IBM Personal Computer (1981): The PC That Set the Standard

The IBM Personal Computer, model 5150, was launched by the American company IBM on 12 August 1981. Built quickly from off-the-shelf parts and running an operating system supplied by the young firm Microsoft, it brought the world’s best-known computer maker into the personal computer market. Its open design was soon copied by other manufacturers, and the resulting “IBM-compatible” PC became the standard for desktop computing worldwide.

Background

In the late 1970s small personal computers such as the Apple II, the Commodore PET and the Tandy TRS-80 were selling well to hobbyists, schools and small businesses. IBM, which dominated the market for large mainframe computers, had no successful product in this field, and its usual development process could take years.

In 1980 IBM set up a small team at its site in Boca Raton, Florida, with permission to work outside the company’s normal rules. Led from early 1981 by Philip Donald “Don” Estridge, the team was given about a year to produce a machine. To meet the deadline, it used components from outside suppliers rather than designing everything in-house.

The machine

The IBM PC was built around the Intel 8088 microprocessor running at 4.77 megahertz. The base model, priced at US$1,565, had 16 kilobytes of memory, a keyboard and a cassette tape interface; most buyers added floppy disk drives, a monitor and more memory, raising the cost to several thousand dollars.

The system unit had five expansion slots, and IBM published a detailed technical reference manual, including the listing of its BIOS, the basic software that starts the machine. This openness encouraged other companies to make add-on cards and software. IBM launched the PC with programs such as the spreadsheet VisiCalc and a version of Microsoft BASIC.

Microsoft and DOS

IBM needed an operating system, the software that manages files and runs programs. Microsoft, run by Bill Gates and Paul Allen, did not have one ready. It bought the rights to 86-DOS, written in 1980 by Tim Paterson of Seattle Computer Products, for a total commonly reported as around US$75,000, and adapted it for IBM.

IBM sold the system as PC DOS, but Microsoft kept the right to license the same software to other manufacturers as MS-DOS. That decision proved enormously valuable: as other firms built IBM-compatible machines, almost all of them paid Microsoft for MS-DOS.

Myths and facts

Myth: Microsoft invented DOS from scratch for IBM. Fact: The core of DOS came from Paterson’s 86-DOS, which Microsoft licensed and then bought outright in 1981 before developing it further.

Myth: IBM chose Microsoft only because Gary Kildall of Digital Research went flying instead of meeting IBM. Fact: IBM did approach Digital Research about its CP/M system, and the talks failed, but accounts of why differ. The popular story of Kildall being away flying is disputed by those involved. IBM did later offer a version of CP/M, CP/M-86, as an alternative, but it cost much more than PC DOS and sold poorly.

Clones and the PC standard

The IBM PC sold far beyond the company’s own forecasts. Business users who had distrusted small computers bought it because it carried the IBM name, and spreadsheets such as Lotus 1-2-3, released in 1983, made it essential in offices.

Because most of the hardware was standard and the operating system was available from Microsoft, other companies could build compatible machines. The one obstacle was IBM’s copyrighted BIOS, which competitors recreated legally by “clean-room” reverse engineering. Compaq’s portable computer, announced in November 1982, was among the first highly compatible clones. By the late 1980s clones outsold IBM’s own machines, and the industry’s direction was set increasingly by Microsoft and Intel.

Timeline

• 1980, July–August: IBM approves a small team in Boca Raton to develop a personal computer.
• 1981, July: Microsoft buys full rights to 86-DOS from Seattle Computer Products.
• 1981, 12 August: IBM announces the Personal Computer in New York.
• 1982, November: Compaq announces its portable IBM-compatible computer.
• 1983, March: IBM releases the PC XT, with a built-in hard disk.
• 1984, August: IBM releases the PC AT, based on the faster Intel 80286.
• 2005: IBM sells its personal computer business to the Chinese company Lenovo.

Legacy

The IBM PC did not invent the personal computer, which grew out of decades of advances from ENIAC to the transistor and the microprocessor. But it fixed a common platform that millions of businesses and households adopted. IBM itself gradually lost control of the market it had created, while Microsoft became one of the world’s most valuable companies. Don Estridge, the project’s leader, died in the crash of Delta Air Lines Flight 191 in 1985.

Why it matters

The IBM PC turned the personal computer from a hobby and niche product into a standard office tool. Its open, copyable design created the “IBM-compatible” world of interchangeable hardware and software, and today’s Windows PCs are its direct descendants.