The Dramatic Story of How IBM PC Was Born!

The year is 1976. Apple's two Steves (Jobs & Wozniak) introduced Apple I to the markets. It was a PC that the end consumer assemble. You had to add a keyboard, power supply among other components to the motherboard). From a consumer point of view, PC was still a fad.

Steve Jobs and Steve Wozniak started Apple Computers on April Fool's Day in 1976.

Image Credits: The First Computer

1977 changed that. Apple II was the first PC that the end customer did not have to assemble herself. And heck it was color computer with expansion slots and floppy disk support. A VERY BIG DEAL back then.

The Entry of IBM Into the PC Business

IBM was not serious about PC and did not really think there was anything 'personal' about the computer. IBM was content being the monopoly in the Corporate Mainframe Computers. But the tide started changing in late 70s. Its share of the overall computer market had declined from 60% in 1970 to 32% in 1980. IBM no longer was the 'apple of media's eyes'!

 In 1979 Business Week asked, "Is IBM just another stodgy, mature company?"

With its stock price declining by 22% in 1981, as reported in the New York Times: IBM was no longer a dominant player in the Computer business.

IBM wished to avoid the same outcome with the new personal computer industry with the advent of Apple, Commodore International, and other players in the market. But as happens with large organizations, IBM's leadership had a huge problem looming in the face: they were too big (IBM had over 340,000 employees in late 80s) and bureaucratic when it came to making decisions. And they wanted something 'now!' And a startup within IBM was born led by Philip Don Estridge.

Estridge was tasked to build a PC that would directly take on Apple and other perceived IBM competitors. Estridge had to deliver the IBM PC in time for IBM to start making inroads in the the 3 billion dollar PC industry only still in it's third year. The countdown had begun.

And to achieve the lofty goal set by his bosses at IBM, Estridge did something that was very never before done at IBM: to use non-IBM components in building the IBM PC.

Estridge's decision to rely on third party vendors in building the hardware and software for the IBM PC would dramatically change the computer industry, resulting in a vast increase in sales of personal computers, thus creating an entire industry of hardware manufacturers of IBM PCs.

And thanks to Estridge's decision of not building everything from the scratch, the in-house team at IBM was up and ready with the hardware for IBM PC in 1980. Now all they needed was the Operating System. Welcome Bill Gates.

In Picture: Bill Gates. Image Credits: Getty Images

IBM approached Microsoft to build the OS for their PC. Bill Gates, the 25 year old geeky programmer did not have the OS and as much mentioned it to IBM's visiting team. He pointed them to another lead Gary Kildall who would miss the meeting and the frustrated team would visit Gates the second time. And this time he knew Microsoft was on it's make or break moment of it's existence. Gates assured the IBM team that he would have the OS built and sent over in time for IBM's PC release.

In Picture: Gary Kildall. Image Credits: Computer History Museum

The fact was Gates did not have an OS! So the opportunistic Gates went down to another company which had an OS called 'Q-DOS' short for Quick and Dirty Operating System coz it was a direct rip off the CP/M OS built by Gary Kildall who Gates first sent the IBM team to. IBM renamed the OS to 'MS-DOS' short for Microsoft Disk Operating System.

IBM asked Microsoft to build the OS for it's PC. Bill Gates did not have the OS. But being the ambitious 25 year old developer he said he could build one. And went down the road and bought the OS from another company for $75,000. Hello MS-DOS!

Image Credits: B2 Solutions

IBM shipped it's PC with MS-DOS in Aug 1981. They predicted sales of over 250,000 PCs. Boy they were so wrong! IBM ended up selling over 2 million units in the next two years and overtook Apple as the world's largest PC manufacturer. It was IBM that made the computer personal and 'PC' a household name.

Image Credits: ExtremeTech

All thanks to one small team within IBM and the man behind it all: Philip Don Estridge - the father of IBM PC who would later be offered a multimillion-dollar job as President of Apple Computer by Steve Jobs, which he turned down.

Philip Don Estridge, the father of IBM PC turned down Steve Jobs' multimillion-dollar offer to head the Apple Computer.

In Picture: Philip Don Estridge. Image Credits: Computer Hope

Written By: Rajesh Jagadish Bhattad

Sales Operations Specialist, Plivo Inc.

Sources:

ColdFusion
Lowendmac dot com

Wikipedia
Livescience dot com

Computer World
Cult of Mac

The Register
Pophisorydig dot com