Tue, Aug 08, 2006 - Page 9 News List

The PC turns 25

When the personal computer was introduced in 1981, it was expected to spark enormous efficiency gains. But the PC only started realizing its true potential after the introduction of interconnectivity

By Harold James

In August 1981, IBM introduced the 5150 personal computer. It was not really the first personal computer, but it turned out to be "The Personal Computer," and it revolutionized not just business life, but also the way people thought about the world.

The 1981 PC was a break with IBM's previous business model, according to which it did not sell computers, but leased them. With the 5150, IBM moved into mass production of a standardized commodity using components produced by other companies. "Big Blue" (as IBM is known) allowed other companies (notably the infant Microsoft) to develop its software.

No good deed goes unpunished: By making the PC, IBM practically destroyed itself as a company. Its innovation gave rise to a huge number of new and dynamic companies, forcing IBM to reinvent itself completely in order to compete with them -- just one example of the socially transformative effects of the PC.

Before 1981, visionaries who thought about the impact of technology on society believed that the computer would allow a centralization of knowledge and power. This was the world of George Orwell's Big Brother, the extrapolation of the 20th century's experience of totalitarianism. Powerful computers led to potent states and powerful and centrally directed business corporations.

The PC seemed at first to promise a restoration of the balance in favor of the individual. Computing became decentralized, and the new flexibility produced a sense that control was moving away from big agglomerations of power -- whether governments or companies. It is not surprising that the triumph of the PC seemed to be accompanied by a revival of the 19th-century vision of classical liberalism and individualism.

The idea was that an individual could buy a computer and the software needed for a specific (and increasingly complicated) purpose, and immediately generate a productive result. Indeed, within a few years, individuals would possess in a small machine as much computing power as the mainframe IBM 360s that had revolutionized centralized computing in the 1960s.

But this initial triumph of the PC (and very substantial sales in the 1980s) did not immediately fulfill all the initial hopes for individual empowerment and social transformation. It did not seem to produce many efficiency gains, despite enormous investments in information technology. Immense amounts of time were wasted in enterprises by informal requests for assistance, forcing knowledgeable workers to become computer gurus in order to aid their colleagues.

The initial disappointment about electronic productivity was thus a vivid demonstration of the limits of classical individualism. Only with interconnection in the 1990s, above all through the Internet, did the PC realize its potential. Suddenly, economists (especially in the US) began to measure substantial productivity gains.

New forms of activity -- Internet auctions, Internet encyclopedias, Internet chat rooms -- reproduced over a much wider area the interactions of individuals. Interlinked PCs really created a sense of a vibrant social market. Individuals could realize themselves, as in the old 19th-century model, but only to the extent that they interacted with as many other people as possible. It was these interactions, rather than the individual on his or her own, that created value and set in motion a dynamic process.

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