Build It Ourselves? Summer 1980

You are advising a small IBM team in Boca Raton, Florida, that wants to build a personal computer.

Personal computers from companies such as Apple are selling fast, and IBM has no strong product in that market. The team has proposed building an IBM personal computer in about a year, far faster than IBM normally develops products.

Known information

IBM traditionally designs its own chips, hardware and software.
Designing everything in-house would likely take several years.
Using an off-the-shelf microprocessor and an operating system licensed from an outside company could meet a target price of around $1,500 within a year.
Outside parts and openly published technical details would make it easier for other companies to build compatible machines.

Reveal what happened (spoilers: decide first)

Fact

What actually happened

IBM built the PC from outside components and licensed software. (Use outside parts and software)

The team used Intel’s 8088 processor and Microsoft’s MS-DOS operating system. The IBM Personal Computer launched on 12 August 1981 at a price of $1,565. Within a year more than 750 software packages were available for it, and other companies soon sold ‘IBM compatible’ computers. IBM’s share of the PC market later fell sharply, and it sold its PC business to Lenovo in 2005.

Important

Possible consequences · Analysis and speculation, not fact

A fully proprietary IBM PC might have kept more profit within IBM, but it could also have arrived too late or been too expensive to set the standard. Which effect would have been stronger is unknowable.

History does not reveal what would definitely have happened under the other choice. Many factors could have changed the outcome.

Context · Why it was decided this way

The decision let IBM enter the market quickly and turned its design into an industry standard. It also meant much of the value in the PC industry flowed to the suppliers of the processor and the operating system.

Historians of technology often cite the IBM PC as an example of the trade-offs of open platforms: fast adoption and a large ecosystem, but less control for the company that set the standard.