Ed Smith, the designer of the Imagination Machine, says it failed because Apple released its floppy drive in 1979 and that made the Imagination Machine obsolete. I think Smith is selling himself short a bit, or perhaps he’s giving people the answer he knows everyone wants to hear. In this blog post, we’ll explore what went wrong with the APF Imagination Machine.
I think there was more to the Imagination Machine and its problems than Apple. First, in 1979 and 1980, the popular magazines weren’t mentioning Apple, and they weren’t comparing the Imagination Machine to Apple. They were comparing it to Atari and Texas Instruments. All three machines sold at a lower price point than Apple.
The Imagination Machine held its own against that competition, and it was the least expensive option of the three. For a time, it looked like the cheap enough, good enough solution, designed and built to capture 16 percent market share.
Being easy to buy
It was easier to find an Atari or TI computer. It’s not like every store in the world sold them, but when you go back and look at the Sears and JC Penney Christmas catalogs from 1979 and 1980, the Atari 400 and 800 are there. TI got there eventually. APF didn’t get in with either its Imagination Machine or even the MP1000 console.
And even though everyone talked about the Atari 800, when you went to look at computers, you would see the Atari 400 right next to it. The Atari 400 was competitively priced with the Imagination Machine. The Imagination Machine had a better keyboard, but the 400 was otherwise a better computer. And it had the backing of Warner Communications behind it.
Radio Shack
We also need to talk about Radio Shack. It seems like the magazines ignored Radio Shack in 1980 too, but Radio Shack had more than 5,000 retail locations throughout North America at the time. Many of them were in small towns that didn’t have any other store that sold consumer electronics. And in September 1980, Radio Shack released its $399 Color Computer I. It had very nearly the same graphics and sound capabilities as the Imagination Machine, along with the better Motorola 6809 CPU.
Commodore
And in 1981, Commodore released the VIC-20, the first home computer with color to sell for less than $300. My hot take is that the VIC-20 was the first successful home computer. It wasn’t as good as the Imagination Machine. The VIC-20 was the most minimal viable product that ever minimal viable producted, at least in my lifetime. But it was more than half as good as APF’s Imagination Machine, and cost half the price. Like Atari and TI, Commodore could sell to the big retail stores that APF couldn’t.
The VIC-20’s job was to swoop in, wipe out competitors like APF, and get out of the way so Commodore could sell a more expensive computer.
The crowded market
I think it’s fair to say Apple was a problem for them. But Apple wasn’t APF’s only problem. Atari, Commodore, and Tandy/Radio Shack pulled APF into a price war. It was completely fair to say in May 1980 that the Imagination Machine wasn’t perfect, but it cost $200 less than Atari or TI. But a year later, the Imagination Machine was lost in the middle of a crowded market.
The software
The second problem for the Imagination Machine was its software. APF employed one software developer. He wrote games that suited the system, but they veered toward traditional games. The Atari 2600 launch titles and especially the Mattel Intellivision launch titles had the same approach. But Atari and Mattel soon pivoted to creating faster paced games with more action. APF never did that. Atari and Mattel had much larger development teams who could push each other and learn together, and you could see that synergy in the games they developed. APF just didn’t have the budget to match that.
The reviews I could find from the 1979 timeframe were charitable, but if you read between the lines you found something. They’d highlight one or two titles as being good, under specific conditions. The implication being the rest of the titles weren’t so great. When I find modern accounts from people who own them today, they’re less likely to mince words. The titles didn’t age very well.
As the home computer wars heated up, the Imagination Machine found itself competing with computers that had first-party libraries with fast-paced games like the consoles had, but with better sound and graphics. And then third-party publishers like Activision and Epyx and even Atarisoft soon started publishing interesting new titles for Atari, Commodore, and TI computers, but not APF.
APF ended up producing Space Destroyers, a good clone of the arcade hit Space Invaders. But it was too little, too late. All of the competitors had their own Space Invaders clones that were about as good, and at least three or four other games of similar quality.
The CPU
Finally, there’s the question of the chips the Imagination Machine used. The combination APF selected stacked up well against the Apple II. But Atari, Commodore, and TI all had the ability to design custom chips rather than using off-the-shelf components.
The 6800 CPU was better than the CPUs in the competition, but the CPU is intangible. The graphics and sound are not. And the competition went to war with better graphics and sound.
In 1979, there was nothing else APF could have used for graphics that was a better set of compromises than the Motorola 6847 they ended up using. But if they had used the cheaper MOS 6502 CPU instead of the Motorola 6800 and spent some of the savings on a General Instruments AY-3-8910 sound chip, the Imagination Machine would have been a better overall package and may have even cost somewhat less.
But in a November 2020 interview with the Computer History Museum, Ed Smith said Motorola wanted to buy its way into the video game console market and made APF a deal. So maybe the combination of the 6800 and 6847 was the cheapest combination APF could get at the time.
Timing
It’s a really interesting machine and a rare machine. In the same 2020 interview with the Computer History Museum, Smith estimated APF produced 20,000 Imagination Machines and closer to 100,000 MP1000 consoles.
And even if it didn’t set any sales records, it’s an admirable effort given the time frame it came out in and the resources of the company who produced it. I also think it was a case of bad timing. If they had somehow been able to come to market a year earlier, or if they had come to market a bit later under slightly different conditions, I think APF might have fared better. APF rushed the machine to market because they were convinced Atari was about to release something similar and they wanted to beat them.
One possible scenario is that APF would have been an ideal candidate to release an MSX computer in the United States in 1983. MSX was Microsoft’s standard for a home computer based on a Z-80 CPU, TI TMS-9918 graphics, and General Instruments AY-3-8910 sound. But by one account I found, APF’s upper management didn’t like Bill Gates very much. An unlicensed clone might have still been a possibility.
The company
Ultimately, APF was a small company with limited resources fighting a losing battle against much larger competitors with more money. The kit computer industry was full of small companies operating on shoestring budgets. But by 1980, large companies were taking interest in the industry. In its December 8th, 1980 issue, Infoworld gave a roundup of companies in the video game and home computer industry, giving analysis of companies like Atari, Mattel, Apple, Commodore, and APF. Infoworld noted that APF was the only one of those companies with a Standard and Poor score of C. Infoworld speculated they might be a takeover target.
I have to give APF props for the way they went down. The New York banks that provided financing for APF’s production runs told APF they wouldn’t loan them any more money unless they exited the game console and computer business to focus on calculators. APF was well aware of the challenges in the calculator market. Two of its biggest competitors in the computer market had also competed with them in the calculator market. Both of them had decided computers were the direction they needed to go.
The company’s management knew things weren’t going well. So they started warning their key personnel and advising them to be looking for other employment so they’d be able to continue to provide for their families. I don’t know another story like that.
When the banks issued a final ultimatum, the Friedman brothers handed the bank officers the keys and said APF was their company now. And they left. And, as best I can tell, they both went on to have long and successful careers.
Another side to the story
I don’t know what happened to all of APF’s employees, but let’s talk about what happened to Ed Smith. Ed Smith grew up in the projects in Brooklyn. His parents had migrated from Mississippi to New York hoping to find better opportunities in the big city.
Smith’s father told him to get a chauffeur’s license, saying that was about all a Black man was allowed to do. But Ed Smith wasn’t interested in that, he was interested in learning how things work. He taught himself to repair household appliances, and eventually how to repair televisions and radios. Studying electronics in high school and attending night classes eventually led him to work his way up from being an electronics technician to a full-blown engineer.
When Smith realized he understood the products he designed better than anyone else at APF, he asked to switch to sales.
After leaving APF, Smith had a successful second career working in sales for Apple and Novell and then moving on to other IT firms. He was successful enough to move his mother out of the apartment he’d grown up in and move her to the New Jersey suburbs, where he eventually bought her a condominium.
It’s unfortunate that Ed Smith never had the chance to design a true next-generation follow-on to the Imagination Machine. But he was able to leverage his experience at APF to build a better life for himself and his family. Even though the Imagination Machine failed in the marketplace, it helped Ed Smith achieve the American Dream.
David Farquhar is a computer security professional, entrepreneur, and author. He started his career as a part-time computer technician in 1994, worked his way up to system administrator by 1997, and has specialized in vulnerability management since 2013. He invests in real estate on the side and his hobbies include O gauge trains, baseball cards, and retro computers and video games. A University of Missouri graduate, he holds CISSP and Security+ certifications. He lives in St. Louis with his family.