Get in tech with technology with tech Stuff from how stuff works dot com. Hey there, and welcome to tech Stuff. I'm your host, Jonathan Strickland. I'm an executive producer at how Stuff Works and I love all things tech. And in the last few episodes, I've covered the early days of personal computers now. I started with an episode dedicated to computer systems that were unable to establish a permanent foothold in the market, so ones that kind of rose up, and they were some of them were really really popular in the early days, but they weren't able to become a defining personal computer and they are no longer around today. You can't go out and buy a brand new one. You could buy emulators, you can buy recreations of them. You could probably find some of them on eBay, but you're not going to go and buy like a two thousand eighteen version of those machines anymore. Then I did a couple of episodes aka to how Apple managed to avoid that same fate. Obviously you can go out and buy an Apple computer. They're called Max now. But today we're going to turn our attention to IBM and its role in defining the modern PC. Because when we say PC, most of us mean a Windows based machine. People tend to call the two different types of computers out there, the two broad different types of computers out there, MAX or PCs, and when they say PC, they generally mean something that's running Windows. Now, that's obviously an over generalization. There are other operating systems out there. I've talked about that before. Their Unix, there's Linux distributions, there's all sorts of stuff. But for the average person, it comes down to a MAC or PC. So how did IBM end up defining what a PC is? And why isn't IBM still in that market? Well, before I dive in, I have to say that while I have used a ton of sources to put this show together, there was one that was more valuable than any of the others, and that was a series of articles, two articles actually written by Jimmy Maher for Ours Technica, and it's called the Complete History of the IBM PC, and it's fantastic. I highly recommend you read those articles to get a better idea about what was going on at this time. Now, IBM was a true powerhouse, a multibillion dollar company well before the PC era, and it behooves us to do a quick dive into IBMS history. I've done full episodes about the history of IBM. It is a long and complicated history. It's fascinating as well. I'm gonna give you sort of the cliffs notes version for this particular episode. So IBM traces its history back to the Computer Tabulating Record Company, which was founded in nineteen eleven, but even that doesn't really get back to the beginning of IBM. Sure, the Peuter Tabulating Record Company would eventually become IBM, but that company, that being Computer Tabulating Record Company, which will just call CTR, that gets way too to complicated. Otherwise, that was actually an amalgamation of other companies. It was a sort of a merger of three to four companies, depending upon how you look at it. So that includes the International Time Recording Company, the Computing Scale Company, and the Tabulating Machine Company, as well as the Bundy Manufacturing Company. And I'll get into why that gets a little complicated in just a second. So those companies, in turn have been around in one form or another since the late nineteenth century. So if you're really picky, you can say that IBM kind of traces its history back to before the turn of the twentieth century. The International Time Recording Company started off as the Bundy Manufacturing Company in the eighteen eighties in New York, and that was named after its founder, Willard L. Bundy, who invented and patented mechanical time recorders. Now technically, the manufacturing aspect of the Bundy Manufacturing Company remained sort of separate from everything else and was lumped in with this general merger that would form the predecessor to IBM. The Computer Scale Company launched in eight when two businessmen in Ohio had the notion to purchase some patents that were related to the computing scale technology that was brand new at the time, and they created an enterprise out of it. The Tabulating Machine Company was originally known as the hollow Earth Electric Tabulating System, named after Herman Hollowrath, its founder. In eighteen ninety six, Hollowrath formed the Tabulating Machine Company. His business really centered on punched card systems and readers, so not really computers, but tabulating devices that used punch cards to tabulate stuff. He had actually used that in an effort to streamline the process of going through the results from the US Census in eighteen nine at that stage, you had a population that was getting so big that figuring out what all the different results were took an enormous amount of time and a lot of hard work doing it all by hand. So he had come up with this more or less automated approach using punch cards and a machine capable of quickly reading those punch cards. Together, those companies merged into a new one in nineteen eleven through this stock amalgamation process. But that does not magically mean that everything will work smoothly, as I'm sure some of you have experienced firsthand if you've ever been through a merger, if you've worked for a company that has merged or acquired another company. Charles Randlet Flint was the guy who had headed these efforts. He was the man behind this stock amalgamation process emerging all the companies, and he realized that this massive beast he had created was a bit beyond his own abilities to lead. It had more than a thousand employees, and of course it had very diverse business processes across us the various businesses. The chairman for the new company was a guy named George Winthrop Fairchild. But Fairchild was also a congressman and so he was largely absent from the operations of the company. They needed to find somebody else. Eventually, a businessman named Thomas J. Watson, whose last name would go on to become the name of IBM s artificially intelligent application platform. Watson stepped up to Flint and said, Hey, I would like to get a job running a business. I feel like I really could do some great things. Watson had at that time whether a pretty rough storm due to being accused, tried, and initially convicted of unfair business practices essentially anti trust laws. Now, he would never end up serving out a prison sentence. The court would eventually overturn this conviction, but his reputation among the public despite this legal issue, was extremely strong. Was known as someone who was very supportive in the community. So while he had cutthroat business uh strategies and and instincts, he was also someone who would give back to the communities he belonged to. Flint would end up naming Watson the general manager for CTR, and a little less than a year later, when all the trial business was resolved, the board would name him the president of CTR. Now CTR would remain the name of the company until nineteen twenty four, when Watson would officially give it a new moniker International Business Machines or IBM. Throughout its history, it would primarily focus on business to business operations, so, in other words, IBM would make the machines that other businesses depended upon to get work done for their customers. IBM was not in the business of creating stuff for the average consumer. So when IBM was working on something, it wasn't for people like you and me. It was for big companies so that they could do the businesses that you know, whatever it was that they did, and so they might have a forward facing uh side to them where they would have contact with customers, but IBM didn't. Their customers were other companies. IBM grew larger and more powerful and became a leading name in business machines, and it all started with mechanical devices, but eventually transition to electronic and then microchip technologies. In the nineteen forties, IBM would partner with Harvard University to build the company's first computer, although most people refer to it as Harvard's first computer, known as the Mark one or the Automated Sequence Controlled Calculator. This was an enormous electro mechanical computer. So in other words, I had electric parts, electronic parts rather and mechanical parts. And it played a very important role with several war related calculations in the nineteen forties, including some designed by John von Neumann as part of the Manhattan Project. That's the project that developed the atomic bomb. It had seven hundred sixty five thousand components and more than one hundred miles of wire and cable. So obviously this was not a home computer, although I guess if you were desperate you could maybe cut a hole in it and make it a home but still not quite the same thing as what we mean when we say home computer. In ninety two, Thomas J. Watson Jr. Would become the president of IBM and thus began the golden age of the company. The engineers IBM did groundbreaking work, including creating the first commercial hard disk drive. By the nineteen sixties, IBM was a leader in producing massive computers for businesses to help them manage their data, and at this point, no one would dream of owning their own home computer. Even after the invention of the transistor, these machines were still pretty darn massive, and they would take up an entire a room of your house. In the early nineteen seventies, as the first computer hobbyists were experimenting with building their own basic computing machines for home use, IBM began to create a platform that would evolve into their own personal computer line of machines. A decade later, and IBM manager named Paul Friedel invented this platform, and it was called the Special Computer a p L Machine Portable or SCAMP. A PO by the way, stands for a programming language real descriptive there that was actually designed by Kenneth e Iverson back in the nineteen sixties. SCAMP was a research project meant to create a single user computer. Now, computers in those days were generally meant for multiple users. This was the main frame approach. You would have a centralized, very powerful mainframe computer, and you would have one or more terminals connected to that mainframe. Typically you would have more than one, and these terminals acted as a point of communication between the users and the computers processing units, which weren't really microchips at this point. They were typically large circuit boards. These computers used a strategy called time sharing, which gave the illusion that everyone was working on this mainframe simultaneously, but in actuality the computer would switch from one terminal to another to run processes, but it would do so at a rate that was fast enough to at least give the implication that everyone was working on the same machine simultaneously rather than sequentially. SCAMP was a departure from this model. Two IBM laboratories in Silicon Valley, the IBM Scientific Center and the Advanced Systems Development Lab, were top secret and given an open sandbox to play in to develop new technologies that could potentially be commercially useful. So, in other words, the engineers at these centers didn't have to worry about improving existing systems or making the next big computer that IBM was going to sell. They could instead think further out and experiment with different concepts that had no real place in the market at that time but could potentially be valuable later on. And SCAMP grew out of that environment. In nineteen two, Dr Paul Friedl, who was a manager at the Scientific Center, wanted to build a personal portable IBM computer, meaning a single use computer that you can move from place to place. Dr Friedel made a plan to build SCAMP within six months and then have it ready to demonstrate to IBM executives. The executives, when presented with the idea, said wouldn't that be something, which became scamps motto. Another IBM employee named Joe George headed up the hardware team to build SCAMP. With six months to start and finish and demo a project, the team was under the gun to prove their concept was tenable, so they didn't really have much of a choice. They decided to go with many off the shelf components because there just wasn't time to develop everything in house from scratch. The whole point was to demonstrate if the concept was possible after all, not to create a product that would ever see the light of day outside of IBM. Six months after those initial discussions, the team actually did have something to show off to IBM executives. The SCAMP was in a case that resembled a briefcase, had a keyboard, it had a CRT display, and used a cassette tape drive for media storage. So, in other words, this machine in nineteen seventy three was already taking a form factor that wouldn't be seen in the hobbyist world. For another couple of years. The team gave multiple demonstrations of the SCAMP concept at IBM and received a lot of interest. At the final demonstration, the one that was going to decide the fate of pursuing a single user computer strategy, it happened here in my hometown of Atlanta, Georgia, at the Marriott Downtown. Dr Friedel even tells a great story about this, how he showed up late to the demonstration because he got lost on the highway because, as he said in the video, there are just too many roads in Atlanta called Peach Tree, which is absolutely true. Despite his late arrival, the demonstration went really well. Dr Freedle showed off SCAMP to the IBM president, who at that time was John Opele. The demo went off without any glitches. They didn't have any hardware failures or software hang ups, nothing like that. Following the demonstration was a presentation about how much money it would cost to fund the project. Opal was so impressed he said, if it was up to me, I'd go four and a half million dollars over the budget you're asking for. And that was enough for Dr Freedle to secure a commitment to move forward. SCAMP would become the starting point of the path that would eventually lead to the IBM fIF fifty a k a. The IBM Personal Computer. SCAMP, by the way, would eventually emerge from the depths of IBM's secret laboratories. It became part of a Smithsonian exhibit on information technology and went on display to the public. But we're not quite at the IBM PC era yet. IBM had a couple of other computers in the one hundred line that would precede the first personal computer from the company, and the first of those, the actual IBMFT, was quite the beast. IBM started selling this descendant of the Scamp in nineteen five, a year before Apple would debut, and around the same time the hobbyists were getting their hands on the Altaire eight hundred. I've got a lot more to say about the IBM in just a second, but first let's take a quick break to thank our sponsor. The IBM was not a computer built for the home user, but rather for engineers and mathematicians. It was called a portable computer, but you really probably wouldn't want to lug it around because it weighed about fifty five pounds, or wasn't just bulky it was a little peculiar. Rather than relying on a microprocessor to act as CPU, spread processor duties across an entire circuit board using an IBM developed technology called palm p a l M. It had sixteen kilobytes of RAM at its base model, and it used a tape drive for storing media and loading programs. It had a five inch computer screen and a keyboard, and it would set you back about ten thousand dollars. Like I said, these were not intended as computers for the home. This was for people who were doing scientific research or engineering, so it was not some thing that you're going to play games on. It just didn't follow the main frame terminal form factor that you had seen in previous computers from IBM. So this was a very specific use computer. The idea being scientists in the field or mathematicians who needed to have a computer that they could potentially bring to another location and not just have in a big research laboratory. IBM would refine their design in two updates. There was the IBM fifty one ten and the IBM fifty one twenty. These were general office computers, so no longer scientific research machines, but office machines. They were marketed as being the machines the company would invest in in order to do stuff like accounting, or data management or word processing. IBM announced the fifty one ten in nineteen seventy eight, and it could support more peripherals than could the one that came out before it, including a peripheral called the IBM fifty one fourteen would was an external dual eight inch floppy drive, so floppy disk drive that could take eight inch floppy disks. You might not remember that there were such things. They weren't really used in personal computers. They were used in these business machines, and by the time the personal computer floppy discs came around, they were more frequently the five and a quarter size and then later on three and a half inch size. The entry level fifty one ten, which supported the Basic programming language only and had sixteen kilobytes of RAM, would cost eight thousand, four hundred seventy five dollars. But if you wanted a top of the line sixty four kilobyte machine capable of running both Basic and the a p L programming language, that would set you back fifteen thousand, seven hundred twenty five dollars. The computer had an all in one form factor. The keyboard and display were all part of the case. The display screen was still five inches and it was monochromatic, and it still relied on the processor, that circuit board processor that had twenty followed in the winter of Night, and it was another all in one machine with a keyboard and monitor all part of the same case. It also shipped with two floppy disk drives standard they accepted those eight inch floppy disks I talked about a second ago. The display, however, was larger. It measured nine inches, and the components in the twenty made the heavy heaviest desktop computer ever was a massive heavyweight. It weighed a hundred and five pounds or forty eight ms. The full computer system included not just the computer, which was technically a fifteen Model three, but also an external diskette unit and a dot Matrix printer. So the price range for that computer system, because keep in minds more than just that one computer started at nine thousand, three forty dollars, and if you wanted to completely tricked out, it would go all the way up to twenty three thousand, nine hundred ninety bucks for that computer system. Yikes. Now that line of computers at least a name would continue to the fifty one fifty PC which was released in But before that, there's another computer from IBM that I need to mention, and it was not part of the line, but was an important step toward the personal computer. And this was the System slash twenty three Data Master or just data Master for short, and I think that's an awesome name for a computer. The Data Master was the first desktop computer designed by IBM to feature a microprocessor instead of that circuit board with the Palm processor that IBM had been using. The Data Master had an Intel eight eighty five as its central processing unit. Like the fifty one twenty, it was heavy. It weighed ninety five pounds or forty three kilo rams. Now, despite the fact that it weighed so much and that it was meant for an office environment, the fact it had a micro processor and it meant that technically speaking, it fell into the category of micro computer. While IBM announced the Data Master in nineteen seventy eight, the computer didn't debut until July. IBM would announce the PC just a month later, which sort of resulted in folks forgetting about the Data Master. Between the Data Master's announcement and when it launched, something else interesting happened. IBM got a little visit from a company called Atari. At this stage, Atari had already launched the VCS game system that's essentially they hundred, and it had also launched the Atari four hundred and Atari eight hundred computer systems. You can listen to the computers that time forgot to learn more about those. Anyway. Atari made a move to suggest that it could design a computer for the home market on behalf of IBM, saying, hey, you guys are really in there when it comes to businesses and research facilities and and government installations and all that kind of stuff. If you want to get into the home higher us, we can totally build that computer for you, guys. The chairman of IBM at that time was a guy named Frank Carey, and he relaid the offer to a fellow named Bill Low that was ibm s director of Entry Systems. Low took it to a management committee and collectively they decided that this proposal from Atari was bonkers. I might be paraphrasing a little bit, but the management team also knew that the chairman was really interested in this idea, so they told Low he should go form a team, come up with a proposal for an IBM personal computer that did not involve Atari at all, and then submit that to the committee within a month. So Low went out and formed a team out of about a dozen or so engineers to work on this project. He also contacted Bill Gates and Steve Bamber of Microsoft to discuss their collaboration and a hypothetical personal computer. This was a big deal for Microsoft, which was already a successful company but stood to receive substantial benefits if IBM were to partner with them. Here was this corporate giant leader in the industry, something that had been around for essentially a century if you trace the history back to the predecessor companies at any rate, and they were reaching out to what was effectively a startup software company that wasn't even a decade old yet. Bill Gates met with a guy named Jack Sam's who was IBM's head of software development, and together they talked about the PC market. Sam's was really interested in that Gates had his finger on the pulse of that market, and he talked about the trends that were emerging in this still very young Field. Sam's reported back to Low and the rest of the team, and they put together a proposal for I b M personal computers. The proposal identified Intel as the best source for microchip processors. At the time, most personal computers were depending upon one of two major chips. There was the six zero two from Most Technologies, which was owned by Commodore, or the Z eight from Zylog. But these chips were already starting to brush up against their technical limitations, and IBM wanted a system that would not immediately be too underpowered to run the latest software. They wanted to future proof a little bit, so they went with the Intel eight chip as the CPU. This was more expensive, but it was also more powerful than the other microchips available in the market. The team also opted to go for a modular approach with the fifty one fifty. By modular approach, some people would call this an open architecture. The computer they created started as a foundation upon which the customer could build the machine he or she needed, using essentially interchangeable components. So a lot of computers that were on the market, what you saw was what you got. They might have some expansion slots and you could perhaps put some additional cards in those expansion slots, but generally speaking, you couldn't really swap out components easily. IBM wanted to go a different way. They wanted to have a sort of a bare foundation upon which you could build whatever computer you wanted. Uh. This was a really radical notion, and it meant that the customer could end up buying a computer graphics card that would support color graphics, or maybe they wanted to save some money or have a higher resolution so they go with a monochromatic video card. They would have the option to do that with IBMS approach, they weren't forced down one path or the other. The same was true for how much RAM the computer would have, the type and number of storage drives attached to it, and more. This proposal got the official approval, and then the team was hit by a very tough deadline. They were told to get a product ready for the market within a year. The team sourced many of these parts from other companies. Now that sped up their process considerably. If they had tried to develop all the different components within IBM, they never would have made that year deadline. They were also given a ton of autonomy as a Business Group. IBM had recently instituted this new strategy called independent business Units, in which teams within such units could operate almost like they were a separate startup company, and IBM was kind of acting like a venture capital funding source, like they were actually providing the money for this unit to get work done, but the unit itself would be very much autonomous in the decisions that would make The project got a code name called Project Chess, and the personal computer's code name became the Acorn, which had no relation to the actual personal computer on the market that also was called Acorn. One thing that stades a challenge to the team was the matter of which programming languages and operating systems should this machine support. Now Sam's, the head of software development, knew he wanted support for Basic and Microsoft was the most well known and reliable name in various flavors of Basic. It wasn't that Microsoft was the only purveyor of Basic, but they were the go to. So Sam's went back to meet with Bill Gates and talk about working with IBM on this project and essentially officially saying we're going to make an IBM personal computer, which was no big surprise at that point, everyone at Microsoft had figured this out. They had also all been made to sign various nondisclosure agreements so they couldn't talk about it, but it was a big deal for Microsoft. And then Sam said he was also interested in the disc operating System or DOSS known as CP slash M because it supported a lot business oriented software. So remember I mentioned there were two different major microprocessors and personal computers at that point, there were six five O two processors and Z A D processors. CPM disc operating system was compatible with the z A D processor, but not the six five O two and also not the eight from Intel. But it did already have a great deal of business software that had been programmed for that operating system. So there were a lot of different companies out there that depended on those various software packages. They needed a computer that could run that, so IBM definitely wanted to make sure that their computer was going to be compatible with that kind of software. They wanted to have that that foundation there so that it would be easier to sell these computers to potential customers. Sam's thought originally that Microsoft owned CP slash M because Microsoft had shipped copies of that operating system along with a hardware chip one of the few pieces of hardware that Microsoft actually was involved with, and that was called the soft card. The soft card was designed for the Apple Too. The soft card had a z A D CPU on it that was compatible with that disc operating system CP slash M. Now, again, Apple's microprocessor was a six five oh two from most technologies, it was not compatible with this version of DOSS. But if you were to slot in a soft card into an Apple to expansion slot, then you could boot into the machine using the z A D CPU instead of the Apple's normal CPU, and then you could run this version of DOSS just fine. And that meant that the Apple Too would become a really powerful computer because not only could you run it for all the applications that were designed specifically for the Apple, which involved a lot of educational software and games, you could then boot it into this other form and then you could run business software on it. It made the Apple to really, really attractive, and that's one of the reasons why it maintained its position in the market for so long, even though it was running on an increasingly aging microprocessor. Well, IBM one of this too, but they couldn't just run CP slash M DOSS on their machines. They needed to be able to get a version of this DOSS that would be compatible with the microprocessor they were using, the eight from Intel. But then they found out that Microsoft didn't own this operating system at all. They had actually been licensing the operating system from another company called Digital Research. At first, IBM tried to work out a deal with Digital Research to license the operating system for IBM s personal computer, but there were various breakdowns in negotiations, and exactly what happened is not entirely clear because the various parties that were involved have conflicting accounts, like wildly conflicting accounts of what actually happened. In the end, IBM left Digital Research without an agreement in place to have that cpf CP slash M DOSS running on their machines, and Sam's was desperate to find an alternative. Now, IBM was not the only party interested in creating a disc operating system that was compatible with this Intel eight eight chip. There's another guy named Tom Paterson of Seattle Computer Products. He had the same problem. He wanted to create a version of this DISC operating system that would work on an Intel eight or eight eight six based computer. The company you worked for, Seattle Computer Products, was a frequent collaborator with Microsoft. So Paterson goes to work on creating this disc operating system that would run on Intel chips. And he took the reference man ULL for the CP slash M version of DOSS, and then he reverse engineered DOSS for these other microchips. He said, well, here's what this version of DOSS does. How can I do that for this other type of microprocessor. He called his build q DOSS that stood for a Quick and Dirty operating system. Peterson actually would reach out to Bill Gates. He had no idea that Gates have been talking to IBM at all. He didn't know that IBM was interested in making a personal computer. He just wanted to talk to Gates about this new operating system he had built in the hopes that Microsoft might show interest in developing software for the operating system, so that way it would create a demand for this version of the OS, and then he would be able to sell this version of the OS to other companies. Gates saw q DOSS as the solution for ibm s woes, but he didn't let Peterson know about it. He report it ly contacted Sam's over at IBM and asked him if Big Blue that's the nickname for IBM, wanted to purchase this operating system for themselves or if Microsoft should look into it. And Sam's made a call that would end up being both the beginning and the end of IBMS foray into personal computing. He said, you guys take care of it. Whoof In retrospect, this, paired with the decision to go with off the shelf components, is the reason why IBM is not still in the personal computer market. If IBM had bought the operating system, this story would be incredibly different. Instead, Microsoft ultimately would get it. Now explain why this ended up creating the PC world we have now and just a little bit, but ultimately Microsoft would be responsible for delivering an operating system and support for four programming languages for this ran new IBM personal computer, and now those languages were Basic, Cobal for Tran, and Pascal. They also promised to make software for this new computer system and give it a bit of a library upon launch, since a home computer is ultimately only as useful as the software it has at its disposal. In return, IBM would pay a licensing fee to Microsoft, giving a portion of each sale to Microsoft as a royalty. The two companies made their partnerships formal by signing a contract on November six. By this time, people like Low and Sam's have been moved to other projects inside IBM, and there was a new leader of Project Chess who was brought on at this stage. This is one of those other issues that IBM had at times where it was such a big company and there were so many different things going on that often people would get shuffled around. And sometimes that was great. Sometimes it was exactly what a project needed in order to get a boost of energy and keep going. In other cases it created a moment of chaos where everyone had to figure out what they were doing and where they were going, and how their actions were going to affect the overall projects. So it was very complicated. Meanwhile, Gates was working on a deal that would end up benefiting Microsoft at the expense of both IBM and s c. P. Peterson still did not know that Gates was talking to IBM at all, or that IBM was interested in q Doss. He had continued to work on the operating system himself independently, and he had refined it, and he also renamed it. It was no longer the Quick and Dirty operating system. It was the eighty six DOSS, named after the eight eight six Intel chip with which the operating system was compatible. It was also compatible with because they were built on similar architectures. Microsoft proposed a deal with SCP. Microsoft would go out and get clients for the eight six DOS operating system and they would pay SCP a ten thousand dollar licensing fee per agreement, or fifteen thousand dollars if the agreement included the source code for eight six DOSS. Microsoft also made a ten thousand dollar investment in SCP, so SEP agreed. They did not know that Microsoft had only one license in mind, and that was IBM. SCP thought that Microsoft had lined up a whole bunch of different clients and then they were just gonna see license fee after a license fee roll in. But Microsoft really just had one. So for twenty five thousand dollars, Microsoft got access to the operating system that IBM desperately wanted. Eventually, Microsoft would hire Peterson away from SCP, and at that point when he moved over to Microsoft, he was finally let in on the secret that IBM was the big client. He also began to edit eighty six DOSS according to some changes that I b M wanted in the operating system to make it closer to the CP slash M DISC operating system that they had wanted in the first place, which Peterson was not crazy about. He did not like the idea of making his product even more like a thing that some people would accuse him of stealing. Later, a magazine called info World published an article in June night one, a couple of months before IBM made the big announcement about this personal computer, and they they leaked the project. Someone had clearly talked to a person over an info World and in the piece the author said that IBM planned to show off the PC in July, which turned out to be wrong. IBM wasn't ready until August, but the data Master did come out in July one, and that caused a bit of confusion because people thought, oh, this must have been the computer. The info World mentioned it wasn't, but it was in some ways similar to the IBM PC, and that it was the first of IBMS micro computers to actually have a micro processor on it. Meanwhile, back at SCP, that company was reeling. They were facing hard times. They were only getting They had only received ten thousand or twenty dollars total from Microsoft for the licensing fees. They The string of fees they had expected to collect didn't happen. Also, Paterson had left the company, so they're head software developer was gone. The hardware they were making was not in demand, so they were really having a hard time. Gates made an offer that the company could not refuse, which was Microsoft would purchase the eight six DOSS operating system outright for fifty thou dollars and then grant SCP and exclusive license for the operating system. SCP was in no real position to negotiate, and they agreed to this deal, which essentially flipped things between Microsoft an SCP. Microsoft became the sole owner of eight six DOSS, which the company quickly rebranded and called MS DOSS. So if you've ever heard of an MS DOS machine, technically that was a machine that was running an operating system that had been developed by a totally different company that was just tightly coupled with Microsoft. Now I have more to say about the IBM PC and how that led into the IBM compatible and clone era in just a minute. But first let's take another quick break to thank our sponsor. As the IBM PC got closer to an official release, Digital Research set, hang on that MS DOS operating system you've got there looks an awful lot like r CP slash M operating system. So there was even the possibility of legal action coming up. Digital Research was looking at the post ability of suing Um, Microsoft and IBM. Now IBM was able to soothe the company by stating that they were still interested in licensing a version of CP slash M that was compatible with the micro processor and said, hey, hey, if you just make a version of the thing you make that works on the computers we're making, we will totally pay you. And Digital Research was reassured and said it would do that, it would deliver upon that request, and this would make the IBM PC have four potential operating systems, which is pretty crazy. The basic model of the IBM PC, as it was finally announced in August one, cost one thousand, five hundred sixty five dollars That included a machine with sixteen kilobytes of RAM and a floppy drive, and it would run basic hosted in the computers read only memory or ROM. Now, if you kick it out an IBM fifty one fifty two its full potential, it would cost closer to six thousand dollars. This is pretty much how PCs shake out today. You typically have a spectrum of options you can choose from, starting with the entry level and working up to LEAT status. On launch, you could opt to have MS DOSS or u c SD Pascal loaded onto your machine for an extra fee. That CP slash M operating system from Digital Research would lag behind for six more months before it was finally available for the platform, and when it did become available, IBM was offering it for the princely sum of two hundred forty dollars. That would lead Digital Research to say, hey, you were pricing us out of the market because MS dos cost like forty bucks. You probaced us at two hundred forty, so you were specifically doing it so that people wouldn't buy our stuff, but they would buy MS DOSS. IBM said, no, that wasn't why we we set the price at that level. Your licensing fees were so high that that was the level we had to charge if we wanted to make any sort of profit, and this argument went back and forth. It never really got nice. It was pretty acrimonious. The market would play out in such a way that MS DOS would eventually become the clear front runner of those four operating systems. Moreover, Microsoft, because of its ownership of ms DOSS, could license out that operating system to other computer manufacturers, not just IBM. Not all of those computers would have software or hardware compatibility with IBM machines, So that makes things a little more confusing. So you had IBM compatibles and IBM clones, but you also had other computers that were running ms DOS, but we're not technically compatible with IBM machines. And IBM had relied so heavily on off the shelf components that minute was possible to recreate, at least from a hardware perspective, the IBM personal Computer. You could go out if you were a manufacturer, and you could get the AI pieces, the same components that IBM was using because they were using so many off the shelf components, and you could build your own version of what the IBM PC was. There was one thing that IBM had going for it that was proprietary and that was the basic Input output system or BIOS. This is sort of the the base level where the various input and output components of your computer communicate with the computer's processor, so things like you know, all the basic stuff. Every way you put information into the computer, in every way the computer sends information back to you, it passes through this layer. And IBM had its own BIOS, so that was one thing that differentiated it from all other competitors on the market, and that was proprietary. However, numerous companies decided they wanted to try and create a clone of IBM PCs, so they started to reverse engineer the BIOS in order to create their own computers would run similar to the IBM pc US. Courts in general have ruled that reverse engineering is not the same thing as copying. Copying involves getting access to the source code of something and then line by line copying it down so that you have your own version. That's illegal. That's considered intellectual property theft. You're you're violating copyright. But if you see a program and you see what the program is doing, like you see what the output is, and then you try to create your own software that does the same thing, like you put the same input in and you get the same output back. If you do that on your own without copying the original, then you could say, well, yeah, I get the same result, but I did it my way. I didn't I didn't copy anyone else, and u S courts in general have said that's legitte. If you reverse engineer what someone else has done and you're not copying them, like you didn't actually go in and look at how the nuts and bolts work, then that that can stand in the market. That doesn't count as copying. Computers like the Commodore sixty four and the TRS e D we're aging out of the market at this stage. The rise of the IBM PC and Microsoft's ability to create software for the platform made the IBM PC a much more powerful competitor. They just the fact that they were having software that was appealing not just to the home user but two businesses made it a really attractive computer platform. Computers like the Tandy two thousand, which could run ms DOSS, were not fully compatible with IBM PCs and really could only run a subset of the same programs that IBM machines could, and that was largely due to micro process or architecture, so IBM had decided to go with the eight. Now that that had some limitations to it, other companies decided, hey, we can compete with I b M by using faster microprocessors, and those will be able to support more RAM than IBM S machines can, and therefore we can make computers that have better specs than IBM does. The problem was the operating system MS DOSS was compatible with those less powerful chips, but not necessarily compatible with more powerful chips, or at least not to the level where you could run all the different types of software. So yes, you would technically have a computer that was more powerful than the IBM PC, but you would have fewer examples of software that you could actually run on that computer, so it's utility was not as great as the IBM PC. In this way, IBM was able to set the standard for what a PC was. Uh As IBM went that way, so did Microsoft with their MS DOSS revisions, and IBM set the pace. So for a while that was the case. It was that IBM was the de facto standard, and other companies would try and make computers that met that standard. But we're less expensive or had some other differentiator that would make them more attractive than IBM's official machines. It didn't help that IBM made a couple of mistakes along the way, where there were a couple of personal computers that ended up getting really bad reviews. But a lot of IBM machines were really good machines. They were also fairly expensive machines, but they again, that was the company that got to set the tone and everyone else had to sort of play along. Tandy was not one of those companies. Tandy was creating computers that were technically superior in many ways to the IBM machines at the time, but again they suffered for it by not being able to run as much of the software, so it ended up not helping Tandy in the long run, and they would eventually get out of that game. Still, more and more manufacturers began to create computers that followed ibm s lead, and that created a full industry of IBM clones or compatible So if you've ever heard the term IBM compatible, what that meant was it was made by a company that was not IBM, but using similar hardware and software and bios that would allow it to run the same software that would run on an IBM machine. And because IBM had used all these off the shelf pieces, and because people could reverse engineer the bios, and because MS DOSS could license or Microsoft rather it could license ms DOS to any company it wanted to. Because IBM to not own the operating system, it meant that IBM had managed to create its own competitors in the marketplace. This was great for the end consumer. If you were someone who was shopping around for a computer, it was great because there were a lot of different opportunities out there that had really affordable machines that could run similar programs to IBM s. But it was not so great for IBM. If they had maintained ownership of the operating system, it would have been an entirely different story. IBM would have not just set the tone, they would be the dominant factor in personal computers because they'd be the only game in town that could actually use that operating system. Someone else would have had to have come up with a different operating system that was at least as good, if not superior, to MS DOST in order to have made that a more competitive space. But IBM didn't have that. Microsoft had it, and of course, for Microsoft, it made way more sense to license out MS DOSS to any company that was capable of running it, because that you could just make money from multiple customers. So Microsoft was making out like a bandit compared to IBM. IBM would end up staying in the PC market for several years, but their choices meant that it was tough to create products that had good profit margins and good enough sales to justify that that industry, And in two thousand five, IBM ultimately decided that it had had enough and it's sold off its PC businesses to Lenovo for a cool one point seven five billion dollars. And at that point IBM said I'm out. But the architecture they had created, the MS DOWS and then later on Windows operating system platforms, had defined what PCs were, and to this day, most computers you find out there follow that modular architecture that IBM set up, where you can mix and match pieces even to the point where you can build your own machine. You can buy all the individual components and build your own computer, and then you just have to get the operating system, which means typically that you're getting like Microsoft Windows. You could go with a different operating system if you wanted to, but you probably wouldn't refer to that machine as a PC, because again, we typically use PC as shorthand for a Windows based machine, or if you're talking about the old ones and MS DOSS based machine. And that's it. I have finally come to the end of this, this long journey talking about the early days of personal computers and why it looks the way it does today. Why it is that you have the Windows machines on one side, the Macintosh machines or the Max on the other side, and not a whole lot of other stuff in the middle. Again, you have your Linux distros and some other operating systems that are out there, but your two big players are mac and uh, the Windows based machines. And that's this is the reason why. It's because IBM had to find this standard in N one, and other companies were able to follow along with that standard and slowly chip away at IBM to the point where the massive company said, you know, it just doesn't make sense for us to be in this market anymore. We can't really compete at a level that is truly profitable, so let's get out, and they did. I hope you guys enjoyed this series of episodes, and our next episode, we'll be talking about something totally different. I'm gonna follow up on a company that I did a series of episodes about in the past, but it's been a couple of years since I've talked about them, so we're gonna catch up and find out what Nintendo has been up to since two thousand sixteen. So tune in for that one. If you have suggestions for future episodes of tech Stuff, send me a message. You can send it to my email address for the show that is tech Stuff at how stuff Works dot com, or drop me a line on Twitter or Facebook. The handle for both of those is tech Stuff hs W. Don't forget to follow us on Instagram, and of course you can watch me record shows live on twitch dot tv slash tech Stuff. Jump in there, join the chat room. I look forward to seeing you and I'll talk to you again really soon. For more on this and thousands of other topics. Is that how stuff Works dot com, wh whe