Below is the transcript of a television documentary on the birth of the
personal computer. It was broadcast in the United States on public television
in 1996. For biographies, an annotated timeline, and additional information,
visit:
http://www.pbs.org/nerds/
kelly
THE TELEVISION PROGRAM TRANSCRIPTS:
Hi, I'm Bob Cringely - and I'm here to tell you the incredible story
of how personal computers took over the world. Why am I telling you
this at a basketball game? Well, I like the game - but mainly it's
because of that guy down there. His name is Paul Allen and everything
you see here belongs to him -- the Portland Trailblazer's basketball
team, their arena, even the dancers. Thanks to personal computers, he
has $8 billion to spend on such toys. Twenty years ago Allen and his
high school friend, Bill Gates, were running a two-man software
company called Microsoft. Today Allen is richer than God and Gates is
richer than Allen. Twenty years ago, young men like Paul Allen and
Bill Gates invented the personal computer and in doing so launched a
revolution that's changed the way we live, work and communicate. It's
hard to believe that twenty years ago there were no personal
computers, now it's the third largest industry in the world, somewhere
between energy production and illegal drugs but the most amazing thing
of all is that it happened by accident because a bunch of
disenfranchised nerds wanted to impress their friends. This is the
story of how a handful of guys launched an industrial revolution. How
they changed the culture of business, how they made history.
Steve Jobs
Co-founder, Apple Computer
Worth $1 billion
I feel incredibly lucky to be at exactly the right place in Silicon
Valley, at exactly the right time historically where this invention
has, has taken form.
Steve Wozniak
Co-founder Apple Computer
Worth $200 million
It wasn't like we both thought it was going to go a long ways, it was
like, we'll both do it for fun and even though we're goin' to lose
some money probably we'll just have been able to say we had a company.
Bill Gates
Co-founder, Microsoft
Worth $13 billion
Now all of us would get together and just hope we were right that the
PC would become a big thing.
Steve Ballmer
Vice President Microsoft
Worth $3 billion
You know I stop and say wow the PC really has become part of the very
fabric of the way people live and we certainly surged with it. I used
to stop and say hmmm pretty incredible ride.
Most of these people come from the place I call home, the Silicon
Valley, south of San Francisco, California. Growing-up here near the
electronics companies that give the place its name, these founders of
the PC revolution were for the most part middle class white kids from
good suburban homes. But it's not their homes we're interested in --
it's their garages. This is my garage and this is all my junk. I'm
probably one of the few guys in Silicon Valley who actually has room
in his garage for a car, most everyone else seems to use theirs to
start computer companies and create great fortunes, but I don't have a
fortune - I'm a failure, I've written computer programmes that almost
ran and I've designed and built hardware devices that frankly didn't
work at all but I'm the ideal guy to tell the story of the personal
computer business because I'm its premier gossip columnist and
everyone tells me all their secrets. And this is my home where I write
a gossip column for a computing magazine. Sorry about the mess.
Institutions in constant change like the PC industry are driven by
rumor and gossip and I thrive on both. My electronic mail address is
deluged with inside information about everything from product flaws to
who's sleeping with whom. What ties these gossipers together is a
desire for truth. These people and their love of technology have
fueled the PC revolution. To understand them is to understand that
revolution. So let's go find some.
Meet Edwin Chin on a Saturday morning at the Weird Stuff Warehouse.
This could be 1976 or 1996 because there is always a new generation of
techies like Edwin who hear the calling. Most other kids are watching
TV, but not Edwin.
Edwin: You know I've been interested in electronics and technology as
a hobby since I started when I was like six or seven you know.
Q: How old are you now, Edwin?
A: Ten, right now.
It's no coincidence that the only woman in the vicinity looks bored,
because this is a boy thing -- the obsession of a particular type of
boy who would rather struggle with an electronic box than with a world of
unpredictable people. We call them engineers, programmers, hackers,
and techies, but mainly we call them nerds.
Douglas Adams
Sci-fi author
I think a nerd is a person who uses the telephone to talk to other
people about telephones. And a computer nerd therefore is somebody who
uses a computer in order to use a computer.
Christine Comaford
CEO Corporate Computing Int.
And people have different degrees of passion and different types of
passion. Some people like just live databases, like 5th normal form is
just like nirvana, they just quest for it you know, that's like what
gets them up in the morning.
Q: What do your friends think of you?
Edwin: Boy, he's a nerd. Yeah, but I don't mind, I'm used to being
called a nerd, can't have other people stop your dreams.
And in Silicon Valley the dream is to grow up to become a boy like
this.... Graham Spencer is chief programmer for Architext Software --
six guys who graduated from Stanford University and started a company
just because they like each other. This is a modern-day startup, but
at heart it's no different from PC pioneers like Apple, or Microsoft
-- nerds who share a dream. Their hobby is their business and the
culture they've created is identical to that of a thousand other
technology companies. First, they dumped the idea of nine to five. In
this industry, you can work any 80 hours per week you like.
Mark Van Haren
Programmer, Architext
And then I've got my cap which I use to cover my eyes and (Oh yes)
sleep in the early morning while everybody is coming in.
Bill Gates
We didn't even obey a 24 hour clock, we'd come in and programme for a
couple of days straight. We'd - you know, four or five of us, when it
was time to eat we'd all get in our cars, kind of race over to the
restaurant and sit and talk about what we were doing, sometimes I'd
get excited talking about things, I'd forget to eat, but then you
know, we'd just go back and programme some more. It was us and our
friends - those were fun days.
Mat Hostetter
Programmer, ARDI
BOB: Let's look in the refrigerator. Woah! We have coke and cold
pizza.
MAT: I drink about two litres of coke a day.
BOB: Two litres of coke a day and do you like think of it as brain
food?
MAT: It keeps me going you know, that and listening to heavy metal,
and get caffeinated and hack.
Steve Wozniak
I'd sit down in my room on the floor with sheets of paper spread all
around with my computer design I was working on. And always I noticed
that I was up pretty late at night and I had lots of cokes - it's just
part of that life.
Doug Muise
Software designer
A combination of stale pizza and body odour and spilt cola kinda
ground in to the rug.
Joe Krause
President Architext
I brought some spaghetti to work and then forgot to wash out the
container for the last couple of days, maybe six or seven if I had to
be honest. Ooh, that smells bad.
Doug Muise
Eating, bathing, having a girlfriend, having an active social life is
incidental, it gets in the way of code time. Writing code is the
primary force that drives our lives so anything that interrupts that
is is wasteful.
What is it about the internal logic of a computer that's so enticing?
For one thing, such logic CAN be understood -- as opposed to things
that can't be understood at all, like the motivations of young women,
say, or of the French. Let me explain....Time for the Cringely crash
course in basic computers, Part 1. This is a mainframe computer - all
of these cabinets are one machine. In the old days all computers were
this size they were tended by engineers in white coats a kind of
priesthood who took their jobs very seriously. Now all computers work
pretty much the same, whether it's a giant that serves two thousand
users like this one, or a little notebook that serves only me. They
process numerical data - adding, multiplying, comparing, - the fact is
if you can quantify it a computer can handle it. It's the emotional
stuff they don't know what to do with. The data must be put into a
special binary code consisting only of ones and zeros. And you have to
give the computer instructions, also in code, to tell it exactly what
to do wth the data and in what order. These instructions are called a
program. In the early days, you put in the instructions by flipping
switches or loaded them from paper tape. This was called machine
language. It made computers a pain to use. Even worse, every type of
computer spoke a different machine language. The ENIAC could compute
the thirty second trajectory of a shell in twenty seconds. Operators
required two days to program it do so. Then a US Navy captain named
Grace Hopper solved the problem. She invented a computer language,
English words that the computer itself could translate into binary
code. Now users could type whole lists of instructions into a computer
rather than flipping those damned switches. Like most things having to do
with computers,that first language had a silly name - COBOL. It was
followed by other languages like FORTRAN and BASIC and they all made
computing just a bit more user-friendly. So when some nerd tells you
he's been up all night programming or writing software or hacking
code, what he really means is he's been typing long lists of
instructions into his computer. Mainframe computers were far from
personal. They sat in big air-conditioned rooms at insurance
companies, phone companies, and the bank, and their main function was
to get us confused with some other guy named Cringely, who was a
deadbeat and had a criminal record. Eventually computer terminals did
begin to appear in some schools, but most of us paid no attention. But
there was usually one kid who did pay attention, falling in love with
the digital purity of those ones and zeros. He was the nerd.
Steve Wozniak
And I took this book home that described the PDP 8 computer and it
just...oh, it was just like a bible to me. I mean, all these things
that for some reason I'd fallen in love with, like you might fall in
love with a card game called Magic, or you might fall in love with
doing crossword puzzles or something else, or playing a musical
instrument, I fell in love with these little descriptions of computers
on their insides, and it was a little mathematics, I could work out
some problems on paper and solve it and see how it's done, and I could
come up with my own solutions and feel good inside.
Steve Jobs
So you would keyboard these commands in and then you would wait for a
while and then the thing would go dadadadadada and it would tell you
something out but even with that it was still remarkable - especially
for a ten year old, that you could write a programme in Basic let's
say or Fortran and actually this machine would sort of take your idea
and it would sort of execute your idea and give you back some results
and if they were the results that you predicted your program really
worked it was an incredibly thrilling experience.
Nerds wanted their own computers right from the beginning, but it took
a technological breakthrough to make that possible. This is it the
chip the microprocessor, this is what allows you to have a mainframe
computer on your desk. In the 1950s mainframes were as big as this
garage and that's because they were filled with thousands of these -
vacuum tubes or valves. Eventually the valves were made much smaller
and replaced with transistors - still too big however to make a
computer that could fit on your desk. What that took was further
miniaturisation. Here we have a single piece of silicon etched with
thousands of transistors. This microprocessor holds more than a
million transistors and that's the secret of the personal computer and
that's why they call it silicon valley not computer valley. These are
the people who invented the microprocessor -- Intel. Intel was started
28 years ago by a handful of guys after a row with their old boss.
Their microprocessors today power 85 percent of the world's computers.
Intel not only invented the chip, they are responsible for the
laid-back Silicon Valley working style. Everyone was on a first-name
basis. There were no reserved parking places, no offices, only
cubicles. It's still true today. Here's the chairman's cubicle.
BOB: Knock, knock I knocked at the door but there's no door. Gordon
Moore is one of the Intel founders worth $3 billion. With money like
that, I'd have a door.
Gordon Moore
Co-founder, Intel
In a business like this the people with the power are the ones that
have the understanding of what's going on, not necessarily the ones on
top. And it's very important that those people that have the knowledge are
the ones that make the decisions. So we set up something where
everyone who had the knowledge had an equal say in what was going on.
Intel's microprocessors kept getting more powerful. By 1974 they came
out with the 8080, which had enough horsepower to run a whole
computer. Only Intel didn't appreciate the brilliance of their own
product, seeing it as useful mainly for powering calculators or
traffic lights. Intel had all the elements necessary to invent the PC
business, but they just didn't get it.
Gordon Moore
Looking back I know of one opportunity where an engineer came to me
with an idea for a computer that would be used in the home. Of course
it wasn't yet called a personal computer. And while he felt very
strongly about it, the only example of what it was good for that he
could come up with was the housewife could keep her recipes on it. And
I couldn't imagine my wife with her recipes on a computer in the
kitchen. It just didn't seem like it had any practical application at
all, so Intel didn't pursue that idea.
This is the chip that launched the personal computer revolution. This
is the magazine that announced it. In January 1975 featured on the
cover was the world's first personal computer the Altair 8800. It was
the crazy idea of an ex-airforce officer from Georgia - Ed Roberts.
Ed Roberts
Founder, MITS
If you look at it you know it was kind of grandiose almost
megalomaniac kind of scheme you know and right now I couldn't do it
because I could see right off there's no way you could do this. There
isn't any way you could do this. But at that time you know we just
lacked the eh the benefits of age and experience. We didn't know we
couldn't do it.
BOB: Jesus Eddy a Silicon Valley garage has nothing on you.
EDDY: Everything you want to know about the microcomputer is probably
in here in one form or another.
Here's the garage of Eddy Currie -- Ed Roberts' best friend. Eddy was
present at the creation of the personal computer. Eddie also seems to
have never met a piece of old computer junk he didn't like.
Eddy Curry
A lot of the audio tapes Ed and I used to send back a forth to one
another in order to keep our phone calls down and one of the tapes,
one of the tapes I found he got into discussion about the future as he
saw it and what his dream was for the Altair. At that time it had not
been named it was just called a computer ehm, but it was some very
interesting stuff and certainly showed the kind of vision he had.
20 years after Ed Roberts' flash of brilliance, this exhibit is being
held to celebrate the anniversary of the Altair. Like every other PC
pioneer, Ed built his computer just because he wanted one to play
with.
Ed Roberts
There were some of us that lusted after computers really at that time.
All the computers in the world tended to be in big centres and you had to
get permission to get close to them, and you know, nobody had
access to computers. And the idea that you could have your own
computer and do whatever you wanted to with it, whenever you wanted
to, was fantastic.
And where was this all happening? It was far from Silicon Valley,
Intel, or IBM. Out in the desert near the airport in Albuquerque, New
Mexico, Ed Roberts ran a calculator company called MITS. Having an
ugly building wasn't it's only problem - MITS was going bankrupt.
Nobody was buying calculators and Ed needed $65,000 just to stay
afloat.
Ed Roberts
And we went to the bank, we had a late night meeting and the issue was
whether we closed MITS down or they loaned us an additional sixty-five
thousand and I was asked how many machines that I think we would sell
in the next year after it was introduced, and I said eight hundred,
which was considered a wild-eyed optimist at that. Within a month
after it was introduced we were getting two hundred and fifty orders a
day.
The Altair wasn't even a computer, it was a computer KIT. Wow this is
a pretty well equipped machine. You had to build it yourself and even
then it usually didn't work. Still, the demand was amazing.
David Bunnell
Founder PC World and Mac World Magazines
There were actually people that came to MITS, a couple of people with
camper trailers and camped out inthe parking lot waiting for their
machines. I mean, they were so eager.
Eddy Currie
I mean I think everybody had sort of daydream, Ed Walter Mitteyed
about owning a computer. The surprise was that it would be possible
for the average college student, for example, who was living on bare
subsistence, to actually buy a computer.
David Bunnell
This is what really amazed me was that people were so - there was a
sort of pent up demand for having your own computer.
Eddy Currie
And if it could be that cheap what a wonderful thing.
This is an Altair computer - the first personal computer. And not just
any Altair - this is Altair serial number 2, the second one made. The
first Altair made was sent off to be photographed at a magazine and
was lost in the mail. So this is the oldest personal computer in the
world. Pretty historic junk but the question is what do you do with
it? I mean it has a front panel with switches that you can click back
and forth and some lights but in the back there's no place to connect
a keyboard, there's no place to connect a monitor, there's no place to
connect a printer, in fact there practically nothing at all that you
can really do with this thing but back then 1975, the people who had
it were thrilled. The nerds formed clubs to talk about their new toy.
One of the first was the Homebrew Computer Club, which met on
Wednesday evenings in a hall rented from Stanford University in
Silicon Valley. Presiding over near-anarchy was Lee Felsenstein who
pretended to be in charge.
Lee Felsenstein
And I would start the meeting by making a horrendous loud noise
because everyone was talking and I had to get some attention somehow.
And I would use it to call upon the person in question. I'd make
threatening gestures with it. Most of us were in the electronics
industry to a certain extent, there was also a stratem of physicians
and there were a lot radio amateurs for instance finding a new
technology that wasn't stale. But most of us were at a sort of middle
level or downwards. We saw ourselves as crazed ignored geniuses or
possibly geniuses but at least we could each hope to get our hands on
a computer of our own.
The very uselessness of the Altair is what drove the hobbyists
together. Roger Melen and Harry Garland started an early computer
company. They came here to meet others and to figure out just what the
heck could be done with this new toy -- a solution in search of a
problem. There's no keyboard that I can see. The Altair was tedious to
use. At first, the only way that data and instructions could be given
to the computer was by flipping switches. Take something trivial like
2+2. Each 2 needed eight different switches to be flipped, then a
ninth switch was used to load them all. 'And' required another nine
switches. The answer 4 was if the third light from the left turned on.
Eureka!
Roger Melen
So if you had a program that was a hundred bytes long you had to go
this procedure a hundred times to load that in the memory.
HARRY GARLAND: It took a long time.
BOB: I bet it did and what happened if you lost power or if you lost
your way in the middle?
HARRY GARLAND: You cried.
The Altair may have been frustrating, but it drove the nerds to
experiment, finding real uses for the useless box, turning it from a
curiosity to a computer.
Lee Felsenstein
Steve Dumpier set up an Altair, ehm laboriously keyed a program into
it. Somebody knocked a plug out of the wall and he had to do that all
over again but nobody knew what this was about. After all, was it just
going to sit and flash its lights? No.
Roger Melen
You put a little eh transistor radio next to the Altair and he would
by manipulating the length of loops in the sofware - could play tunes.
Lee Felsenstein
The radio began playing 'Fool on the Hill'....Da da da, da da
da....and the tinny little tunes that you could tell were coming from
the noise that the computer was generated being picked up by the
radio. Everybody rose and applauded. I proposed that he receive the
stripped Philips Screw Award for finding a use for something
previously thought useless. But I think everybody was too busy
applauding to even hear me.
Roger Melen
It was a very exciting thing, it was probably the first thing the
Altair actually did.
Turning the Altair into a useful tool required a programming language
so users could type their programs in rather than flipping switches.
What it needed was a version of some big computer language like BASIC,
only modified for the PC. This was called a BASIC interpreter, but it
didn't yet exist because the experts all thought that not even BASIC
was basic enough to fit inside the tiny Altair memory. Yet again the
experts were wrong. Here comes the guy who solved the problem. Twenty
years after finishing the first microcomputer BASIC, Paul Allen is
returning to Albuquerque for a celebration of that event -- this time
with his $15 million jet and three foot red carpet. At a time when I
was killing brain cells, this guy was founding an empire. He has come
to eat rubber chicken in honor of the Altair's 20th anniversary.
Speaker
I'd like to introduce to you - Paul Allen.
Allen co-founded Microsoft with his younger buddy from high school --
Bill Gates.
Paul Allen
One day in Boston, I was in Harvard Square I saw a cover of Popular
Electronics with this thing that looked like what I had been
imagining, and so I grabbed it off the shelf, I looked at it and I
bought it and I ran back to Bill's dorm, and I think he was probably
playing poker that night and usually losing money at that point. One
of the few times when that's been the case.
Bill Gates
Paul showed that to me and then okay, here was a company that would be
needing software.
Paul Allen
And he said OK we gotta call these guys up and see if this thing's for
real.
Bill Gates
We realised that things were starting to happen, and just because we'd
had a vision for a long time of where this chip could go, what it
could mean er, that didn't mean the industry was going to wait for us
while I stayed and - and finished my Degree at Harvard.
Paul Allen
So called up Ed you know, we told him we've got this Basic and it's
you know just for your machine, and it's you know not that far from
being done, and we'd like to come out and show it to you.
Bill Gates
So we created this BASIC interpreter. Paul took the paper tape er,
and - and flew out. In fact, the night before, he - he got some sleep
while I double checked everything to make sure that we had er, had it
all right.
Paul Allen
But I had no idea what it was really going to be like to try to run
the software. It had never been run on an actual computer before.
David Bunnell
He was very nervous about whether this would actually work. And then
he got to the office and we all gathered around him and he put his
fingers on the switches and he loaded BASIC with paper tape into the
Altair.
Paul Allen
I was just I was so nervous....this is just....it's not going to work
and it worked.
David Bunnell
And it came up, and it could do a few little simple things.
Bill Gates
And it was amazing when Paul called me up and said the thing had
worked the first time. And of course, it was incredibly fast.
Paul Allen
And it printed out memory size and I think Bill said it printed
something. So I said yeah, yeah.
Bill Gates
Oh, that was - that was unbelievable. The fact that it really worked
er, was - was - was a breakthrough.
David Bunnell
Maybe there wouldn't be a Microsoft if the screen hadn't come alive,
who knows, it might all be quite different.
After the demo succeeded, Bill forgot about finishing university.
Afraid of missing his chance to dominate the new industry, he joined
Allen in what was then the the center of world microcomputing research --
among the sleezy bars and gas stations of Albuquerque, New Mexico.
David Bunnell
And they lived across the street from MITS in the Sundowner Motel, and
the prostitutes and the drug dealers out on the corner, and they were
writing BASIC for the Altair computer, and gradually they actually
started Microsoft here in Albuquerque.
Paul Allen
We hired some of our high school friends basically to come down and eh
stay with us in our apartment, which became very crowded.
Bill Gates
We were pretty young. We started when I was 19 and so we just had a
lot of - a lot of energy.
David Bunnell
They worked really hard. They listened to really loud music, I could
hardly stand to go to the software room sometimes because the music
would be banging off the walls, mostly acid rock.
Paul Allen
You know we'd usually go out, eat pizzas and then go out and watch
action movies.
David Bunnell
They would work all night long, and there were days when Bill Gates
would be sleeping on the floor in the software lab.
Paul Allen
Sometimes it would be Bill and these two other guys all, you know,
sitting on tables around the apartment with stacks and stacks of paper
writing, converting the BASIC for the 8080.
Bill Gates
I still know the source code by heart, and that was er, er, a work of
love, you know, we just kept tuning and tuning that thing. And - and
so that kind of craftsmanship paid off.
BASIC let the Altair be used for both fun stuff and real work. People
attached terminals to the computer and began writing games, word
processors, and accounting programs. Most of us didn't notice but soon
there was thriving industry for enthusiasts. By the end of 1975,
dozens of other companies were building microcomputers.
Ed Roberts
We created an industry and I think that goes completely unnoticed. I
mean there was nothing - every aspect of the industry when you talk
about software, hardware, application stuff, dealerships, you name it,
it was all in a mess.
Bill Gates
It was a wild time. It was a very exciting time. And the first user
convention - where we got people to come in and tell us what they were
doing, what they were excited about, and other companies like
Processor Technology or Imsai or Comemco got going as add-on
companies. These companies are long-forgotten, but they were the - the
humble beginnings of the - of the PC industry.
Left in the hands of those early hobbyists the PC might never have
made it to the shopping mall. Reaching the wider market required a
different type of vision. Enter the flower children of California, who
thought the PC was, well, groovy.
Steve Jobs
Remember that the Sixties happened in the early Seventies, right, so
you have to remember that and that's sort of when I came of age. So I
saw a lot of this and to me the spark of that was that there was
something beyond sort of what you see every day. It's the same thing
that causes people to want to be poets instead of bankers. And I think
that's a wonderful thing. And I think that that same spirit can be put
into products, and those products can be manufactured and given to
people and they can sense that spirit.
To help you understand all this, I will now take off my clothes.
Jim Warren
And he says well frame relay is scaleable.
Jim Warren knows better than most what the hippy movement did for the
PC. A sixties radical himself, he staged the West Coast Computer Faire -
- for a time the biggest computer show in the world. The Faire was
where the PC really arrived. It's also where Jim got rich.
BOB: So eh Jim is this where you hold all your meetings?
JIM: Uhm as many as possible - sure why not.
BOB: This is how silicon vallye entrepreneurs conduct business?
JIM: Oh I don't know if it's how entrenpreneurs conduct business.
Believe it or not, Jim once taught mathematics at a Catholic girls
school.
JIM: Bubbles Bob?
BOB: Sure.
JIM: OK.
Jim was immediately fascinated by the PC like many Bay Area hippies.
The California counter culture was crucial to the PC's development.
Jim Warren
And the whole spirit there was working together, was sharing. You
shared your dope, you shared your bed, you shared your life, you
shared your hopes. And a whole bunch of us had the same community
spirit and that permeated the whole Home Brew Computer Club. As soon
as somebody would solve a problem they'd come running down to the Home
Brew Computer Club's next meeting and say hey everybody you know that
problem that all of us have been trying to figure out how to solve,
here's the solution, isn't this wonderful? Aren't I a great guy. And
it's my contention that that is a major component of why Silicon
Valley was able to develop the technology as rapidly as it did,
because we were all sharing - everybody won.
Out of this creative show-and-tell came Apple Computer, the first mass
market PC company. The Apple founders, a couple of recent graduates
from Homestead High were regulars at Homebrew meetings. Steve Wozniak
was the technical wizard and Steve Jobs was the visionary who saw
microcomputers as a possible business. But Apple wasn't their first
business. Woz & Jobs had once built a device to cheat the phone
company - they called it a blue box.
Steve Wozniak
Blue boxes were devices that could put tones into your phone and
direct the phone company to switch your calls anywhere in the world
for free and it was kind of...kind of weird for people to imagine that
how could this worldwide phone system let you put a few little tones
into your phone just like punching a touchtone phone, put the right
tones in and it would direct your call anywhere in the world for free.
Steve Jobs
And it turned out we were at Stanford Linnear Accelerator Centre one
night and way in the bowels of their technical library way down at the
last bookshelf in the corner bottom rack we found an AT&T technical
journal that laid out the whole thing and that's another moment I'll
never forget - we saw this journal we though my God it's all real and
so we set out to build a device to make these tones.
Steve Wozniak What we'd do is we'd walk into a dorm with a big tape
recorder and we'd set the tape recorder on the floor and play the
phone through it, hook up the phone with alligator clips so that
everyone in the room could hear the phone conversations. And I was
master jokester, and then I would get on the phone and dial some
countries to show how easy it was. I would dial The Ritz in London and
make a reservation and dial something and dial a joke in Sydney,
Australia and everybody was really amazed by these things and so one
time I said I could call the Pope. I called into Italy and asked for
the number of The Vatican and eventually got the call into The
Vatican. And I said this is Henry Kissinger - I didn't even use an
accent. This is Henry Kissinger and I'd like to speak to the Pope
about the summit trip, he was on a summit trip. And they said oh wait
wait a minute we'd have to wake him up. It was like 4:30 in the
morning there. And I hung on the line and they said we're waking him
up, we're waking him up and finally the Bishop came on who was the
highest Bishop up who was going to be the translater for the Pope and
he said you're not Henry Kissinger and I went into a little accent and
said oh yes I am you can call me back at this call-back number and I
gave them a weird number where they'd call it back, I'd call a
different number, we'd talk to each other but they don't know my phone
number and eh they never called back - but it was a good - I woke him
up.
Steve Jobs
What we learned was that we could build something ourselves that could
control billions of dollars worth of infrastructure in the world -
that was what we learnt was that us two you know, we're not much, we
could build a little thing that could control a giant thing and that
was an incredible lesson. I don't think there would ever have been an
Apple computer had there not been blue boxes.
The first Apple computer was primitive. It was cobbled together by Woz
to impress his friends at the Hombrew meetings.
Steve Wozniak
Everybody was interested in computers so I started getting a crowd
around me because even although I was too shy to raise my hand and say
anything in a club meeting - after the club meetings I would put my
computer that I had built and every week it had a little bit more
working on it too but I would set it down and let people type on the
keyboard and I would explain what's in it. If they would come up to me
and ask the question I can answer eh you know nowadays I would have
the ability to tell them what it is you know and be a little bit more
promotional but back then I could only answer questions that they
asked me but a kinda group started gathering around me. And Steve Jobs
saw that I had a lot of interest around me at the club and he said
let's start selling it and let's make this company. He came up with
the name Apple and eh and eh thatÍs how it started.
Apple was at best a funky company...started by a couple of teenage
hackers who had previously been working as Alice in Wonderland
characters in a local shopping mall and they started it in this garage
right here. The first Apple computer was built here, now there are
more than ten million in use around the world. And I was there - well
for a short time I was an employee of Apple Computer, employee number
12 and one day I helped move materials out of this garage. At the time
Steve Jobs said that the company was short of loot so he offered to
pay me in company shares, but I held out for the money - my mother
still reminds me of that incident. The Apple 1 was even less of a
computer than the Altair -- a single circuit board that came with
neither a case nor a keyboard. Still, Steve Jobs managed to sell 50
Apple 1's. That experience showed Jobs there was a market for a real
computer -- the Apple II.
Steve Jobs
It was very clear to me that while there were a bunch of hardware
hobbyists that could assemble their own computers, or at least take
our board and add the transformers for the power supply and the case
the keyboard and go get, you know, et cetera, go get the rest of the
stuff. For every one of those there were a thousand people that
couldn't do that, but wanted to mess around with programming -
software hobbyists. Just like I had been when I was, you know, ten,
discovering that computer. And so my dream for the Apple 2 was to sell
the first real packaged computer.
Steve Jobs's dream was impossible. It needed too many chips, making
the product too complicated and expensive to build. But Woz didn't
know it was impossible.
Steve Wozniak
And then I got in to a way of why have memory for your TV screen and
memory for your computer, make them one, and that shrunk the chips
down, and I shrunk the chips here, and why not take all these timing
circuits and I looked through manuals and found a chip that did it in
one chip instead of five, and reduced that, and one thing after
another after another happened. I wound up with so few chips, when I
was done I said hey, a computer that you could program to generate
coloured patterns on a screen, or data or words or play games or
anything it was just the computer I wanted, you know, for myself
pretty much, but it had turned out so good. He said I think we have a
computer we could sell a thousand a month of. How can you sell a
thousand a month, you know?
Steve Jobs
But we needed some money for tooling the case, things like that, we
needed a few hundred thousand dollars.
Steve Wozniak
That was a lot of money for two people who had nothing in their lives
to speak of, didn't have a 400 dollar bank account.
Steve Jobs
So I went looking for some venture capital.
The scruffy 19 year-old seduced the conservative world of venture
capitalists. The man Jobs persuaded to part with his cash was Arthur
Rock, the inventor of venture capital and the man who had originally
funded Intel. At least the Intel boys had graduated from university
and owned suits.
Arthur Rock
Venture Capitalist
Well, he wore sandals and he had long, very long hair and a beard and
a moustache, but very articulate. He was, I think at one time in his
life, and it was probably when I first met him that he ate nothing but
fruit.
Bob: So as a mainline venture capitalist, is this...
Arthur: This is not the norm. This is not the norm.
With money in hand and under occasional adult supervision from an
ex-Intel manager named Mike Markkula, Woz & Jobs finished the Apple II
and ordered a local factory to build 1000 machines. Two years passed
between the Altair and the Apple 2. And in that time a lot of things
changed. We went from a computer that was designed for hobbyists and
engineers and certainly looked like a piece of test equipment to a
computer that looked like a piece of consumer electronics and we can
thank Steve Jobs for that - his sense of design demanded that this
structural foam case be used for the Apple 2 - the first case of its
type on a personal computer. And not that there wasn't good
engineering inside either. The Apple 2 was a model of efficient
engineering - here's the floppy disk drive controller for example.
There are eight chips here where previously there would have been
thirty-five. This is an amazing bit of engineering that we can
attribute to Steve Wozniak who is certainly the Mozart of digital
design and all told it turned the Apple 2 into a sensation. The Apple
II was launched at Jim Warren's West Coast Computer Faire -- one of
the first big microcomputer shows. The 1978 show drew thousands of
attendees and dozens of exhibitors -- many of them members of the
Homebrew Computer Club, which spawned most of the early microcomputer
companies. But there was only one company showing something that
looked like a modern personal computer. Right by the entrance, in a
prime spot negotiated by Steve Jobs, sat the Apple II. It mesmerized
all who saw it. One later became a top Apple programmer.
Andy Hertzfeld
Apple Computer Designer
As a grad student I went to the first West Coast Computer Faire
because I was interested in personal computers, and just on a tiny
little table, like a picnic table almost - just covered with a
tablecloth there was this Apple 2 and I swear, in my memory, it seems
to have a halo around it now. It just drew me right to it.
Steve Jobs
My recollection is we stole the show, and a lot of dealers and
distributors started lining up and we were off and running.
Bob: How old were you?
Steve: Twenty-one.
Bob: Twenty-one!
Following the West Coast Computer Faire, the next two years were ones
of explosive growth for Apple, with thousands of customers literally
arriving on the doorstep of the tiny office in Cupertino, California.
Sales and profits grew so quickly that Apple had more money than the
company could spend. And the company was very young. The founders were
in their twenties and some employees were even younger, like 14
year-old Chris Espinosa, who never left. He still works at Apple,
almost 20 years later.
Chris Espinosa
Manager, Media Tools, Apple
And there would be public demonstrations of our product every Tuesday
and Thursday afternoon at 3 o'clock and that was good because it was
after school. So I would get out of my, you know sophomore-junior year of
high school, I would ride my little moped down to the Apple offices and
at 3 oÍclock I'd give the demonstrations of the Apple 2.
Steve Wozniak
When we were in the office it was hey jokes and we were wiring up
people's phones to do weird things, just every one of us I mean there
wasn't a person in Apple I don't think for a couple of years that was
you know super serious. We were lucky, we had like the hot product of
its day.
Chris Espinosa
And some of the people that I did original demos to came up to me
years later and said you know I founded a hundred million dollar chain
of computer stores based on the demo you showed me one Tuesday
afternoon at Apple. It was really fun.
Steve Wozniak
It went so successful that all of a sudden Steve and I wouldn't have
to worry about work for the rest of our lives. And then it got even
more successful and more successful after that, and eh it was sort of
a shock.
The Apple II set a new standard for personal computers and showed
there was some real money to be made. Rival companies popped-up all
over, but the market was still hobbyists -- guys with big beards who
thought a good use for their computer was controlling a model train
set. But for microcomputers to be taken seriously, they had to start
doing things that needed doing -- functions that were useful, not just
for fun.
The enthusiast had its limits. To reach the rest of us the Apple 2
needed what nerds call a killer application. Software that's so useful
that people will buy computers just to run it. For the Apple II, this
application was called VisiCalc. It came straight from the blackboards
of the Harvard Business school. Invented by a graduate student, Dan
Bricklin with his programmer friend Bob Frankston, VisiCalc was the
first electronic spreadsheet. A spreadsheet is a tool for financial
planning, bringing together for the first time the seduction of money
with the power of microcomputing. Dan Bricklin's professor at Harvard
showed how companies used a grid of numbers on a blackboard to work
out profits and expenses.
Dan Bricklin
VisiCalc Inventor
Sixty down here and your profit would be this minus this which gives
you forty. And then well let's see what's the sales growth, say
there's a ten percent...
The trick to a spreadsheet is that all the values in the table are
related to the others. So changes in one year would ripple through the
table, affecting prices and profits in subseqent years. Students were
asked to calculate how future profits would be affected by various
business scenarios. It was called running the numbers and they did it
laborously by hand.
Dan Bricklin
Well let's say your initial costs have a hundred fixed costs at the
beginning so now you have a minus twenty is how much you make the
first year and in the second year you have a hundred but your variable
is say let's say twenty-five so now your losing what is it - it's a
pain in the neck I wasn't very good at this stuff - eighty what - no
no no - fifteen - minus fifteen right and eventually your making
money, what year do we make money and how much does the cost of money
that's what running numbers was.
Because each value was linked to others, one mistake could mean
disaster.
Dan Bricklin
It blows your all number afterwards because you make all your
calculations based on the other numbers before them. If I had
miscalculated...
Dan, who had worked as a programmer, started daydreaming about how he
could use a computer to replace the tedious hand calculations.
Dan Bricklin
I imagined that there was this magic blackboard that did like word
processing does word wrapping - if you make a change to a word it
automatically pulls everything back, well why no recalculate in the
same way? So that if I change my number, you know, I should have used
ten per cent instead of twelve per cent, I could just put it in and it
would recalculate everything and go through it you know and that would
be this idea of an electronic spread sheet.
Following a model that's common today, Dan Bricklin designed the
program, but got his friend Bob Frankston to write the actual computer
code. After months of programming late at night when computer time was
cheaper, the Harvard Business School blackboard came to life.
Dan Bricklin
Now weÍve set this up, OK. Then we type a new value in, then I'm going
to take that one hundred, I'm going to change it right and here, it
recalculated! Woa! That saved me so much time. People who saw it and
went and got it like an accountant, I remember showing it to one
around here and he started shaking and said that's what I do all week,
I could do it in an hour you know, you know, they would take their
credit cards and shove them in your face. I meet these people now they
come up to me and say I gotta tell you you know...
BOB: You changed my life.
DAN: You changed my life. You made accounting fun and...
Bob Frankston
VisiCalc Programmer
You have to remember what it was like in those days we did not use the
word spreadsheet cause nobody knew what a spreadsheet was. I came up
with the name visible calculator or visicalc because we wanted to
emphasise that aspect.
VisiCalc hit the market in October, 1979, selling for $100. Marv
Goldschmitt sold the first copies from his computer store in Bedford,
Massachusetts. After a slow start VisiCalc took off.
Marv Goldschmitt
What it did in our society, it gave people who were obsessed with
numbers, whether they were in business or at home, how much am I worth
today, what's my stock portfolio worth, how am I doing against budget
on this project. It gave them an ability to play with scenarios and
change it and say well, what if I do this. So it put people in a sense
in control of the thing that lots of people in our society feel is
driving them and that's numbers.
The spreadsheet was every businessman's crystal ball. It answered all
those 'what if' questions. What if I fire the engineering department?
What if I invest $10 million in pantyhose futures? Look! I'll be rich
in under a year and have slimmer thighs at the same time! The Computer
says so! The effect of the spreadsheet was enormous. Armed with an
Apple 2 running Visicalc a twenty-four year old MBA with two pieces of
dubious data could convince his corporate managers to allow him to
loot the corporate pension fund and do a leverage buy-out. It was the
perfect tool for the eighties...the lead decade where money was
everything and greed was good. In five years, the PC had gone from a
hobbyist's toy to an engine that shaped the times we lived in. Thanks
to VisiCalc the Apple II made history.
Steve Wozniak
Everybody you talked to just seemed excited about talking about what
we were doing. And there was this huge media explosion, kind of like
the Internet is receiving today, of this is the happening thing. You
read about it over and over and over, and every time you took an
airplane flight you read about it, in every newspaper every week you'd
read something about small computers coming, and Apple was one of the
highlight companies so we were being portrayed as a leader of a
revolution, and we really felt that we were a leader of a revolution.
We were going to change life a lot.
Pretty good for a company started in a garage three years before. But
not all the PC pioneers made great fortunes. Dan Bricklin decided not
to patent his spreadsheet idea. Though more than 100 million
spreadsheets have been sold since 1979, Bricklin and Frankston haven't
earned VisiCalc royalties in years.
Dan Bricklin
You know, looking back at how successful a lot of other people have
been it's kind of sad that we weren't as successful...
Bob Frankston
It would be very nice to be gazillionaires, but you can also
understand that part of the reason was that that's not what we're
trying to be.
Dan Bricklin
We're kids of the Sixties and what did you want to do? You wanted to
make the world better, and you wanted to make your mark on the world
and improve things, and we did it. So by the mark of what we would
measure ourselves by, we're very successful.
And what about Ed Roberts? Three years and 40,000 computers after
assembling that first Altair, the fun was over for Ed. MITS was just
another player in what had become a competitive market for personal
computers. Roberts sold his company in 1978 and started a new life. He
went back to his native Georgia and retrained as a doctor.
Ed Roberts
I hadn't really thought anything at all about it for the last few
years until people started taking credit for things that we did at
MITS eh that's the only thing I think about. It irritates me when I
think about the things that we did at MITS and we took all the heat
for that other people have tried to take credit for and that
frustrates me.
While Ed Roberts invented the personal computer, it was the founders
of Apple who got rich. When Apple went public in spectacular fashion
in 1980, Jobs and Woz became multimillionaires. The nerds had
inherited the earth.
Steve Jobs
I was worth about over a million dollars when I was twenty-three and
over ten million dollars when I was twenty-four, and over a hundred
million dollars when I was twenty-five and ehm it wasn't that
important ehm because I never did it for the money.
Steve Wozniak
It was just a little hobby company like a lot of people do not
thinking anything of it. I mean it wasn't as though we both thought it
was going to go a long ways. It was like we'll both do it for fun but
back then there was a short window in time where one person who could
sit down and do some neat good designs could turn them into a huge
thing like the Apple 2.
It's astonishing that at the beginning of 1975 nobody owned a personal
computer all there was was a mock-up on a magazine cover yet within
five years there had emerged here in Silicon Valley a billion dollar
industry. An unhealthy fascination with technology on the part of a
few adolescents had awakened the nerd within us all. PC companies were
sprouting like mushrooms to meet the enormous demand. Apple had
emerged as the top fungus and had taken fifty per cent of the market.
To the boys in Cupertino, every day seemed like Christmas...but
Scrooge was around the corner. There was a company that everyone
associated with the word computer, a company that expected, no
demanded to dominate its market - IBM - Big Blue was on the move and
Silicon Valley would soon be feeling the reverberations.
part 2
The story so far.... In 1975, Ed Roberts invented the Altair personal
computer. It was a pain to use until 19 year-old pre-billionaire Bill
Gates wrote the first personal computer language. Still, the public
didn't care. Then two young hackers -- Steve Jobs and Steve Wozniak --
built the Apple computer to impress their friends. We were all
impressed and Apple was a stunning success. By 1980, the PC market was
worth a billion dollars. Now, view on.....
Christine Comaford
We are nerds.
Vern Raburn
Most of the people in the industry were young because the guys who had
any real experience were too smart to get involved in all these crazy
little machines.
Gordon Eubanks
It really wasn't that we were going to build billion dollar
businesses. We were having a good time.
Vern Raburn
I thought this was the most fun you could possibly have with your
clothes on.
When the personal computer was invented twenty years it was just that
- an invention - it wasn't a business. These were hobbyists who built
these machines and wrote this software to have fun but that has really
changed and now this is a business this is a big business. It just
goes to show you that people can be bought. How the personal computer
industry grew from zero to 100 million units is an amazing story. And
it wasn't just those early funky companies of nerds and hackers, like
Apple, that made it happen. It took the intervention of a company that
was trusted by the corporate world. Big business wasn't interested in
the personal computer. In the boardrooms of corporate America a
computer still meant something the size of a room that cost at least a
hundred thousand dollars. Executives would brag that my mainframe is
bigger than your mainframe. The idea of a $2,000 computer that sat on
your desk in a plastic box was laughable that is until that plastic
box had three letters stamped on it - IBM. IBM was, and is, an
American business phenomenon. Over 60 years, Tom Watson and his son,
Tom Jr., built what their workers called Big Blue into the top
computer company in the world. But IBM made mainframe computers for
large companies, not personal computers -- at least not yet. For the
PC to be taken seriously by big business, the nerds of Silicon Valley
had to meet the suits of corporate America. IBM never fired anyone,
requiring only that undying loyalty to the company and a strict dress
code. IBM hired conservative hard-workers straight from school. Few
IBM'ers were at the summer of love. Their turn-ons were giant
mainframes and corporate responsibility. They worked nine to five and
on Saturdays washed the car. This is intergalactic HQ for IBM - the
largest computer company in the world...but in many ways IBM is really
more a country than it is a company. It has hundreds of thousands of
citizens, it has a bureaucracy, it has an entire culture everything in
fact but an army. OK Sam we're ready to visit IBM country, obviously
we're dressed for the part. Now when you were in sales training in
1959 for IBM did you sing company songs?
Sam Albert
Former IBM Executive
Absolutely.
BOB: Well just to get us in the mood let's sing one right here.
SAM: You're kidding.
BOB: I have the IBM - the songs of the IBM and we're going to try for
number 74, our IBM salesmen sung to the tune of Jingle Bells.
Bob & Sam singing
'IBM, happy men, smiling all the way, oh what fun it is to sell our
products our pruducts night and day. IBM Watson men, partners of TJ.
In his service to mankind - that's why we are so gay.'
Sam Albert
Now gay didn't mean what it means today then remember that OK?
BOB: Right ok let's go.
SAM: I guess that was OK.
BOB: Perfect.
Sam Albert
When I started at IBM there was a dress code, that was an informal
oral code of white shirts. You couldn't wear anything but a white
shirt, generally with a starched collar. I remember attending my first
class, and a gentleman said to me as we were entering the building,
are you an IBMer, and I said yes. He had a three piece suit on, vests
were of the vogue, and he said could you just lift your pants leg
please. I said what, and before I knew it he had lifted my pants leg
and he said you're not wearing any garters. I said what?! He said your
socks, they're not pulled tight to the top, you need garters. And sure
enough I had to go get garters.
IBM is like Switzerland -- conservative, a little dull, yet
prosperous. It has committees to verify each decision. The safety net
is so big that it is hard to make a bad decision - or any decision at
all. Rich Seidner, computer programmer and wannabe Paul Simon, spent
twenty-five years marching in lockstep at IBM. He feels better now.
Rich Seidner
Former IBM Programmer
I mean it's like getting four hundred thousand people to agree what
they want to have for lunch. You know, I mean it's just not going to
happen - it's going to be lowest common denominator you know, it's
going to be you know hot dogs and beans. So ahm so what are you going
to do? So IBM had created this process and it absolutely made sure
that quality would be preserved throughout the process, that you
actually were doing what you set out to do and what you thought the
customer wanted. At one point somebody kind of looked at the process
to see well, you know, what's it doing and what's the overhead built
into it, what they found is that it would take at least nine months to
ship an empty box.
By the late seventies, even IBM had begun to notice the explosive
growth of personal computer companies like Apple.
Commercial
The Apple 2 - small inexpensive and simple to use the first
computer.....
What's more, it was a computer business they didn't control. In 1980,
IBM decided they wanted a piece of this action.
Jack Sams
Former IBM Executive
There were suddenly tens of thousands of people buying machines of
that class and they loved them. They were very happy with them and
they were showing up in the engineering departments of our clients as
machines that were brought in because you can't do the job on your
mainframe kind of thing.
Commercial
JB wanted to know why I'm doing better than all the other
managers...it's no secret...I have an Apple - sure there's a big
computer three flights down but it won't test my options, do my charts
or edit my reports like my Apple.
Jack Sams
The people who had gotten it were religious fanatics about them. So
the concern was we were losing the hearts and minds and give me a
machine to win back the hearts and minds.
In business, as in comedy, timing is everything, and time looked like
it might be running out for an IBM PC. I'm visiting an IBMer who took
up the challenge. In August 1979, as IBM's top management met to
discuss their PC crisis, Bill Lowe ran a small lab in Boca Raton
Florida.
Bill Lowe
Hello Bob nice to see you.
BOB: Nice to see you again. I tried to match the IBM dress code how
did I do?
BILL: That's terrific, that's terrific.
He knew the company was in a quandary. Wait another year and the PC
industry would be too big even for IBM to take on. Chairman Frank
Carey turned to the department heads and said HELP!!!
Bill Lowe
Head, IBM IBM PC Development Team 1980
He kind of said well, what should we do, and I said well, we think we
know what we would like to do if we were going to proceed with our own
product and he said no, he said at IBM it would take four years and
three hundred people to do anything, I mean it's just a fact of life.
And I said no sir, we can provide with product in a year. And he
abruptly ended the meeting, he said you're on Lowe, come back in two
weeks and tell me what you need.
An IBM product in a year! Ridiculous! Down in the basement Bill still
has the plan. To save time, instead of building a computer from
scratch, they would buy components off the shelf and assemble them --
what in IBM speak was called 'open architecture.' IBM never did this.
Two weeks later Bill proposed his heresy to the Chairman.
Bill Lowe
And frankly this is it. The key decisions were to go with an open
architecture, non IBM technology, non IBM software, non IBM sales and
non IBM service. And we probably spent a full half of the presentation
carrying the corporate management committee into this concept. Because
this was a new concept for IBM at that point.
BOB: Was it a hard sell?
BILL: Mr. Carey bought it. And as result of him buying it, we got
through it.
With the backing of the chairman, Bill and his team then set out to
break all the IBM rules and go for a record.
Bill Lowe
We'll put it in the IBM section.
Once IBM decided to do a personal computer and to do it in a year -
they couldn't really design anything, they just had to slap it
together, so that's what we'll do. You have a central processing unit
and eh let's see you need a monitor or display and a keyboard. OK a
PC, except it's not, there's something missing. Time for the Cringely
crash course in elementary computing. A PC is a boxful of electronic
switches, a piece of hardware. It's useless until you tell it what to
do. It requires a program of instructions...that's software. Every PC
requires at least two essential bits of software in order to work at
all. First it requires a computer language. That's what you type in to
give instructions to the computer. To tell it what to do. Remember it
was a computer language called BASIC that Paul Allen and Bill Gates
adapted to the Altair...the first PC. The other bit of software that's
required is called an operating system and that's the internal traffic cop
that tells the computer itself how the keyboard is connected to
the screen or how to store files on a floppy disk instead of just
losing them when you turn off the PC at the end of the day. Operating
systems tend to have boring unfriendly names like UNIX and CPM and
MS-DOS but though they may be boring it's an operating system that
made Bill Gates the richest man in the world. And the story of how
that came about is, well, pretty interesting. So the contest begins.
Who would IBM buy their software from? Let's meet the two contenders
-- the late Gary Kildall, then aged 39, a computer Ph.D., and a 24
year old Harvard drop-out - Bill Gates. By the time IBM came calling
in 1980, Bill Gates and his small company Microsoft was the biggest
supplier of computer languages in the fledgling PC industry.
Commercial
'Many different computer manufacturers are making the CPM Operating
System standard on most models.'
For their operating system, though, the logical guy for the IBMers to
see was Gary Kildall. He ran a company modestly called Interglactic
Digital Research. Gary had invented the PC's first operating system
called CP/M. He had already sold 600,000 of them, so he was the big
cheese of operating systems.
Gary Kildall
Founder Digital Research
Speaking in 1983
In the early 70s I had a need for an operating system myself and eh it
was a very natural thing to write and it turns out other people had a
need for an operating system like that and so eh it was a very natural
thing I wrote it for my own use and then started selling it.
Gordon Eubanks
In Gary's mind it was the dominant thing and it would always be the
dominant of course Bill did languages and Gary did operating systems
and he really honestly believed that would never change.
But what would change the balance of power in this young industry was
the characters of the two protagonists.
Jim Warren
Founder West Coast Computer Faire 1978
So I knew Gary back when he was an assistant professor at Monterrey
Post Grad School and I was simply a grad student. And went down, sat
in his hot tub, smoked dope with him and thoroughly enjoyed it all,
and commiserated and talked nerd stuff. He liked playing with gadgets,
just like Woz did and does, just like I did and do.
Gordon Eubanks
He wasn't really interested in how you drive the business, he worked
on projects, things that interested him.
Jim Warren
He didn't go rushing off to the patent office and patent CPM and
patent every line of code he could, he didn't try to just squeeze the
last dollar out of it.
Gordon Eubanks
Gary was not a fighter, Gary avoided conflict, Gary hated conflict.
Bill I don't think anyone could say backed away from conflict.
Nobody said future billionaires have to be nice guys. Here, at the
Microsoft Museum, is a shrine to Bill's legacy. Bill Gates hardly
fought his way up from the gutter. Raised in a prosperous Seattle
household, his mother a homemaker who did charity work, his father was
a successful lawyer. But beneath the affluence and comfort of a
perfect American family, a competitive spirit ran deep.
Vern Raburn
President, The Paul Allen Group
I ended up spending Memorial Day Weekend with him out at his
grandmother's house on Hood Canal. She turned everything in to a game. It
was a very very very competitive environment, and if you spent the
weekend there, you were part of the competition, and it didn't matter
whether it was hearts or pickleball or swimming to the dock. And you
know and there was always a reward for winning and there was always a
penalty for losing.
Christine Comaford
CEO Corporate Computing Intl.
One time, it was funny. I went to Bill's house and he really wanted to
show me his jigsaw puzzle that he was working on, and he really wanted to
talk about how he did this jigsaw puzzle in like four minutes, and
like on the box it said, if you're a genius you will do the jigsaw
puzzle in like seven. And he was into it. He was like I can do it. And I
said don't, you know, I believe you. You don't need to break it up
and do it for me. You know.
Bill Gates can be so focused that the small things in life get
overlooked.
Jean Richardson
Former VP, Corporate Comms, Microsoft
If he was busy he didn't bathe, he didn't change clothes. We were in
New York and the demo that we had crashed the evening before the
announcement, and Bill worked all night with some other engineers to
fix it. Well it didn't occur to him to take ten minutes for a shower
after that, it just didn't occur to him that that was important, and
he badly needed a shower that day.
The scene is set in California...laid back Gary Kildall already making
the best selling PC operating system CPM. In Seattle Bill Gates maker
of BASIC the best selling PC language but always prepared to seize an
opportunity. So IBM had to choose one of these guys to write the
operating system for its new personal computer. One would hit the
jackpot the other would be forgotten...a footnote in the history of
the personal computer and it all starts with a telephone call to an
eighth floor office in that building the headquarters of Microsoft in
1980.
Jack Sams
At about noon I guess I called Bill Gates on Monday and said I would
like to come out and talk with him about his products.
Steve Ballmer
Vice-President Microsoft
Bill said well, how's next week, and they said we're on an airplane,
we're leaving in an hour, we'd like to be there tomorrow. Well,
hallelujah. Right oh.
Steve Ballmer was a Harvard roommate of Gates. He'd just joined
Microsoft and would end up its third billionaire. Back then he was the
only guy in the company with business training. Both Ballmer and Gates
instantly saw the importance of the IBM visit.
Bill Gates
You know IBM was the dominant force in computing. A lot of these
computer fairs discussions would get around to, you know, I.. most
people thought the big computer companies wouldn't recognise the small
computers, and it might be their downfall. But now to have one of the
big computer companies coming in and saying at least the - the people
who were visiting with us that they were going to invest in it, that -
that was er, amazing.
Steve Ballmer
And Bill said Steve, you'd better come to the meeting, you're the only
other guy here who can wear a suit. So we figure the two of us will
put on suits, we'll put on suits and we'll go to this meeting.
Jack Sams
We got there at roughly two o'clock and we were waiting in the front,
and this young fella came out to take us back to Mr. Gates office. I
thought he was the office boy, and of course it was Bill. He was quite
decisive, we popped out the non-disclosure agreement - the letter that said
he wouldn't tell anybody we were there and that we wouldn't hear
any secrets and so forth. He signed it immediately.
Bill Gates
IBM didn't make it easy. You had to sign all these funny agreements
that sort of said I...IBM could do whatever they wanted, whenever they
wanted, and use your secrets however they - they felt. But so it took
a little bit of faith.
Jack Sams was looking for a package from Microsoft containing both the
BASIC computer language and an Operating System. But IBM hadn't done
their homework.
Steve Ballmer
They thought we had an operating system. Because we had this Soft Card
product that had CPM on it, they thought we could licence them CPM for this
new personal computer they told us they wanted to do, and we said
well, no, we're not in that business.
Jack Sams
When we discovered we didn't have - he didn't have the rights to do
that and that it was not...he said but I think it's ready, I think
that Gary's got it ready to go. So I said well, there's no time like
the present, call up Gary.
Steve Ballmer
And so Bill right there with them in the room called Gary Kildall at
Digital Research and said Gary, I'm sending some guys down. They're
going to be on the phone. Treat them right, they're important guys.
The men from IBM came to this Victorian House in Pacific Grove
California, headquarters of Digital Research, headed by Gary and
Dorothy Kildall. Just imagine what its like having IBM come to visit -
its like having the Queen drop by for tea, its like having the Pope
come by looking for advice, its like a visit from God himself. And
what did Gary and Dorothy do? They sent them away.
Jack Sams
Gary had some other plans and so he said well, Dorothy will see you.
So we went down the three of us...
Gordon Eubanks
Former Head of Language Division, Digital Research
IBM showed up with an IBM non-disclosure and Dorothy made what I...a
decision which I think it's easy in retrospect to say was dumb.
Jack Sams
We popped out our letter that said please don't tell anybody we're
here, and we don't want to hear anything confidential. And she read it
and said and I can't sign this.
Gordon Eubanks
She did what her job was, she got the lawyer to look at the
nondisclosure. The lawyer, Gerry Davis who's still in Monterey threw
up on this non-disclosure. It was uncomfortable for IBM, they weren't
used to waiting. And it was unfortunate situation - here you are in a
tiny Victorian House, its overrun with people, chaotic.
Jack Sams
So we spent the whole day in Pacific Grove debating with them and with
our attorneys and her attorneys and everybody else about whether or
not she could even talk to us about talking to us, and we left.
This is the moment Digital Research dropped the ball. IBM, distinctly
unimpressed with their reception, went back to Microsoft.
BOB: It seems to me that Digital Research really screwed up.
STEVE BALLMER: I think so - I think that's spot on. They made a big
mistake. We referred IBM to them and they failed to execute.
Bill Gates isn't the man to give a rival a second chance. He saw the
opportunity of a lifetime.
Bill Gates
Digital research didn't seize that, and we knew it was essential, if
somebody didn't do it, the project was going to fall apart.
Steve Ballmer
We just got carried away and said look, we can't afford to lose the
language business. That was the initial thought - we can't afford to
have IBM not go forward. This is the most exciting thing that's going
to happen in PCs.
Bill Gates
And we were already out on a limb, because we had licensed them not
only Basic, but Fortran, Cobol Assembler er, typing tutor and Venture.
And basically every - every product the company had we had committed
to do for IBM in a very short time frame.
But there was a problem. IBM needed an operating system fast and
Microsoft didn't have one. What they had was a stroke of luck - the
ingredient everyone needs to be a billionaire. Unbelievably, the
solution was just across town. Paul Allen, Gates's programming partner
since high school, had found another operating system.
Paul Allen
There's a local company here in CL called CL Computer Products by a
guy named Tim Patterson and he had done an operating system a very
rudimentary operating system that was kind of like CPM.
Steve Ballmer
And we just told IBM look, we'll go and get this operating system from
this small local company, we'll take care of it, we'll fix it up, and
you can still do a PC.
Tim Patterson's operating system, which saved the deal with IBM, was,
well, adapted from Gary Kildall's CPM.
Tim Patterson
Programmer
So I took a CPM manual that I'd gotten from the Retail Computer Store
five dollars in 1976 or something, and used that as the basis for what
would be the application program interface, the API for my operating
system. And so using these ideas that came from different places I
started in April and it was about half time for four months before I
had my first working version.
This is it, the operating system Tim Patterson wrote. He called in
QDOS the quick and dirty operating system. Microsoft and IBM called it PC
DOS 1.0 and under any name it looks an awful lot like CPM. On this
computer here I have running a PC DOS and CPM 86 and frankly itÍs very
hard to tell the difference between the two. The command structures
are the same, so are the directories, in fact the only obvious
external difference is the floppy dirive is labelled A in PC DOS and
and C in CPM. Some difference and yet one generated billions in
revenue and the other disappeared. As usual in the PC business the
prize didn't go to the inventor but to the exploiter of the invention.
In this case that wasn't Gary Kildall it wasn't even Tim Paterson.
There was still one problem. Tim Patterson worked for Seattle Computer
Products, or SCP. They still owned the rights to QDOS - rights that
Microsoft had to have.
Vern Raburn
Former Vice-President Microsoft
But then we went back and said to them look, you know, we want to buy
this thing, and SCP was like most little companies, you know. They
always needed cash and so that was when they went in to the
negotiation.
Paul Allen
And so ended up working out a deal to buy the operating system from
him for whatever usage we wanted for fifty thousand dollars.
Hey, let's pause there. To savour an historic moment.
Paul Allen
For whatever usage we wanted for fifty thousand dollars.
It had to be the deal of the century if not the millenium it was
certainly the deal that made Bill Gates and Paul Allen multi
billionaires and allowed Paul Allen to buy toys like these, his own
NBA basketball team and arena. Microsoft bought outright for fifty
thousand dollars the operating system they needed and they turned
around and licensed it to the world for up to fifty dollars per PC.
Think of it - one hundred million personal computers running MS DOS
software funnelling billions into Microsoft - a company that back then
was fifty kids managed by a twenty-five year old who needed to wash
his hair. Nice work if you can get it and Microsoft got it. There are
no two places further apart in the USA than south eastern Florida and
Washington State where Microsoft is based. This - this is Florida,
Boca Raton and this building right here is where the IBM PC was
developed. Here the nerds from Seattle joined forces with the suits of
corporate and in that first honeymoon year they pulled off a fantastic
achievement.
Dan Bricklin
After we got a package in the mail from the people down in Florida...
As August 1981 approached, the deadline for the launch of the IBM
Acorn, the PC industry held its breath.
Dan Bricklin
Supposedly, maybe at this very moment eh, IBM is announcing the
personal computer. We don't know that yet.
Software writers like Dan Bricklin, the creator of the first
spreadsheet VisiCalc waited by the phones for news of the
announcement. This is a moment of PC history. IBM secrecy had
codenamed the PC 'The Floridian Project.' Everyone in the PC business
knew IBM would change their world forever. They also knew that if
their software was on the IBM PC, they would make fortunes.
Dan Bricklin
Please note that the attached information is not to be disclosed prior to
any public announcement. (It's on the ticker) It's on the ticker OK
so now you can tell people.
What we're watching are the first few seconds of a $100 billion
industry.
Promo
After years of thinking big today IBM came up with something small.
Big Blue is looking for a slice of Apple's market share. Bits and
Bytes mean nothing try this one. Now they're going to sell $1,000
computers to millions of customers. I have seen the future said one
analyst and it computes.
Commercial
Today an IBM computer has reached a personal......
Nobody was ever fired for buying IBM. Now companies could put PCs with
the name they trusted on desks from Wisconsin to Wall Street.
Bob Metcalfe
Founder 3COM
When the IBM PC came and the PC became a serious business tool, a lot
of them, the first of them went into those buildings over there and
that was the real ehm when the PC industry started taking off, it
happened there too.
Commercial
Can learn to use it with ease...
Sparky Sparks
Former IBM Executive
What IBM said was it's okay corporate America for you to now start
buying and using PCs. And if it's okay for corporate America, it's got
to be okay for everybody.
For all the hype, the IBM PC wasn't much better than what came before.
So while the IBM name could create immense demand, it took a killer
application to sustain it. The killer app for the IBM PC was yet
another spreadsheet. Based on Visicalc, but called Lotus 1-2-3, its
creators were the first of many to get rich on IBM's success. Within a
year Lotus was worth $150 million bucks. Wham! Bam! Thank you IBM!
Commercial
Time to rock time for code...
IBM had forecast sales of half a million computers by 1984. In those 3
years, they sold 2 million.
Jack Sams
Euphoric I guess is the right word. Everybody was believed that they
were not going to... At that point two million or three million, you
know, they were now thinking in terms of a hundred million and they
were probably off the scale in the other direction.
What did all this mean to Bill Gates, whose operating system, DOS, was at
the heart of every IBM PC sold? Initially, not much, because of the deal
with IBM. But it did give him a vital bridgehead to other players in the
PC marketplace, which meant trouble in the long run for Big
Blue.
Bill Gates
The key to our...the structure of our deal was that IBM had no control
over...over our licensing to other people. In a lesson on the computer
industry in mainframes was that er, over time, people built compatible
machines or clones, whatever term you want to use, and so really, the
primary upside on the deal we had with IBM, because they had a fixed
fee er, we got about $80,000 - we got some other money for some
special work we did er, but no royalty from them. And that's the DOS
and Basic as well. And so we were hoping a lot of other people would
come along and do compatible machines. We were expecting that that
would happen because we knew Intel wanted to vend the chip to a lot
more than just than just IBM and so it was great when people did start
showing up and ehm having an interest in the licence.
IBM now had fifty per cent market share and was defining what a PC
meant. There were other PCs that were sorta like the IBM PC, kinda
like it. But what the public wanted was IBM PCs. So to be successful
other manufacturers would have to build computers exactly like the
IBM. They wanted to copy the IBM PC, to clone it. How could they do
that legally, well welcome to the world of reverse engineering. This
is what reverse engineering can get you if you do it right. It's the
modest Aspen, Colorado ski shack of Rod Canion, one of the founders of
Compaq, the company set up to compete head-on with the IBM PC. Back in
1982, Rod and three fellow engineers from Texas Instruments sketched
out a computer design on a place mat at the House of Pies restaurant
in Houston, Texas. They decided to manufacture and market a portable
version of the IBM PC using the curious technique of reverse
engineering.
Rod Canion
Co-founder Compaq
Reverse engineering is figuring out after something has already been
created how it ticks, what makes it work, usually for the purpose of
creating something that works the same way or at least does something
like the thing you're trying to reverse engineer.
Here's how you clone a PC. IBM had made it easy to copy. The
microprocessor was available off the shelf from Intel and the other
parts came from many sources. Only one part was IBM's alone, a vital
chip that connected the hardware with the software. Called the
ROM-BIOS, this was IBM's own design, protected by copyright and Big
Blue's army of lawyers. Compaq had to somehow copy the chip without
breaking the law.
Rod Canion
First you have to decide how the ROM works, so what we had to do was
have an engineer sit down with that code and through trial and error
write a specification that said here's how the BIOS ROM needs to work. It
couldn't be close it had to be exact so there was a lot of detailed
testing that went on.
You test how that all-important chip behaves, and make a list of what
it has to do - now it's time to meet my lawyer, Claude.
Claude Stern
Silicon Valley Attorney
BOB: I've examined the internals of the ROM BIOS and written this book of
specifications now I need some help because I've done as much as I
can do, and you need to explain what's next.
CLAUDE: Well,the first thing I'm going to do is I'm going to go
through the book of specifications myself, but the first thing I can
tell you Robert is that you're out of it now. You are contaminated,
you are dirty. You've seen the product that's the original work of
authorship, you've seen the target product, so now from here on in
we're going to be working with people who are not dirty. We're going
to be working with so called virgins, who are going to be operating in
the clean room.
BOB: I certainly don't qualify there.
CLAUDE: I imagine you don't. So what we're going to do is this. We're
going to hire a group of engineers who have never seen the IBM ROM
BIOS. They have never seen it, they have never operated it, they know
nothing about it.
Claude interrogates Mark
CLAUDE: Have you ever before attempted to disassemble decompile or to
in any way shape or form reverse engineer any IBM equipment?
MARK: Oh no.
CLAUDE: And have you ever tried to disassemble....
This is the Silicon Valley virginity test. And good virgins are hard
to find.
CLAUDE: You understand that in the event that we discover that the
information you are providing us is inaccurate you are subject to
discipline by the company and that can include but not limited to
termination immediately do you understand that?
MARK: Yes I do.
CLAUDE: OK.
After the virgins are deemed intact, they are forbidden contact with
the outside world while they build a new chip -- one that behaves
exactly like the one in the specifications. In Compaq's case, it took
l5 senior programmers several months and cost $1 million to do the
reverse engineering. In November 1982, Rod Canion unveiled the result.
Bill Murto
What IÍve brought today is a Compaq portable computer.
When Bill Murto, another Compaq founder got a plug on a cable TV show
their selling point was clear 100 percent IBM compatibility.
Bill Murto
It turns out that all major popular software runs on the IBM personal
computer or the Compaq portable computer.
Q: That extends through all software written for IBM?
A: Eh Yes.
Q: It all works on the Compaq?
The Compaq was an instant hit. In their first year, on the strength of
being exactly like IBM but a little cheaper, they sold 47,000 PCs.
Rod Canion
In our first year of sales we set an American business record. I guess
maybe a world business record. Largest first year sales in history. It
was a hundred and eleven million dollars.
So Rod Canion ends up in Aspen, famous for having the most expensive
real estate in America and I try not to look envious while Rod tells
me which executive jet he plans to buy next.
ROD: And finally I picked the Lear 31.
BOB: Oh really?
ROD: Now thart was a fun airplane.
BOB: Oh yeh.
Poor Big Blue! Suddenly everybody was cashing in on IBM's success. The
most obvious winner at first was Intel, maker of the PCs
microprocessor chip. Intel was selling chips like hotcakes to
clonemakers -- and making them smaller, quicker and cheaper. This was
unheard of! What kind of an industry had Big Blue gotten themselves
into?
Jim Cannavino
Former Head, IBM PC Division
Things get less expensive every year. People aren't used to that in
general. I mean, you buy a new car, you buy one now and four years
later you go and buy one it costs more than the one you bought before.
Here is this magical piece of an industry - you go buy one later it
costs less and it does more. What a wonderful thing. But it causes
some funny things to occur when you think about an industry. An
industry where prices are coming down, where you have to sell it and
use it right now, because if you wait later it's worth less.
Where Compaq led, others soon followed. IBM was now facing dozens of
rivals - soon to be familiar names began to appear, like AST,
Northgate and Dell. It was getting spectacularly easy to build a
clone. You could get everything off the shelf, including a
guaranteed-virgin ROM BIOS chip. Every Tom, Dick & Bob could now make
an IBM compatible PC and take another bite out of Big Blue's business. OK
we're at Dominos Computers at Los Altos California, Silicon Valley
and this is Yukio and we're going to set up the Bob and Yukio Personal
Computer Company making IBM PC clones. You're the expert, I of course
brought all the money so what is it that we're going to do.
Yukio
OK first of all we need a motherboard.
BOB: What's a motherboard?
YUKIO: That's where the CPU is set in...that's the central processor
unit.
BOB: OK.
YUKIO: In fact I have one right here. OK so this is the video board...
BOB: That drives the monitor.
YUKIO: Right.
BOB: Terror?
BILL LOWE: Oh, of course. I mean we were able to sell a lot of
products but it was getting difficult to make money.
YUKIO: And this is the controller card which would control the hard
drive and the floppy drive.
BOB: OK.
Rod Canion
And the way we did it was by having low overhead. IBM had low cost of
product but a lot of overhead - they were a very big company.
YUKIO: Right this is a high density recorder.
BOB: So this is a hard disk drive.
Rod Canion
And by keeping our overhead low even though our margins were low we
were able to make a profit.
YUKIO: OK I have one right here.
BOB: Hey...OK we have a keyboard which plugs in right over here.
YUKIO: Right...
BOB: People build them themselves - how long does it take?
YUKIO: About an hour.
BOB: About an hour.
And where did every two-bit clone-maker buy his operating system?
Microsoft, of course. IBM never iniagined Bill Gates would sell DOS to
anyone else. Who was there? But by the mid 80's it was boom time for
Bill. The teenage entrepreneur had predicted a PC on every desk and in
every home, running Microsoft software. It was actually coming true.
As Microsoft mushroomed there was no way that Bill Gates could
personally dominate thousands of employees but that didn't stop him.
He still had a need to be both industry titan and top programmer. So
he had to come up with a whole new corporate culture for Microsoft. He
had to find a way to satisfy both his adolescent need to dominate and
his adult need to inspire. The average Microsoftee is male and about
25. When he's not working, well he's always working. All his friends
are Microsoft programmers too. He has no life outside the office but
all the sodas are free. From the beginning, Microsoft recruited
straight out of college. They chose people who had no experience of
life in other companies. In time they'd be called Microserfs.
Charles Simonyi
Chief Programmer, Microsoft
It was easier to to to create a new culture with people who are fresh
out of school rather than people who came from, from from eh other
companies and and and other cultures. You can rely on it you can
predict it you can measure it you can optimise it you can make a
machine out of it.
Christine Comaford
I mean everyone like lived together, ate together dated each other you
know. Went to the movies together it was just you know very much a it
was like a frat or a dorm.
Steve Ballmer
Everybody's just push push push - is it right, is it right, do we have
it right keep on it - no that's not right ugh and you're very frank
about that - you loved it and it wasn't very formal and hierarchical
because you were just so desirous to do the right thing and get it
right. Why - it reflects Bill's personality.
Jean Richardson
And so a lot of young, I say people, but mostly it was young men, who
just were out of school saw him as this incredible role model or
leader, almost a guru I guess. And they could spend hours with him and
he valued their contributions and there was just a wonderful
camaraderie that seemed to exist between all these young men and Bill,
and this strength that he has and his will and his desire to be the
best and to be the winner - he is just like a cult leader, really.
As the frenzied 80's came to a close IBM reached a watershed - they
had created an open PC architecture that anyone could copy. This was
intentional but IBM always thought their inside track would keep them
ahead - wrong. IBM's glacial pace and high overhead put them at a
disadvantage to the leaner clone makers - everything was turning into
a nightmare as IBM lost its dominant market share. So in a big gamble
they staked their PC future to a new system a new line of computers
with proprietary closed hardware and their very own operating system.
It was war.
Presentation
Start planning for operating system 2 today.
IBM planned to steal the market from Gates with a brand new operating
system, called - drum roll please - OS/2. IBM would design OS/2. Yet
they asked Microsoft to write the code. Why would Microsoft help
create what was intended to be the instrument of their own
destruction? Because Microsoft knew IBM was was the source of their
success and they would tolerate almost anything to stay close to Big
Blue.
Steve Ballmer
It was just part of, as we used to call it, the time riding the bear.
You just had to try to stay on the bear's back and the bear would
twist and turn and try to buck you and throw you, but darn, we were
going to ride the bear because the bear was the biggest, the most
important you just had to be with the bear, otherwise you would be
under the bear in the computer industry, and IBM was the bear, and we
were going to ride the back of the bear.
Bill Gates
It's easy for people to forget how pervasive IBM's influence over this
industry was. When you talked to people who've come in to the industry
recently there's no way you can get that in to their - in to their
head, that was the environment.
The relationship between IBM and Microsoft was always a culture clash.
IBMers were buttoned-up organization men. Microsoftees were obsessive
hackers. With the development of OS/2 the strains really began to
show.
Steve Ballmer
In IBM there's a religion in software that says you have to count
K-LOCs, and a K-LOC is a thousand line of code. How big a project is
it? Oh, it's sort of a 10K-LOC project. This is a 20K-LOCer. And this
is 5OK-LOCs. And IBM wanted to sort of make it the religion about how
we got paid. How much money we made off OS 2, how much they did. How
many K-LOCs did you do? And we kept trying to convince them - hey, if
we have - a developer's got a good idea and he can get something done
in 4K-LOCs instead of 20K-LOCs, should we make less money? Because
he's made something smaller and faster, less KLOC. K-LOCs, K-LOCs,
that's the methodology. Ugh anyway, that always makes my back just
crinkle up at the thought of the whole thing.
Jim Cannavino
When I took over in '89 there was an enormous amount of resources
working on OS 2, both in Microsoft and the IBM company. Bill Gates and
I met on that several times. And we pretty quickly came to the
conclusion together that that was not going to be a success, the way
it was being managed. It was also pretty clear that the negotiating
and the contracts had given most of that control to Microsoft.
It was no longer just a question of styles. There was now a clear
conflict of business interest. OS/2 was planned to undermine the clone
market, where DOS was still Microsoft's major money-maker. Microsoft
was DOS. But Microsoft was helping develop the opposition? Bad idea.
To keep DOS competitive, Gates had been pouring resources into a new
programme called Windows. It was designed to provide a nice
user-friendly facade to boring old DOS. Selling it was another job for
shy, retiring Steve Ballmer.
Steve Ballmer (Commercial)
How much do you think this advanced operating environment is worth -
wait just one minute before you answer - watch as Windows integrates
Lotus 1, 2, 3 with Miami Vice. Now we can take this...
Just as Bill Gates saw OS/2 as a threat, IBM regarded Windows as
another attempt by Microsoft to hold on to the operating system
business.
Bill Gates
We created Windows in parallel. We kept saying to IBM, hey, Windows is
the way to go, graphics is the way to go, and we got virtually
everyone else, enthused about Windows. So that was a divergence that
we kept thinking we could get IBM to - to come around on.
Jim Cannavino
It was clear that IBM had a different vision of its relationship with
Microsoft than Microsoft had of its vision with IBM. Was that
Microsoft's fault? You know, maybe some, but IBM's not blameless there
either. So I don't view any of that as anything but just poor business
on IBM's part.
Bill Gates is a very disciplined guy. He puts aside everything he
wants to read and twice a year goes away for secluded reading weeks -
the decisive moment in the Microsoft/IBM relationship came during just
such a retreat. In front of a log fire Bill concluded that it was no
longer in Microsoft's long term interests to blindly follow IBM. If
Bill had to choose between OS2, IBM's new operating system and
Windows, he'd choose Windows.
Steve Ballmer
We said ooh, IBM's probably not going to like this. This is going to
threaten OS 2. Now we told them about it, right away we told them
about it, but we still did it. They didn't like it, we told em about
it, we told em about it, we offered to licence it to em.
Bill Gates
We always thought the best thing to do is to try and combine IBM
promoting the software with us doing the engineering. And so it was
only when they broke off communication and decided to go their own way
that we thought, okay, we're on our own, and that was definitely very,
very scary.
Steve Ballmer
We were in a major negotiation in early 1990, right before the Windows
launch. We wanted to have IBM on stage with us to launch Windows 3.0,
but they wouldn't do the kind of deal that would allow us to profit it
would allow them essentially to take over Windows from us, and we
walked away from the deal.
Jack Sams, who started IBM's relationship with Microsoft with that
first call to Bill Gates in 1980, could only look on as the
partnership disintegrated.
Jack Sams
Then they at that point I think they agreed to disagree on the future
progress of OS 2 and Windows. And internally we were told thou shalt
not ship any more products on Windows. And about that time I got the
opportunity to take early retirement so I did.
Bill's decison by the fireplace ended the ten year IBM/Microsoft
partnership and turned IBM into an also-ran in the PC business. Did
David beat Goliath? The Boca Raton, Florida birthplace of the IBM's PC
is deserted - a casualty of diminishing market share. Today, IBM is
again what it was before - a profitable, dominant mainframe computer
company. For awhile IBM dominated the PC market. They legitimised the
PC business, created the standards most of us now use, and introduced
the PC to the corporate world. But in the end they lost out. Maybe it
was to a faster, more flexible business culture. Or maybe they just
threw it away. That's the view of a guy who's been competing with IBM
for 20 years, Silicon Valley's most outspoken software billionaire,
Larry Ellison.
Larry Ellison
Founder, Oracle
I think IBM made the single worst mistake in the history of enterprise
on earth.
Q: Which was?
LARRY: Which was the manufacture - being the first manufacturer and
distributor of the Microsoft/Intel PC which they mistakenly called the
IBM PC. I mean they were the first manufacturer and distributor of
that technology I mean it's just simply astounding that they could ah
basically give a third of their market value to Intel and a third of
their market value to Microsoft by accident - I mean no-one, no-one I
mean those two companies today are worth close to you know approaching a
hundred billion dollars I mean not many of us get a chance to make a
$100 billion mistake.
As fast as IBM abandons its buildings, Microsoft builds new ones. In
1980 IBM was 3000 times the size of Microsoft. Though still a smaller
company, today Wall Street says Microsoft is worth more. Both have
faced anti-trust investigations about their monopoly positions. For
years IBM defined successful American corporate culture - as a machine
of ordered bureaucracy. Here in the corridors of Microsoft it's a
different style, it's personal. This company - in its drive, its
hunger to succeed - is a reflection of one man, its founder, Bill
Gates.
Jean Richardson
Bill wanted to win. Incredible desire to win and to beat other people.
At Microsoft we, the whole idea was that we would put people under,
you know. Unfortunately that's happened a lot.
Esther Dyson
Computer Industry Analyst
Bill Gates is special. You wouldn't have had a Microsoft with take a
random other person like Gary Kildall. On the other hand, Bill Gates
was also lucky. But Bill Gates knows that, unlike a lot of other
people in the industry, and he's paranoid. Every morning he gets up
and he doesn't feel secure, he feels nervous about this. They're
trying hard, they're not relaxing, and that's why they're so
successful.
Christine Comaford
And I remember, I was talking to Bill once and I asked him what he
feared, and he said that he feared growing old because you know, once
you're beyond thirty, this was his belief at the time, you know once
you're beyond thirty, you know, you don't have as many good ideas
anymore. You're not as smart anymore.
Bill Gates
If you just slow down a little bit who knows who it'll be, probably
some company that may not even exist yet, but eh someone else can come
in and take the lead.
Christine Comaford
And I said well, you know, you're going to age, it's going to happen,
it's kind of inevitable, what are you going to do about it? And he
said I'm just going to hire the smartest people and I'm going to
surround myself with all these smart people, you know. And I thought
that was kind of interesting. It was almost - it was like he was like
oh, I can't be immortal, but like maybe this is the second best and I
can buy that, you know.
Bill Gates
If you miss what's happening then the same kind of thing that happened to
IBM or many other companies could happen to Microsoft very easily.
So no-one's got a guaranteed position in the high technology business,
and the more you think about, you know, how could we move faster, what
could we do better, are there good ideas out there that we should be
going beyond, it's important. And I wouldn't trade places with anyone,
but the reason I like my job so much is that we have to constantly
stay on top of those things.
The Windows software system that ended the alliance between Microsoft
and IBM pushed Gates past all his rivals. Microsoft had been working
on the software for years, but it wasn't until 1990 that they finally
came up with a version that not only worked properly, it blew their
rivals away and where did the idea for this software come from? Well
not from Microsoft, of course. It came from the hippies at Apple.
Lights! Camera! Boot up! In 1984, they made a famous TV commercial.
Apple had set out to create the first user friendly PC just as IBM and
Microsoft were starting to make a machine for businesses. When the TV
commercial aired, Apple launched the Macintosh.
Commercial
Glorious anniversary of the information...
The computer and the commercial were aimed directly at IBM - which the
kids in Cupertino thought of as Big Brother. But Apple had targeted
the wrong people. It wasn't Big Brother they should have been worrying
about, it was big Bill Gates.
Commercial
We are one people....
To find out why, join me for the concluding episode of Triumph of the
Nerds.
Commercial
...........we shall prevail.
Part 3
In 1980, just four years after being founded in a Californian garage,
Apple was the biggest maker of PCs in the world. Computer giant IBM
was not amused and fought back, launching its own PC in 1981. Though
built from copy-cat technology, IBM's PC was an enormous hit and
spawned many imitators, the PC clones. But PCs were still a pain to
use. A revolution was needed to make them friendlier. Now view on.
Ladies and gentlemen welcome to the launch of Windows 95. Yes welcome
Microsoftees nice to have you all here. But now let's welcome the
chairman of Microsoft. Listen to this. This is a man, a man so
successful his chaffeur is Ross Perot ladies and gentlemen...please
welcome Bill Gates.
It's August 24th, 1995. In a suburb of Seattle in the Pacific
Northwest, this is the biggest, noisiest product launch in the history of
the personal computer. It's Windows 95 software - and Bill Gates is the
star, chairman, chief nerd and spiritual leader of Microsoft. This is the
latest step in Bill's dream to have his software running on
every PC in the world.
Bill Gates
We wanted people to be able to appreciate how Windows 95 makes
computing faster, easier and more fun. And for seven years it was a
lonely, lonely crusade...this moves the whole PC industry up to a
whole new level...
Wait a minute all this publicity is so Bill Gates can claim that
Windows 95 is the latest and perhaps the most significant improvement
in the PC since it was invented. He can say that his new operating
system makes PC's nicer to look at and easier to use than ever before.
They'll no longer be just for geeks and nerds they'll be so easy to
use that even my mother will want one...but you know what - most of
the ideas in Windows 95 were invented twenty years ago. The 20 year
journey to this software celebration hasn't been easy. It has involved
huge gambles, passionate commitment, dramatic setbacks and required
the occasional crushing of rivals and allies. It's the triumph of Bill
Gates' commercial vision. Success in the market place doesn't have to
come from innovation, or from being the best, if you have a ruthless
ability to exploit your opportunities. And the way Microsoft made the
PC's graphical user interface its own is a textbook example of that
ability. Time for another Cringely crash course in elementary
computing. In the early days of personal computing the machines were
pretty hard to use in part that's because they were primitive but it's
also because computer guys tend to like things that are pretty hard to
use. This is an IBMPC circa about 1983 and on it I have written a
letter to my bank manager asking him to back one of my get rich quick
schemes and I need to file the letter now and let me show you how I do
it - there will be a test on this. OK the commands are - copy c,
colon, backslash, quickrich, dot, doc space a colon bakcslash begging
and return - well not very easy to do. Here's a windows PC about
twelve years newer and we'll do exactly the same thing - I've written
a document - quickrich, dot doc and I put it in the begging file and
it yes I really do mean to do it and that's it. Pictures rather than
words making the PC easy and intuitive. This is called a graphical
user interface - GUI or gooey - where they come up with these names.
The battle to bring gooeys to PCs and make them more user friendly
took ten years and is a helluva story - that is what this program is
about. It's also about how Bill Gates ended up master of the gooey
universe and a gazillionaire. I never said it was a fairy story. It
all began in 1971 in Palo Alto, just south of San Francisco, when
Xerox, the copier company, set up the Palo Alto Research Center, or
PARC. The Xerox management had a sinking feeling that if people
started reading computer screens instead of paper, Xerox was in
trouble. Unless...they could dominate the paperless office of the
future.
Bob Taylor
Former Head of Computer Science Lab, Xerox PARC
You could take computer technology into the office and make the office a
much better place to work, more productive, more enjoyable - a lot
more enjoyable, ehm more interesting, more rewarding and so we set to
work on it.
Bob Taylor ran the Computer Science Lab and one of the first things he
did was to buy bean bags for his researchers to sit on and brainstorm.
Bob Taylor
Here's a couple of the original beanbag chairs. The role of the
beanbag in computer science is ease of use.
BOB: OK.
It was said that of the top 100 computer researchers in the world, 58
worked at PARC. Strange, as the staff never exceeded 50.
Bob Taylor
See you didn't get your butt low enough...
But Taylor gave these nerd geniuses unlimited resources and protected
them from commercial pressures.
BOB: It's very comfortable.
BOB TAYLOR: Now let's see you get out of it.
BOB: I feel my neural capacity already increasing - Oh God...
John Warnock
Former Xerox PARC Researcher
The atmosphere was electric eh there was total intellectual freedom.
There was no conventional wisdom almost every idea was up for
challenge and got challenged regularly.
Larry Tesler
Former Xerox PARC Researcher
The management said go create the new world. We don't understand it.
Here are people who have a lot of ideas and tremendous talent, young,
energetic.
Adele Goldberg
Former Xerox PARC Researcher
People came there specifically to work on five year programs that were
their dreams.
This is a computer room in the basement of the Xerox Pala Alto
Research Centre...about twenty five years ago they built the max time
sharing system and now it's loaded with all sorts of other computers
and eh there's one that we're really interested in here let's see here
it is let me turn on the lights. OK here we have it. This is a
Xerox/Alto computer built around 1973. Some people would argue that
this is the first personal computer. Ah it really isn't because for
one thing it wasn't ever for sale and the parts alone cost about
$10,000 but it has all the elements of quite a modern personal
computer and without it we wouldn't have the Macintosh, we wouldn't
have Windows we wouldn't have most of the things we value in computing
today and ironically none of those things has a Xerox name on it.
Commercial
WhatÍs the mail this morning?
This promotional film made in the mid seventies, to flaunt XEROX PARC
research, shows just how revolutionary the Alto was. It was friendly
and intuitive.
Commercial
This is an experimental office system. It's in use now...
It had the first GUI using a mouse to point to information on the
screen. It was linked to other PCs, by a system called ethernet, the
first computer network. And what you saw on the screen was precisely
what you got on your laser printer. It was way ahead of its time.
Commercial
Thank you Fred.
Many of the research team left Xerox, they started their own companies
and made a lot of money by exploiting their own ideas. Bob Metcalfe
made enough from what he invented at PARC to furnish him with the good
things in life - including this boat and a prime berth in New York
Harbour whenever he visits the Big Apple.
Bob Metcalfe
Former Xerox PARC Researcher
And here I am happy and healthy and I invented ethernet! HAHAHA And
there's now 50 million people using ethernet which is pretty amazing.
Those early PARC researchers were truly inventing the future.
Bob Metcalfe
We're going to build these personal computers - we're going to put one
on every desk. Now in 1996 one on every desk doesn't sound that
amazing does it...but in 1971/2 you were lucky to have a computer in
your city let alone your building and if it was in your building
there'd be one and we were talking about putting them on every desk
and this required a new kind of network.
Larry Tesler
Everybody wanted to make a real difference, we really thought that we
were changing the world and that at the end of this project or this
set of projects personal computing would burst on the scene exactly
the way we had envisioned it and take everybody by total surprise.
But the brilliant researchers at PARC could never persuade the Xerox
management that their vision was accurate. Head Office in New York
ignored the revolutionary technologies they owned three thousand miles
away. They just didn't get it.
John Warnock
None of the main body of the company was prepared to accept the
answers. So there was a tremendous mismatch between the management and
what the researchers were doing and these guys had never fantasised
about what the future of the office was going to be and when it was
presented to them they had no mechanisms for turning those ideas into
real live products and that was really the frustrating part of it was
you were talking to people who didn't understand the vision and yet
the vision was getting created everyday within the Palo Alto Research
Centre and there was no one to receive that vision.
But a few miles down the road from Palo Alto was a man ready to share
the vision. The most dangerous man in Silicon Valley sits in an office
in this building. People love him and hate him. Often at the same
time. For ten years by sheer force of will he made the personal
computer industry follow his direction. With this guy we're not
talking about someone driven by the profit motive in a desire for an
opulent retirement at the age of forty, no we're talking holy war
we're talking rivers of blood and fields of dead martyrs to the cause
of greater computing. We're talking about a guy who sees the personal
computer as his tool for changing the world. We're talking about Steve
Jobs.
Steve Jobs
Hi I'm Steve Jobs.
Larry Tesler
When I wasn't sure what the word charisma meant, I met Steve Jobs and
then I knew.
Bob Metcalfe
Steve Jobs is on my eternal heroes list, there's nothing he can ever
do to get off it.
Larry Tesler
Chief Scientist, Apple Computer
He wanted you to be great and he wanted you to create something that
was great and he was going to make you do that.
Bob Metcalfe
He's also obnoxious and this comes from his high standards. He has
extremely high standards and he has no patience with people who don't
either share those standards or perform to them.
Steve Jobs
And I'm also one of these people. I don't really care about being
right you know I just care about success.
Steve Jobs had co-founded Apple Computer in 1976. The first popular
personal computer, the Apple 2, was a hit - and made Steve Jobs one of
the biggest names of a brand-new industry. At the height of Apple's
early success in December 1979, Jobs, then all of 24, had a privileged
invitation to visit Xerox Parc.
Steve Jobs
And they showed me really three things. But I was so blinded by the
first one I didn't even really see the other two. One of the things
they showed me was object orienting programming they showed me that
but I didn't even see that. The other one they showed me was a
networked computer system...they had over a hundred Alto computers all
networked using email etc., etc., I didn't even see that. I was so
blinded by the first thing they showed me which was the graphical user
interface. I thought it was the best thing I'd ever seen in my life.
Now remember it was very flawed, what we saw was incomplete, they'd
done a bunch of things wrong. But we didn't know that at the time but
still though they had the germ of the idea was there and they'd done
it very well and within you know ten minutes it was obvious to me that
all computers would work like this some day.
It was a turning-point. Jobs decided that this was the way forward for
Apple.
Adele Goldberg
Founder, PARC Place Systems
He came back and I almost said asked, but the truth is, demanded that
his entire programming team get a demo of the Smalltalk System and the
then head of the science centre asked me to give the demo because
Steve specifically asked for me to give the demo and I said no way. I
had a big argument with these Xerox executives telling them that they
were about to give away the kitchen sink and I said that I would only
do it if I were ordered to do it cause then of course it would be
their responsibility, and that's what they did.
Demonstration
The mouse is a pointing device that moves a cursor around the display
screen.
Adele and her colleagues showed the Apple programmers an Alto machine
running a graphical user interface.
Demonstration
A selected window displays above other windows much like place a piece
of paper on top of a stack on a desk.
The visitors from Apple saw a computer that was designed to be easy to
use, a machine that anybody could operate and find friendly...even the
French.
Bill Atkinson
Designer, Macintosh Development Team
I think mostly what...what we got in that hour and a half was
inspiration and just sort of basically a bolstering of our convictions
that a more graphical way to do things would make this business
computer more accessible.
Larry Tesler
After an hour looking at demos they understood our technology, and
what it meant more than any Xerox executive understood after years of
showing it to them.
Steve Jobs
Basically they were copier heads that just had no clue about a
computer or what it could do. And so they just grabbed eh grabbed
defeat from the greatest victory in the computer industry. Xerox could
have owned the entire computer industry today. Could have been you
know a company ten times its size. Could have been IBM - could have
been the IBM of the nineties. Could have been the Microsoft of the
nineties.
For Steve Jobs the road to Damascus passed through Palo Alto. He
persuaded the Apple board to invest in technology copying what he'd
seen at Xerox Parc - his instrument of change. They hired a hundred
engineers and started developing a new PC codenamed Lisa. But there
were problems. They couldn't get it to work properly and the pricetag
was heading toward $10,000 - way too much for the average PC buyer.
Jobs' domineering style drove everyone nutstoo so the board ousted him
from his own pet project.
Steve Jobs
You know I brooded for a few months, but it was not very long after
that that it really occurred to me that if we didn't do something here
the Apple 2 was running out of gas and we needed to do something with
this technology fast or else Apple might cease to exist as the company
that it was.
Jobs found his answer from Jeff Raskin, Apple employee number 31.
Raskin's idea was a $600 computer - as easy to use as a toaster -
code-named Macintosh, after America's favourite apple. Jobs liked the
price but not Raskin's design ideas. So Steve took over the Macintosh
project, determined to make it a cheaper Lisa.
Steve Jobs
And so I formed a small team to do the Macintosh and we were on a
mission from God you know to save Apple.
Steve needed to find the right people to join in his technological
crusade...brilliant engineers who would worship him.
Andy Hertzfeld
Designer, Macintosh Development Team
Steve Jobs kind of came bopping by my cubicle saying OK you're working on
the Mac now. And I said well I have to finish up this Apple 2 stuff I'm
doing here. No you don't that stinks that's not going to amount to anything
you gotta start now. And I said well just give me a few days
to finish and he said no and what he did was he pulled the plug on my
Apple 2 that I was programming just losing, losing the code I'm
working on and start taking my computer and walking away with it and
what could I do but follow him out to his car cause he had my machine
he plopped it down in the trunk and drove me over to this remote
building, took the computer out, walked upstairs, plopped it down on a
desk, well you're working on the Mac now.
While Jobs pursued his MacMission he needed a more orthodox chief
executive to run the company. A respectable face who could sell to
corporate America. He chose Pepsi-Cola executive John Sculley. Sculley
refused - leave Pepsi for 4 year old company that had been set up in a
garage! Are you serious?! But it was hard saying no to Steve Jobs.
John Sculley
President, Apple Computer, 1983-93
And then he looked up at me and just stared at me with the stare that
only Steve Jobs has and he said do you want to sell sugar water for
the rest of your life or do you want to come with me and change the
world and I just gulped because I knew I would wonder for the rest of
my life what I would have missed.
For the young Mac team, average age 21, this was the start of the
toughest, but most exhilarating assignment of their lives,
relentlessly driven by Jobs' ego.
BOB: Oh look at this and who is this fresh-faced young guy here?
ANDY: That's me eleven years ago - had more hair I guess little
thinner. Oh I love these people. They're like family to me really and
we were united by this common bond of trying to do this incredible
thing with the Mac.
Jobs wanted the Mac to revolutionise the PC market - so he insisted
that the team deliver perfection.
Andy Hertzfeld
Steve was upset that the Mac took too long to boot to boot up when you
first turned it on so he tried motivating Larry Kenyon by telling him
well you know how many millions of people are going to buy this
machine - it's going to be millions of people and let's imagine that
you can make it boot five seconds faster well that's five seconds
times a million every day that's fifty lifetimes, if you can shave
five seconds off that you're saving fifty lives. And so it was a nice
way of thinking about it, and we did get it to go faster.
Larry Tesler
And the little things he did would create incredible pressure unlike
I'd ever experienced before just tearing you to the bone ripping you
apart and making you feel worthless.
Bill Atkinson
I mean, he would sometimes tell people this is shit and you had to
understand what that meant in Jobs language, you see.
BOB: What did it mean?
BILL: As an engineer, if you understood his language you would
understand that that was a request to teach me about this.
Steve Jobs
No that's not usually what I meant. I you know when you get really
good people they know they're really good and you don't have to baby
peoples egos so much.
Bill Atkinson
And maybe in the process of that dialogue Steve will suggest something
that caused his engineers to go back and make it better yet and that's
actually what a happened a lot of times Steve really did make the
product better without even knowing exactly how the engineer was doing
it.
Andy Hertzfeld
And then this is one of the very first Macintosh wire-wrap. This is
wire-wrap board No. 4.
As the Mac progressed, new features were continually being added. Jobs
said the Mac had to be 'insanely great' and pushed his engineers to
the limit. He had to - because by early 1983, Apple was in trouble.
And this was what was giving Apple such a headache...IBM's first PC
launched in 1981. It was a runaway success. Within a couple of years
more than 2 million units had been shipped overtaking Apple and making
Big Blue the biggest player in the market.
Commercial
When IBM personal computer owners look for good software where can
they turn - to IBM.
What was driving IBM PC sales was software...
Commercial
Business program, entertainment, productivity, education.
But software for an IBM wouldn't run on the Mac. If the Macintosh was
to succeed Jobs needed killer applications. Enter 25 year old software
supremo Bill Gates. At that time his company Microsoft had one hundred
workers and was growing like crazy thanks to DOS, the operating system
that drove the IBM PC. But DOS sure wasn't a GUI. Gates and his
aggressive number 2 Steve Ballmer were immediately intrigued by the
Mac.
Steve Ballmer
Jobs talked to Bill at some industry conference and said hey we're
doing, I think LISA was sort of in development and he said I'm gonna
do the graphical interface machine here at Apple not just that LISA
thing Bill I'm going to do the one the one that's really going to be
the winner.
While the Mac was being developed, Jobs staged an event, a parody of a
TV game show, to whip up enthusiasm among software developers.
MAC Dating Game
And now ladies and gentlemen the Macintosh Software Dating Game...
Jobs got the three top software bosses of the time to sing the Mac's
praises. One of them was Bill Gates. Steve didn't realise he was
opening the door to the man who'd prove to be Apple's main rival.
JOBS: When was your first date with the Macintosh?
GATES: We've been working with the Mac for almost two years now and we
put some of our really good people on it and eh...
Bill Gates
Even before we finished our work on the IBM PC, er, Steve Jobs came
and talked about what he wanted to do what he thought he could do sort of
a LISA but cheaper. We said boy we'd love to help out. The LISA had all its
own applications but of course they required a lot of memory
ah and we thought we could do better and so Steve signed a deal with
us to actually provide bundled applications for the first Mac and so
we were big believers in the Mac and what Steve was doing there.
Steve Jobs
Most people don't remember, but until the Mac Microsoft was not in the
applications business...it was dominated by Lotus. And Microsoft took
a big gamble to write for the Mac.
Bill Gates
I signed up for Excel and Chart and File. He didn't buy Word because
he had Macwrite going on and so we were part of that Mac development.
Steve Jobs
And they came out with applications that were terrible, but they kept
at it and they made them better.
Bill Gates
Once again we had more people than Apple did for most of that
development and they, they did all the key work but we got to do a lot
of tests you know.
Jeff Raikes
Vice-President, Microsoft
And so we got started in early 1982 on our Macintosh software effort
and I think at that point in time you know, it really clicked with
Bill that you know, graphic user interface was going to be the way,
the way of the future.
But while Bill was having his own GUI revelation, Jobs believed that
Apple's true enemy was IBM.
Steve Jobs
Will Big Blue dominate the entire computer industry...the entire
information age, was George Orwell right about 1984?
Despite Steve Jobs' showmanship, the IBM PC was hurting Apple's
business.
John Sculley
And most pundits considered that Apple was going to be out of business
in a few short months. Business Week ran an article on their cover
saying ehm "It's Over - IBM Has Won."
The Mac team saw themselves as Apple's pirates but the gang was now
being called on to save the ship, as the Apple II was losing precious
market share.
John Sculley
In the case of the Macintosh team ehm they were behind schedule in
getting the Mac out which was not unusual in high technology ehm and
so just getting that product to market was extremely important.
After many delays, a date for the launch of the Mac was announced. The
pressure of the deadline was mounting, but Steve was still a
perfectionist.
Chris Espinosa
Manager Media Tools, Apple
I had a huge screaming match with him about the software is written if we
change it we've got to test it you know we're going to risk product quality,
the manuals are already pasted up we've got to go to press if you do this
it's going to slip the product. I don't care it sucks we
can't do it this way. No design issue was too small and it was never
too late to do it right.
Andy Hertzfeld
It was a pressure cooker. We were working until we finished. We
couldn't go to sleep or anything I was up for three days in that very
last push and finally the stars aligned and the last release we made
at six a.m. that morning.
It was now all or nothing, because Lisa had turned out an expensive
flop. The fate of the whole company seemed to rest on the launch of
the Mac. John Sculley had even authorised a 15 million dollar
advertising campaign to coincide with the Mac's public unveiling -
January 24th, 1984.
John Sculley
I remember how nervous Steve was before the introduction of the
Macintosh and the rehearsal the night before was a total disaster ehm
nothing seemed to go right, Steve was upset at everybody, we wondered
how in the world we were going to get through the introduction the
following day but when that moment came Steve was a master showman.
Steve Jobs (AT LAUNCH)
There have only been two milestone products in our industry - the
Apple 2 in 1977 and the IBM PC in 1981. Today...one year after LISA we
are introducing the third industry milestone product...Macintosh. Many of us
have been working on Macintosh for over two years now and it has turned out
insanely great. You've just seen some pictures of Macintosh now
I'd like to show you Macintosh in person.
The Macintosh was undoubtedly the first affordable personal computer
with a genuine graphical user interface. It was also the first
computer to be a monument to one man's ego. Forget the brilliant work
done at Xerox PARC and the innovations borrowed from the Lisa. On the
day only one man was claiming paternity for the Mac.
Computer Voice
So it is with considerable pride that I introduce a man who's been
like a father to me - Steve Jobs.
John Scully
I was standing off-stage and as he came off he said this is the
proudest happiest moment of my life and it was all over his face it
clearly was cause he had launched a revolution.
Steve Jobs
Ultimately it comes down to taste. It comes down to trying to expose
yourself to the best things that humans have done and then try to
bring those things in to what you're doing. I mean Picasso had a
saying he said good artists copy great artists steal. And we have
always been shameless about stealing great ideas ehm and I think part
of what made the Macintosh great was that the people working on it
were musicians and poets and artists and zoologists and historians who
also happened to be the best computer scientists in the world.
With delusions of grandeur running rampant, Apple created a
Hollywood-style TV commercial. It symbolised how the friendly Mac
would free us from the Orwellian tyranny of clunky IBM PC's.
Pleeeeeease! Despite the hype, by late 1984, the Mac's sales were
disastrous. In ad after ad, Apple desperately pointed out that the Mac
was far easier to use than the IBM PC. But it sold for $2500 - a
thousand more than the IBM. And despite Jobs' best efforts in
recruiting software makers like Bill Gates, applications were scarce.
John Sculley
It didn't do very much. We had Mac Paint and Mac Write were our only
applications and the market started to figure this out, by the end of
the year people said well maybe the IBM PC isn't as easy to use or is
not as attractive as the Macintosh but it actually does something that
we want to be able to do - spreadsheets, wordprocessing and database
and so we started to see the sales of the Mac tail off towards the end
of 1984, and that became a problem the following year.
Cringely's Third Law of Personal Computing was right again - to
succeed, a PC must have an application which alone justifies buying
the whole box. The IBM PC had Lotus 1-2-3. The Mac needed its killer
application. Wysiwyg - another bunch of initials, from the world of
the nerds. What you see is what you get - so what's the big deal? Well
it turns out that it's very hard to print on paper exactly the same
image that you see on the computer screen. Eighty per cent of our
brain is devoted to processing visual data but that's not the same for
computers. I've been here writing a letter to my Mum and I'm signing
it Bob in 72 point Times Roman Italic type as befitting myself and
when I tell it to print - what comes out is a Bob but certainly not
the Bob that I intended. Until someone invented a way to print exactly
what was on the screen gui would be, well a lot of hooey. Apple's
problem was the dot matrix printer. It gave everything a type-writer
quality. But salvation was at hand - and once again it owed a lot to
Xerox Parc. One of Parc's former brains, John Warnock, had invented a
technology that allowed a laser printer to print exactly, precisely
what was on your screen. He started a company called Adobe to market
his invention - when along came Steve Jobs.
Steve Jobs
But I heard a few times, people would tell me, hey there was these
guys over in this garage at Xerox Parc you ought to go see em and I
finally went and saw em and I saw what they were doing and it was
better than what we were doing.
John Warnock
Co-founder, Adobe Systems
Steve Jobs came in, he told us about the Macintosh. He knew that the
dot matrix printers, the old image writer that they had was not going
to fly in a business environment. He had no...he and Atkinson had not
been able to figure out how to drive laser printers and what we had
figured out how to do what no-one else had figured out how to do was
drive laser printers.
Steve Jobs
Within two or three weeks we had cancelled our internal project, a
bunch of people wanted to kill me over this but we did it and I had
cut a deal with Adobe user software and we bought 19.9 per cent of
Adobe at Apple.
The investment paid off. The power of precise laser-printed images and
a user friendly gui gave birth to a brand new business - desk-top
publishing. The spreadsheet had made us all accountants. Now using
break-through software we could create fancy artwork, snappy-looking
note-paper - even counterfeit money. The Mac had found its killer
application - and would soon become the PC of choice for any creative
business.
Dana Muise
Founder, Hypnovista
It changed my life that one instant when I picked up the mouse my
whole life changed to building a career as a computer artist.
The success of desk-top publishing came too late for Apple's founder.
In 1985 Mac sales were still flat but Jobs refused to believe the
numbers. He simply behaved as if the Mac was a hot seller from the
start.
Chris Espinosa
The grandiose plans of what Macintosh were going to be was just so far
out of whack with the truth of what the product was doing and the
truth of what the product was doing was not horrible it was salvagable
but the gap between the two was just so unthinkable that somebody had
to do something and that somebody was John Sculley.
John Sculley, whom Jobs saw as his own creation, presented the board
with his strategy to save the company. The plan did not include Steve
Jobs.
John Sculley
The board had to make a choice, and I said look, it's Steve's company,
I was brought in here to help you know, if you want him to run it
that's fine with me but you know we've at least got to decide what
we're going to do and everyone has got to get behind it.
Andy Hertzfeld
But he took it as a personal attack, started attacking Scully you know
and which, backed himself into a corner because he was sure that the
board would support him and not Sculley.
John Sculley
And ehm ultimately after the board talked with Steve and talked with
me, the decision was that we would go forward with my plans and Steve
left.
Steve Jobs
Ehm what can I say? I hired the wrong guy.
Q: That was Sculley?
JOBS: Yeah and eh he destroyed everything I spent ten years working
for. Ehm starting with me but that wasn't the saddest part. I would
have gladly left Apple if Apple would have turned out like I wanted it
to.
Larry Tesler
People in the company had very mixed feelings about it. Everyone had
been terrorised by Steve Jobs at some point or another and so there
was a certain relief that the terrorist had gone but on the other hand
I think there was an incredible respect for Steve Jobs by the very
same people and we were all very worried - what would happen to this
company without the visionary, without the founder without the
charisma...
Andy Hertzfeld
Apple never recovered from losing Steve. Steve was the heart and soul
and driving force. It would be quite a different place today. They
lost their soul.
Ironically the years after Jobs left were Apple's most profitable.
Apple people played hard, they worked hard. They made the computer
business look like a beach party and with a median age of twenty seven
the company was very sexy...maybe too sexy. There was so much sleeping
around that they came up with a travel policy back then that men would
share rooms with other men on the road and women with other women -
just to settle it down a bit. They applied the California lifestyle to
the computer industry and the computer industry would never be the
same again. In this bizarre promo to inspire their sales force, Apple
stressed that the Mac's ease of use could liberate the pathetic
prisoners of the IBM PC.
Promo
We'll fight them in the office and the classroom and the desktop with
superior weapons.
With improvements to the hardware and the boom in desktop publishing,
Mac production went into overdrive. By 1987, Apple was selling a
million a year. IBM numbers! The Mac minted money - half its 2000
dollar price was pure profit! Apple arrogantly assumed their stuff was so
good, consumers would always pay a premium for it. Big mistake. The Mac
really ought to have won the battle for the desktop - OK it was
more expensive than an IBM PC but if you what you wanted was a
friendly easy to use system and surely everyone wanted that, then this
was the only game in town - at least that's what the boys at Apple
thought but they weren't reckoning on one man, Bill Gates. Gates saw
that the Mac's GUI represented a long term threat to Microsoft's money
machine, to DOS, the clunky operating system that sat inside every IBM PC.
So Bill had his boys create a GUI that sat in top of DOS rather
like building a fancy facade on an old building. They called it
Windows and it wasn't much at first but it was good enough to defend
the DOS franchise.
Jeff Raikes
February or March of 1984, which was just right after the Apple
Macintosh had been introduced. And at that point in time we were
firmly convinced that we needed to bet on graphic user interface.
First with the Macintosh and then with Windows.
At Microsoft, it was a long and often frustrating struggle to find a
GUI solution that challenged the MAC. I know the feeling! For years
teams of Microsofties slaved in their windowless offices to build
Windows - refreshed by an endless supply of free sodas.
Steve Ballmer
I was the development manager for Windows 1.0 and we kept slogging and
slogging yeah I don't know about seven versions just a few versions to
get things right for 1990, that's right.
Windows may at first have been a joke compared to the Mac. But Gates
is persistent. Slowly it got better - and the guys at Apple got
worried. As each new feature appeared on the Windows gui, the more
they thought Microsoft was copying the features on the Mac. So finally
they sued Microsoft, accusing them in a long legal battle of stealing
the look and feel of Apple's gui.
John Sculley
The look and feel which is how it looks, the experience of using it
was not patentable but it was copyrightable but there was no precedent
law. This was going to be a precedent setting case.
Bill Gates
But it was a period of five years where, Microsoft er, our whole
strategy would have been ruined because Windows was very important to
us.
Larry Tesler
They weren't going to change anything and ehm they were going to get
us to cave in or take us all the way to the Supreme Court on this
thing.
Bill Gates
We assumed that the lawyers, the judges would all come to the right
conclusion which eventually they did.
John Sculley
And Apple lost. But in that period of about six years that this case
was going on it may have lulled us into a bit of complacency thinking
that we were going to be insulated, you know, from the Windows attack.
The launch of Windows 3 in 1990 killed off Apple's hopes that the
Macintosh would win the gui wars.
Bill Gates
Today we're introducing Microsoft Windows version 3...
The six years' labour to produce a GUI that made IBM PCs and all the
clones as easy to use as the Mac finally came up trumps. In a year
Windows 3 sold close to 30 million copies, consigning the Mac to a
niche in the market.
Bill Gates
Ladies and gentlemen the Windows 3 development team.
Bill Gates strategy won out. In every stage in the PC's development he
joined the leading hardware company and by carving out a dominant
market share for his product made his software the industry standard.
Bill Gates
You know the original PC did our evangelism in the way we created
tools for that and pulled that together. Take Windows did we bet our
company on that - did that come together? Virtually everything we've
done, when we've first come out with it there's a lot of scepticism
but most of the things we really stuck with them and despite all that
second guessing we were able to pull them off.
The launch of Windows means if nothing else, that Microsoft has
finally won the battle for the graphical user interface. The great
ideas of Xerox Parc which were turned into a great product by Apple
are going to make Bill Gates even richer - why? Well he was smart. He
was persistent. He took advantage of opportunities missed by others
and he made clever decisions when his competitors were making stupid
ones.
John Sculley
The problem was the industry wasn't measured by who has the best
selling personal computer or who has the most innovative technology.
The industry was measured by who had the most open system that was
adopted by the most other companies and the Microsoft strategy
ultimately turned out to be the better business strategy.
Steve Jobs
The only problem with Microsoft is they just have no taste, they have
absolutely no taste, and what that means is - I don't mean that in a
small way I mean that in a big way. In the sense that they they don't
think of original ideas and they don't bring much culture into their
product ehm and you say why is that important - well you know
proportionally spaced fonts come from type setting and beautiful
books, that's where one gets the idea - if it weren't for the Mac they
would never have that in their products and ehm so I guess I am
saddened, not by Microsoft's success - I have no problem with their
success, they've earned their success for the most part. I have a
problem with the fact that they just make really third rate products.
Steve Ballmer
I will admit quite frankly that I think Windows today is probably four
years behind, three years behind where it would have been had we not
danced with IBM for so long. Because the amount of split energy, split
works, split IQ in the company really cost our end customer real
innovation in our product line and so whenever I hear these criticisms
which I gotta to say sting eh sometimes, I say to myself just you
watch, just you watch Windows 95, Windows 9...there's no lack of focus
there hasn't been here for the last three or four years since we
didn't have this big spot with IBM. Even in the operating systems here
now, you'll start to see clear, clear...and people will recognise
clear leadership.
Bill Gates
We just keep making them better. We get millions of phone calls we get
to go out there and talk to customers there's nothing cast in
concrete. If people decide that there's something we should change we
change it, it's a lot better than most industries in that sense. I
think the way that applications user interfaces have advanced over the
last decade Microsoft has been at the forefront of a very high
percentage of that, and you know, I think it's great stuff.
On August 24th 1995, Gates delivered the coup de grace to his software
rivals. Windows 95 combines a PC's operating system and its graphical
interface into one package. With a worldwide promotional campaign
costing $300 million, it looks set to become the industry standard -
supplanting Microsoft's old warhorse DOS. Cue the triumph of Bill. A
software nerd is the richest man in the world. But even as Bill Gates
bestrides the PC world like a colossus, ahead lie bigger battles,
battles that will make the trouncing of the Mac and mastering the IBM
PC look like a tea party. The Gates fortune was built on setting the
industry standard for PC operating systems. Fine as long as PC's are
stand alone boxes on your desk. But now they are being linked - into a
worldwide network, the much hyped information superhighway.The PC on
the internet is a mailbox, a telephone and a television.
Of course at the centre of this will be the idea of digital
convergence that is taking all the information - books, art, movies
and being able to provide that on demand on what the PC will have
evolved into.
The Internet is the next wave of the information revolution where
there is as yet no industry standard, a world where even Bill Gates
seems unsure.
Bill Gates
You know, if you take the way the Internet is changing month by month, if
somebody can predict what's going to happen three months from now,
nine months from now even today eh my hat's off to them, I think we've
got a phenomena here that is moving so rapidly that nobody knows
exactly where it will go.
Bill Gates isn't resting on his laurels. He's making new alliances,
like investing in Steven Spielberg's new movie studio, Dreamworks.
He's in cable TV with broadcaster NBC and in competition with Rupert
Murdoch and Mickey Mouse. These tycoons are a far cry from the nerds
Bill has so far outsmarted - guys like Gary Kildall who became
businessmen by accident. Even Bill's victory over IBM was really with
a corporate outpost a long way from the attention of Big Blue
Headquarters. No - Bill's new rivals are hotshots, not hippies. And
one of them is the guy I'm visiting. He hopes the Internet will go
somewhere other than to Bill Gates' bottom line. He's betting it will
soon consign the PC itself to the trashcan - and do the same to
Microsoft. Larry Ellison is the boss of Oracle, a booming business
that sells software to companies who share information among hundreds
of users. In Atherton, the most exclusive suburb in Silicon Valley,
the bachelor billionaire has built himself a 10 million dollar samurai
mansion. Naturally!
Larry Ellison
I want to have a large pond about 5 acres of water surrounded by
several little buildings like a village.
With his ceremonial carp Larry contemplates the coming battle with
Microsoft.
Larry Ellison
President, Oracle
People make a terrible mistake of thinking IBM is the present and
Microsoft is the future and I think IBM is the past and Microsoft is
the present and the future has not happened so we don't know what
company, what technology is going to be dominant. These are temple
guardians from the Koma Kura period ah and they you know you would
have one on either side of your door and the job was to scare
employees of Microsoft away and keep them from entering the Temple. We
shouldn't spend all of our time wringing our hands about Microsoft you know
Microsoft world domination that eh there still room enough for
innovation - there's going to be change and Microsoft's future is not
assured. Anything good for the Internet. Yeah IÍm very supportive of
it because the Internet does not require a PC.
Larry believes the PC will be replaced with a cheap device he calls an
information appliance. It will be a glorified television which will
access information and computing simply by connecting to giant
computers via the Internet. Just like turning on a tap - and the PC
will go the way of the well and the bucket.
Larry Ellison
I hate the PC with a passion. Me going down to the store and buying
Windows 95, I've got to get into my car drive down to a store buy a
cardboard box full of bits you know encoded on a piece of plastic
CDROM and you bring it home and read a manual install this thing - you
must be kidding you know, put the stuff on the net - it's bits, don't
put bits in cardboard, cardboard in trucks, trucks to stores, me go to
the store, you know, pick the stuff out, it's insane. OK I love the
Internet - I want information you know it flows across the wire.
So, the way ahead is wired - Larry, Bill, everybody agrees on that.
And we have the nerds of the seventies to thank for making it
possible, whether the PC itself survives or not. As we take up their
challenge, it's worth finding out how these pioneers made out. Steve
Jobs sold all his Apple stock in disgust when he was fired, but has
made another fortune from his stake in a movie animation studio. He
has no doubts about his contribution to humanity.
Steve Jobs
If you talk to people that use the Macintosh they love it but you
don't hear people loving products very often you know really but you
could feel it in there, there was something really wonderful there.
Apple, the company Jobs took from a garage to the Fortune 500 is in
trouble. It is now a fading force in the PC marketplace. Apple's other
millionaire founder Steve Wozniak spends much of his time teaching
computing to 11 and 12 year olds. IBM created the mass market for the
PC but no longer sets industry standards. And most of the guys who
built IBM's first PC have left Big Blue. And Ed Roberts who built the
Altair, the very first PC, he turned his back on computing and
returned to his first love, medicine. Funny, isn't how things turn
out? After all the first PC revolution caught us all pretty much by
surprise. Even Microsoft with 2000 millionaires and at least two
billionaires never expected to be as successful as they are today.
Cringely's universal law says society takes 30 years to adopt new
technology into daily life - the phone, movies. Even television took
that long before our rear ends became couch-shaped. So far the PC has
had 20 years. So what comes next? Well, I'm off to find out. See you
in ten years!
end of document
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