There are now more than three million Commodore 64s. It's arguably the world's most successful small computer but the machine casts a small shadow in US microcomputing because it can't be expanded, lacks compatibility, and is several years old.

Of those millions of Commodoreusers at least a third are ready for a serious upgrade. They've had the hors d' oeuvres of microcomputing, they've had games, word processing, and lots, lots more, but they've also had to put up with Commodore disk drives and all the rest of the familiar litany. Besides, they read magazines and they dream their dreams.

They're ready for their cheap Mac/32-bit type home computer, with 512K of RAM, loads of ports, great graphics, etc, etc.

This Christmas Commodore passed up the greatest sales opportunity in history. The figures are brutal, indicating a 93.6 per cent decline in earnings from the $50 million they took in the quarter ending on December 31, 1983 to the $3.2 million for the same quarter in 1984.

At the January 1985 Consumer Electronics Show Commodore finally showed the 128, a good looking upgrade for its line. It even made it compatible with the 64, thus shattering company traditions. The 128 has new disk drives and lots, lots more.

Except it may be too late. At the same show Jack Tramiel showed off the Atari ST Jacintoshes which are based on the 68000 chip and look like a "poor man's Mac", as certain software vendors put it at CES. Except that unlike the Mac, the Jac has a great big keyboard with cursor keys and numeric pad, not to forget the two-button mouse.

The Jac has similar graphics to the Mac except that on a colour screen the resolution isn't as good. Of course, games and colour go together in a lot of users' minds and colour games that take advantage of 512K of RAM and all the ports of the Jac should be quite astonishing to behold. Again, like the Mac, the Jac offers 128K or 512K versions but unlike the Mac (512K for $2,000 in New York) the Jacintosh will be priced at $400 and $700. If Atari can bring this machine to market in six months, Tramiel will have pulled off his greatest commercial coup. The ST line will bring the advances seen in business computers these last two years into the home market, along with powerful peripherals like the Atari hard disk system - 15Mb for $399 (perhaps by June 1985).

Some older micro enthusiasts react with a degree of awe to the idea of home dard disk systems on sale at the toy store. Tramiel says simply: "What a machine does is up to the user." He'll continue to distribute through the big chains like Toys 'R Us and K-Mart.

But those who can bring themselves to forego "the purchasing environment" of specialist computer stores (where there was some sneering at the Jac last week in the midst of all those integrated software packages that cost more than Trameil's new computer) will save themselves a cool $2,000 and still have all the computing power they'll need for the next five years.

And only a year ago Tramiel seemed all washed up. He'd retired from Commodore at the height of its success. Why? At the CES he gave a rather enigmatic answer: "Because I could no longer come into work with a smile on my face. I just wasn't happy any more."

Loafing on the beach didn't suit Jack. He missed the thrill of combat and besides, when he visited his son Sam in Tokyo, he found that the Japanese were smiling "because Tramiel is out of the industry, and now they could come in". So Tramiel raised risk capital in Hong Kong, Taiwan and the US like some taipan of the Jumbo Jet age. He then called his sons together and relieved Warners of the dying weight of Atari, drowning in red ink, and reforged the company around the "Tramiel religion" which is basically "Work until you drop, wake up, resume work". Of what happened to the old Atari, bristling with managerial fiefs, Tramiel said brusquely: "You cut out the waste."

Commodore, of course, is not out of the game yet, but it will have to bring the 68000-based Amiga to market this summer and it will have to be very good.

Which would mean a pair of 68000-based Mac-style home computers on the market in time for the anticipated sales rush. Christmas billions will be in the balance so the appearance of these machines, Jac and Amiga, wil be the micro event of the year.