If you thought things were looking bad in the home micro market, confirmation arrived this week with news from Commodore where the world's number one is up against the ropes.

The US giant has posted third quarter losses of $20 million - a year after it was showing profits of $36 million. Worst of all, chairman Irving Gould has warned that the company will probably show a loss on the year's operations. It's been a while since that happened.

Mr. Gould was quoted in the Financial Times last week as saying earnings were affected by "a price reduction in February 1985, a reluctance of retailers to rebuild their depleted inventory and the general slowdown in our non-US sales."

This sounds like a bit of guff to us, but taken at face value what Mr. Gould is saying is that Commodore couldn't afford to go into a price war, and even after it did retailers still thought its products were wrongly priced.

The truth is that Commodore went into 1984 like a champion and it came out of it staggering. Its product range was badly scrambled with the introduction of the C16 and Plus/4 - the 128 is the machine it should have released for Christmas.

Since then a round of price cutting on the newer models but not on the C64 has made a mess of the company's price structure. The more recent launch of the IBM-compatible business machines may defray some of the worst possibilities, but Commodore could get badly hurt trying to reassert its former position at the top of the business market.

If anyone from Commodore is reading this, we'd suggest you drop the 16 and the Plus/4, cut the C64 to the position the Vic once held, move the 128 into the C64's slot and put your faith in God and the Amiga, not necessarily in that order.