After a lot of heated arguments, the team concluded they needed to go outside the company and use “off-the-shelf” parts to fast-track a computer they could sell for US$1500. Until this moment IBM, in its 70 years in business, had designed and made nearly everything it sold. “We’re free to do this our way,” Estridge told a group of communications specialists at Armonk at the time. "For a month, we met every morning to hash out what it was this machine had to do and then in the afternoon worked on the morning's decisions,” said Dave Bradley, who wrote the interface code for the new machine. Bill Sydnes took on the hardware mission, Jack Sams had software, and H.L. Lowe was soon promoted to a higher level job, and Don Estridge took over the project, called “Chess.” Estridge got rare permission to live and work outside of IBM’s design and development process. Cary said, “Come back with a prototype in one month.” Lowe agreed that IBM shouldn’t and couldn’t afford to remain on the sidelines, and boldly told Cary that IBM needed to either buy one of the companies making these new microcomputers, or build its own-with an improbable sticker price of US$1500. Lowe, then systems manager for IBM Entry Level Systems, part of the company’s General Systems Division, traveled from Boca Raton, Florida, to IBM headquarters in Armonk, New York, to meet with CEO Frank Cary, who was looking at the personal computer uprising and wondering what to do about it. It was against this solid economic background that William C. IBM at the time was a US$23 billion enterprise with 337,000 employees.
Typical margins were 20 percent to 60 percent on these machines plus the software and services that went with them.
In those days, an entry-level computer at IBM meant a US$90,000 IBM System/38 minicomputer (forefather of today’s IBM Power Systems™ servers) or the barely luggable 50-pound IBM Portable Computer, selling at US$9000. Commodore, Apple, Tandy, Atari and Digital Research had been putting together the pieces that make up a personal computer: a microprocessor (a central processing unit on a single chip), a BIOS (the system boot code), read-only memory (usually a solid-state ROM for controlling the PC), a floppy disk drive, a motherboard and an operating system. Back then,Ī handful of aggressive young companies set out to take computing out of back offices and give it to the people.
You had a pencil or a typewriter to work with, and if you didn’t know how to spell a word, you used a dictionary. If you had work to finish up in the evening, you carried a briefcase filled with papers. In the late 1970s, when the office closed, you turned off your terminal-if you had one-and went home. When the concept first came up at IBM corporate headquarters, a senior executive asked the simple question: “Why would anyone want to take a computer home with them?”