A PC on every desk and in every home

Last month, we covered the advent of the personal computer. This month, we pick up the tale at the point where the PC moved out of the hobbyist realm and became a serious business tool.
1 February 2008

The personal computer's appeal to business users came about when two critical components came together: a professionally designed PC for the retail market and the killer application. After the release of the Apple I - in the form of what we would today call a motherboard - Steve Jobs realised that not all potential customers wanted to build their own PCs.

Owen Linzmayer writes in Apple Confidential 2.0 that Jobs hated the crude metal cases of hobbyist computers of the time and insisted that the Apple II have a professionally designed plastic enclosure that would appeal to consumers. He got his way and the Apple II went on sale (for $1 298) on 17 April 1977 in the now familiar package with a built-in power supply and keyboard. The monitor was extra, as were the disk drives, modem and all the other peripherals that came later.

But that was only the first piece of the puzzle and it took more than two years before the other pieces fell into place.

The History of Mathematical Tables by Martin Campbell-Kelly, et al. notes that the first electronic spreadsheet was produced by Dan Bricklin and his partner Bob Frankston. In October 1979, VisiCalc went on sale through the duo's company Software Arts at a retail price of $99. By the end of the following year, Software Arts was shipping 12 000 copies a month - at which time the laws of supply and demand kicked in and the price went up to $249. [The VisiCalc story was covered in more detail in the November 2007 edition of Brainstorm. - Ed]

At the beginning of the 1980s, an Apple II with monitor, single floppy disk drive and a copy of VisiCalc would have set you back around At the beginning of the 1980s, an Apple II with monitor, single floppy disk drive and a copy of VisiCalc would have set you back around $2 500. 500.
In Accidental Empires, Robert Cringely explains: "The Apple II found its eventual home in business, answering the prayers of all those middle managers who had not been able to gain access to the company's mainframe or who were tired of waiting the six weeks it took for the computer department to prepare a report, dragging the answers to simple business questions from corporate data."

Feigning disinterest

At the time, the big names in the computer industry were staying out of the PC game - and many almost missed the boat as a result. The most oft cited reason for this was the money: at the time, IBM and the BUNCH (Brainstorm, May 2007) priced their mainframes in the hundreds of thousands of dollars while minicomputer offerings from DEC and its competitors typically came in in the tens of thousands.

But there were also architectural considerations. Paul Cerruzi elucidates, using DEC as an example in A History of Modern Computing: "Many within DEC felt that the company was not so much a minicomputer builder as it was a company that sold architecture... To build a computer around that Intel 8080 [microprocessor] meant surrendering decisions about architecture to a semiconductor house - how could they allow themselves to do that?"

However, authors James Wallace and Jim Erickson assert in Hard Drive that this was exactly the IBM approach and one of the key reasons the IBM PC took off like a rocket.

But first, some context. At the beginning on the 1980s, an Apple II with monitor, single floppy disk drive and a copy of VisiCalc would have set you back around $2 500. At that price, the more established computer makers couldn't see a way to make the profits to which they had become accustomed. However, when sales of the Apple II (and VisiCalc) took off in mid-1980, IBM knew it had to move. Big Blue had the benefit of experience - it had tried to build a PC several years before. In A History of the Personal Computer, author Roy Allan writes that IBM announced the 5100, the first commercially produced portable computer, in September 1975. The unit weighed 50 pounds (22.7kg) and the company described it as being "slightly larger than an IBM typewriter".

According to Cerruzi, the IBM 5100 fitted on a desk and consisted of a processor, 16kb of memory, a keyboard, a cassette tape drive and a small video terminal. But priced from about $9 000, it just never took off. From that experience, IBM knew it could never build a PC using its own components. This was brought home to the company's management committee (MC) by Bill Lowe when he was asked to present in July of 1980. So the MC did the only thing it could: sent Lowe back to his offices in Boca Raton, Florida, with orders to do whatever had to be done to develop IBM's own personal computer. He was to assemble a task force and bring back a prototype of "IBM's Apple" in 30 days.

Project chess

Wallace and Erikson pick up the tale, noting that on his return, Lowe picked his team of 13 from engineers not cut from the traditional blue cloth of IBM. Don Estridge, the man Lowe eventually selected as the day-to-day project manager, is reported to have said: "If you're competing against people who started in a garage, you have to start in a garage."

Bill Gates licensed 86-QDOS from Seattle Computer Products... and sub-licensed it to IBM. Later, Microsoft bought the product outright...
Once assembled, the taskforce agreed on an "open architecture" system. In real terms, this meant that components would come from existing technology in the marketplace and would not be proprietary, like the components in the Apple. Lowe and his taskforce made the deadline and returned with the prototype a month later, whereupon he was given one year to produce the IBM PC.

In Big Blues: The Unmaking of IBM, Paul Carroll quotes Bill Sydnes, a senior engineer who made the trip with Lowe, as saying that at that point "the system would do one of two things: it would draw an absolutely beautiful picture of a nude lady and it would show a picture of a rocket ship blasting off the screen. We decided to show the MC the rocket ship."

But the prototype had no software - programming languages or operating system. The task of finding and contracting suppliers for those components fell to taskforce member Jack Sams. The first part was easy: Microsoft had already established itself as a leading supplier of the Basic language commonly used on PCs of the day and was branching out into other languages such as Cobol, Fortran and Pascal (Brainstorm, June 2007).

Opportunity knocks

Sams approached Microsoft and did a deal with Bill Gates to provide the languages. When he asked about a 16-bit operating system - IBM had already decided to use Intel's 8088 processor in its PC - Gates suggested CP/M and referred him to Gary Kildall, CEO of Digital Research. There was apparently a tacit agreement between the two that Microsoft would stick to languages, while Digital Research remained focused on operating systems.

There is a bit of industry folklore surrounding the subsequent events. It is said that Kildall was off on a joyride in his twin-engine plane the day IBM came calling. Wallace and Erikson write that while Kildall acknowledges flying his plane, he says he was on a business trip and had left his wife - who was actually running the business at the time - and lawyer to handle the meeting with IBM. Sams confirms this, but calls the meeting a fiasco because neither Kildall's wife, Dorothy McEwen, nor the lawyer would sign IBM's obligatory non-disclosure agreement - and with good reason.

The agreement was intimidating. It stipulated that a vendor could not tell IBM anything confidential in the meeting, and if something confidential were revealed, IBM could not be sued if it acted on the information. On the other hand, if the vendor - in this case Digital Research - revealed or acted on anything confidential it heard from IBM at the meeting, it could be sued.

Square one

Frustrated that McEwen wouldn't sign away Digital Research's rights, Sams went back to Seattle and asked Gates, who had already signed the NDA, if he could provide a 16-bit operating system. After some debate and further discussions with Digital Research, that's exactly what happened - but Microsoft didn't develop it from scratch as many believe. Part of the problem was that CP/M, at that time, was only an 8-bit operating system and nobody, not even IBM, had been able to get Digital Research to commit to developing a 16-bit version. But Tim Patterson, a developer working for Seattle Computer Products, was tired of waiting, so he climbed in and developed what he called 86-QDOS - the 86 signified it was for the 16-bit Intel architecture and the QDOS meaning Quick and Dirty Operating System.

Gates licensed 86-QDOS from Seattle Computer Products owner Rod Brock, renamed it DOS (for Disk Operating System) and sub-licensed it to IBM. Later, Microsoft bought the product outright from Brock who only found out after the fact that the end customer was IBM. It was an early example of Gates' shrewdness as a businessman.

But fate nearly derailed Project Chess, as IBM called its PC development effort. Carroll writes that, following the 1980 heart attack and death while on holiday in Mexico of IBM's Rochester plant general manager Hal Martin, Lowe was offered the position. Turning it down was not an option and he was replaced in Boca Raton by his project manager, the charismatic Estridge, who is widely regarded as the father of the PC.


Big Blue announced its IBM PC in August 1981 and sold just short of 14 000 units that year. By the end of 1983, the company had shipped more than half a million PCs and, in 1984 alone, it moved 1.375 million units. The PC revolution had begun and it wasn't long before other players came to the party, efforts that were greatly aided by IBM's decision to adopt an open architecture using freely available components.


> Accidental Empires, Cringley, R.X. (Addison-Wesley, 1992)
> A History of Modern Computing, Cerruzi, P. (MIT Press, 2003)
> A History of the Personal Computer, Allan, R.A. (Allan Piblishing, 2001)
> Apple Confidential 2.0, Linzmayer, O.W. (No Starch Press, 2004)
> Big Blues: The Unmaking of  IBM, Carroll, P. (Weidenfeld & Nicholson, 1993)
> Hard Drive: Bill Gates and the Making of Microsoft Empire, Wallace, J. & Erikson, J. (HarperBusiness, 1993)
> The History of Mathematical Tables, Campbell-Kelly, M., Croarken, M., Flood, R. & Robson, E. (Oxford University Press, 2003).

The first clones came from Compaq. Cringely writes that former Texas Instruments employees Rod Canion, Jim Harris and Bill Murto started the company in 1981 and, just to be different, the first Compaq models were 28-pound (12.7kg) portables, which soon became known as 'luggables'. In addition to the portability differentiator, Compaq offered dealers a better margin - 36 percent rather than the 33 percent given by IBM - and Compaq did not have a direct sales force that competed with its dealers. As a result, Compaq sold 47 000 computers worth $111 million in its first year, a start-up record at the time.

Despite this, Compaq didn't really begin to threaten IBM until Big Blue opened the door by not adopting Intel's 80386 processor, choosing instead to stick with its follow-up to the PC and PC/XT (a PC with a 10MB hard disk drive), the 80286-based IBM PC/AT. The problem was Windows: the 286 simply wasn't capable of running it.

Enter the clones

Where Compaq had succeeded, others soon followed and what became known as the IBM PC-compatible market emerged. Consisting of numerous vendors all around the globe, it quickly forced the smaller, proprietary fish to adhere to the standard or die. Today, the successors to those early PCs are available all over the planet at a fraction of the price (in real terms) of those early machines.

The only proprietary technology hold-out - to this day - is Apple, but not without some failure. On 19 May 1980, it launched the Apple III, but the market wasn't interested. Linzmayer writes that Apple III represented a number of firsts. It was Apple's first attempt at building a powerful business computer, and it was the first departure from the tried-and-tested Apple II architecture.

But in the end, the Apple II refused to die, morphing into variants such as the IIc, IIe and IIGS along the way. The company finally discontinued the last model, IIGS, in the early 1990s, by which time it had found a new niche with the Macintosh. [The full Apple story will be covered in a future edition of Brainstorm. - Ed]