The IBM PC, Part 1: Arrival

In the early 1980s, the personal computer market was a raucous bazaar, teeming with variety. Each distinct type of personal computer—from Atari, Radio Shack, Apple, Commodore, Texas Instruments, and many more—had its own sub-culture of clubs and magazines, full of partisans ready to tout the superiority of their chosen machines.[1]

Though a substantial bloc of smaller manufactures such as North Star and Vector Graphic all supported an Altair-compatible hardware standard (8080-compatible processor and S-100 bus) and Gary Kildall’s CP/M operating system, they were far from a monopoly share. Standards in graphics, sound, and peripheral connections varied even more widely. Most microcomputers used processors compatible with Intel’s 8080 or MOS Technology’s 6502, but the BASIC programming language was the only near-universal lingua franca, often pre-installed in read-only-memory (ROM) chips on the computer and usually supplied by Microsoft.

Table of Contents from The Microcomputer Handbook: A Buyer’s Guide (1982, edited by Dick Olney). Most of the listed computers are mutually incompatible (i.e. software written for one could not run on another).

Over the course of the 1980s, the IBM PC and its successors paved over all of that, leaving behind a near-uniform cookie-cutter subdivision of compatible computers. By the end of the decade only fragmentary remains attested to the lost world that preceded it: the antiquated Apple IIs still populating school computer labs; the strange boxes at the electronics store labeled “Amiga” and “Atari ST” (the last gasps of dying giants); the Macintoshes found in the offices of graphic designers, writers, publishers, and other members of the cultural avant garde.

The full story of how that unfolded will have to wait for another volume. For now, we will see how it began, with the launch of the IBM Personal Computer in 1981. Ironically, the ecosystem was closed by openness.

Project Chess

Ever since Thomas Waston, Junior launched International Business Machines (IBM) into the electronic computing market in the 1950s, the company had become nearly synonymous with the idea of the computer.

Though many of their offerings were technically impressive, especially the breakthrough System/360 line launched in 1965, their success rested mainly on the comprehensiveness of their product line and their unmatched sales and service departments. Though not quite so dominant as it had been in prior decades, the IBM of 1980, with 40% of the global computer market, was still a powerhouse—the popular press routinely called it a “colossus.” To other computer makers, it was simply “the environment”; to be in the business was to swim in IBM’s sea.[2]

IBM’s greatest strength lay in large, mainframe computers. It could not dominate everywhere along the ever-expanding digital frontier, swarming with upstarts staking out new territories for minicomputers, software, dedicated word processing systems, and more. Each market segment had its own leading companies—smaller than IBM individually, but collectively a grave threat to its position as the center of gravity of the computer business. When it came to the very small computers that were selling in the hundreds of thousands by 1980 and projected to continue growing at an astonishing 40% per year, IBM had nothing at all to show for itself.[3]

IBM leadership had known since the early 1970s that the plummeting cost of electronics would make it practical to dedicate an entire computer to a single user. The problem was translating that knowledge into a product that would reach a mass audience. In 1973, IBM engineer Paul Friedel launched a single-user computer project that became the IBM 5100, a fifty-pound, all-in-one computer and terminal for scientists and engineers. In 1983, its creator tried to claim the 5100 as the “missing link” in personal computer history, but with a starting price of $9,000, it hardly belongs in the same forest as the Altair, let alone in its family tree.[4]

The 5100 did not have a microprocessor (which most computer engineers in 1973 still considered far too feeble an instrument to power a real computer). It ran on a multi-chip processor developed out of the IBM office in Boca Raton, Florida, about an hour north of Miami, which housed IBM’s Entry Level Systems Division.

As the personal computer rose and rose in the second half of the 1970s, it became obvious in Boca Raton (and even in the airy heights of IBM headquarters in Armonk, New York) that to maintain its reputation as a leader in the world of computing, IBM had to respond. In 1978, the Florida office started work on the System 23/Datamaster, a true microcomputer based on the 8-bit Intel 8085 (a variant of the popular 8080). But two years into that project, it remained mired in development, weighed down by a succession of changes mandated by leadership to align the product with other parts of the company. It was also obvious based on its cost structure that the Datamaster would cost far more than leading personal computers like the Apple II and TRS-80.[5]

Forty-year-old Boca Raton executive Bill Lowe was so disgusted with this state of affairs that in July 1980 he went before the corporate management committee in Armonk and declared that IBM was culturally incapable of producing a personal computer; they would have to slap the IBM logo on a white-label device from the likes of Apple or Atari to bring anything to market. This may have been a gambit intended to force corporate to give him a free hand, but it was not all bluster; there had certainly been talks about selling an Atari computer under IBM livery.[6]

Bill Lowe

Whether in accordance with Lowe’s plan or not, IBM CEO Frank Cary refused to accept that there was any kind of computer that IBMers couldn’t build. He “decided that the assumptions behind these machines [the 5100 and Datamaster] were the problem. His executives were all assuming that the systems would use only IBM technology, that they’d be sold only by IBM salesmen, that they’d carry all the standard IBM service policies.” An internal study had found that procuring the physical parts alone for a personal computer through the normal IBM channels would cost more than the computer’s target retail price. Cary’s solution was to give Lowe carte blanche to develop a personal computer within a newly invented corporate structure, the Independent Business Unit. Lowe would report directly to the CEO and be shielded from all corporate politics. He had one month to come back with a proposal that would deliver a saleable computer in one year.

Internally, the initiative was called Project Chess and the device the Acorn; externally IBM would call it simply the IBM Personal Computer (PC).[7]

Lowe, a corporate climber who had been moving up the IBM ladder since 1962, soon saw the chance to grab another rung: the sudden heart attack of the head of the Rochester, Minnesota office put him in line for a Vice Presidency. He quickly dropped Project Chess, which had already served his purposes by raising his profile with corporate leadership, to pursue this new opportunity. Responsibility for the development of the IBM personal computer thus fell into the lap of Don Estridge.[8]

Slightly older than Lowe, Estridge appeared to have a much less bright future at the company. After stints on the SAGE air defense project and the Apollo project, he eagerly put down roots at the newly opened Boca Raton office in 1969, back in his native state of Florida. Rebelling against the “I’ve Been Moved” company culture, he had no interest in leaving home again to chase promotions. He was also coming off of a rocky “Series 1” minicomputer project that had nearly sunk his career. It was salvaged from financial ruin only by a lucky order from State Farm Insurance.[9]

Don Estridge

Nonetheless, Estridge had two qualities that made him perfectly suited to bring Project Chess to fruition. First, the fact that he held the norms of IBM management culture in low regard. He wielded his direct line to the CEO as a talisman to ward off vice-presidential demands and bureaucratic process, and in so doing prevented the lightning sprint to a 1981 launch from bogging down into a multi-year slog. Second, he had insight into the target market because he belonged to it: he had bought an Apple II in 1977 and, like thousands of his fellow hobbyists, tinkered on it in the evenings after work.[10]

Estridge protected his people from pressure to use only the IBM dealer network and IBM suppliers. They would sell the PC through third-party retailers—most importantly, ComputerLand.

And, though IBM factories were allowed to put in their bids like everyone else, the Acorn would be built mostly from third-party parts: disk drives from Tandon, power supplies from Zenith, printers from Epson, and a processor from Intel. Even after the release of the PC, internal IBM suppliers would be forced to compete with outside vendors for business: to bootstrap an ecosystem as quickly as possible, Project Chess would follow in the footsteps of Apple and publish all the technical specs needed to allow and encourage third parties to write software and create hardware accessories for their new computer.[11]

Intel was a natural choice for the processor, because many of the engineers in Boca Raton had already become familiar with Intel hardware from the Datamaster project’s 8085. But Estridge’s hardware team wanted to move up to a sixteen-bit processor from the eight-bit processor of the Datamaster (and the vast majority of microcomputers than in use). Doing calculations in sixteen-bit chunks would make the Acorn 1 more efficient at data processing and (most importantly) allow it to support larger amounts of memory. Intel offered the fully-sixteen-bit 8086, but the Chess team chose the hybrid 8088, which processed sixteen-bit chunks internally but communicated with the external word (over its “data bus”) eight bits at a time. This would substantially reduce the overall cost of the machine, since eight-bit support chips were much more common and less expensive to produce.[12]

From CP/M to MS-DOS

Even as they were settling these major hardware problems, the Chess team began its search for software. Jack Sams, tasked with heading up this effort, wanted the Acorn to support two modes of operation, both very popular in the personal computing world: running BASIC from read-only memory (ROM) for simple programming tasks and games, and running a disk-based operating system like CP/M from Digital Research for word-processing, accounting, and heavy data-processing tasks.[13]

Sams was tasked with finding suppliers for this software, and he went first to a name he already knew and trusted: Microsoft, which provided the BASICs installed on most of the major brand names in the personal computer market. In August 1980, he met with Microsoft’s principals, Bill Gates and Paul Allen, in Seattle.