The Machine That Changed
by Beatrice Garcia
In the summer of 1980, IBM gathered 12 of its top engineers
and sent them to Boca Raton, Fla., with a mandate: Build
a personal computer that's faster and cheaper than anything
on the market and, oh yes, have it ready for sale in
At the time, the personal computer was a fledgling
product in an industry dominated by Silicon Valley start-ups
such as Apple Computer, Osborne, Commodore and Tandy's
Radio Shack unit. Together, they had sold 327,000 PCs
The original IBM PC, photographed in the Delray Beach
But IBM -- a company unaccustomed to moving quickly
-- saw great potential in the personal computer. So
its group of 12 -- nicknamed the Dirty Dozen -- embarked
on Project Chess. And 20 years ago -- Aug. 12, 1981
-- IBM unveiled its creation: a PC that sold for $2,665
with a black-and-white monitor and 64 kilobytes of memory.
It was a machine that changed the world.
"Nobody had a clue that it would be so successful,''
said Mark Dean, who developed the color graphics card
for the PC.
With billions sold since 1981, the personal computer
has had a profound effect on modern life -- from work
to school to play. It also has created tremendous gains
in productivity and unfathomable corporate and personal
wealth. The IBM team also created computing standards
still in use today, allowing some young firms to flourish
and dominate their fields.
|The IBM PC in August
``We built a machine that was acceptable for use by
business . . . better than what was on the market then.
It could also be used at home, and that turned the PC
into a very popular machine,'' said David Bradley, a
member of that original team.
Project Chess also had its tragedy. Philip D. Estridge,
an IBM veteran who headed the Boca Raton effort, was
killed in 1985 in a plane crash in Dallas. At the time
of the crash, Estridge was vice president of manufacturing
A view of the back of the wirewrapped
board delivered to Microsoft in December of 1980.
Without question, the biggest beneficiary
of the PC has been Microsoft, which sold IBM its programming
language and an operating system for a one-time fee
of $80,000. But Microsoft kept the licensing rights
to the operating system, allowing it to make billions
of dollars as it sold copies of MS-DOS -- and later
Windows -- for use in nearly all the PCs that have been
Last year alone, PC makers sold more than 140 million
|A view of the front
of the wirewrapped board delivered to Microsoft
in December of 1980.
Because of its decision to open the PC's architecture
and license the operating system from another company,
IBM created a machine whose cost fell year after year
even as its performance improved. But the ``open'' decision
also ensured that IBM would be just one competitor among
many, said Michael Swaine, one of the authors of ``Fire
in the Valley: The Making of the Personal Computer.''
``Open architecture was the right decision,'' says
David O'Connor, the engineering manager on the original
team of 12. ``It encouraged standards to be adopted
internationally and helped drive down costs so more
and more people and businesses could (take) advantage
Slow to cash in
IBM, which had been responsible for many innovations,
was often slow to exploit its own technology, says Melvin
Hallerman, who signed on as the chief programmer in
the original group. Big Blue's bureaucracy and lack
of speed had allowed many competitors to take the lead
in a variety of fields.
So when it decided to tackle the PC, IBM realized it
had to move quickly. The one year deadline forced compromises.
There was no time to develop all the components from
scratch, so IBM went with off-the-shelf components.
Joseph Sarubbi, an IBM engineer who began his career
in the pre-transistor days, oversaw purchasing of the
components and tested their reliability. He also oversaw
manufacturing of the computers in Boca Raton.
``We were very antsy about this because of IBM's reputation
and reliability,'' Sarubbi said.
Perhaps fittingly, the original production schedule
for the IBM PC was produced on an Apple II computer
in O'Connor's office.
Once IBM's top management approved the PC project,
the team had an unprecedented amount of freedom to do
its work, including a proviso that it did not have to
use any of IBM's technology.
Throughout, the project was cloaked in secrecy.
IBM decided to use Intel's then-new 8088 microprocessor,
but it didn't tell Intel exactly what kind of product
it was developing. At one meeting between Intel engineers
and the IBM team, the two sat at opposite sides of a
table separated by a dense black curtain. The Intel
engineers were trying to figure out the bugs in a product
mock-up they couldn't even see.
In 1980, Intel had annual revenue of $854 million.
Last year, it topped $33.7 billion.
As part of Project Chess, IBM also required vendors
to sign nondisclosure and confidentiality agreements.
Some companies were reluctant to sign, fearing IBM might
walk away with their technology.
One such firm was Digital Research, a small company
in Pacific Grove, that had a popular operating system
on the market in 1980. IBM knocked on its door because
of Bill Gates.
IBM already had negotiated with Microsoft, then 5 years
old, for its programming languages. Gates and Microsoft
co-founder Paul Allen had made a name for themselves
after creating a programming language for the first
minicomputer. Microsoft had licensed Digital Research's
operating system for a specific use, but didn't own
it and couldn't offer it to IBM. So, Gates helped IBM
arrange a meeting for IBM with Digital Research.
But Digital Research, according to Swaine's book, was
uncomfortable with the terms demanded by Big Blue. Also,
it wanted to license its operating system to IBM, not
sell it outright.
IBM came back to Microsoft, and Gates seized the opportunity.
What followed could well be the deal of the century.
Microsoft acquired an operating system that had been
written by another Seattle company and used it as the
basis for MS-DOS. Microsoft paid $50,000 for the operating
Microsoft No. 2
Today, Microsoft is the world's second-most valuable
Of course, much has changed from the early days of
the PC's development.
Sarubbi, who went on to head the team that developed
the IBM XT, the first desktop computer with a built-in
hard drive, recalls how analysts criticized him for
putting 10 megabytes on that drive. ``Who in their right
mind would use 10 million bits of memory,'' he says.
Yet, back in 1983 when the XT was introduced, he was
convinced software developers would take advantage of
the memory and add more information.
Sarubbi was right. Today, a copy of Myst III: Exile,
a popular new computer video game, requires 200 MB of
available hard-drive space.
What the team of IBM developers unveiled that fateful
day in 1981 was an instant hit.
``What IBM did was make it OK for American business
to buy little computers,'' said Robert Cringely, who
wrote and produced `Triumph of the Nerds,'' a PBS documentary
on the PC industry.
``The fact that the PC has become so commoditized today
doesn't take away from that contribution.''