When David Bunnell saw the first personal computer, built in 1981 by International Business Machines Corp, he quit his job to start PC Magazine.
"This really changed our lives," said Bunnell, who went on to found other publications, including PC World and Macworld.
Twenty years ago yesterday, IBM unveiled its PC and began permitting other companies to add software or make their own versions. Since then, the machine has been called an invention on the scale of the automobile a century ago.
Companies that make the devices, along with the chips and software that run them, have become household names. Their founders have become billionaires, such as Bill Gates of Microsoft Corp, Michael Dell of Dell Computer Corp and Gordon Moore of Intel Corp.
Those companies are no longer as bullish about the PC's future, though, and they're betting that they can't stake their livelihoods on just selling the machines.
Intel, the biggest semiconductor maker, and Microsoft, the largest software company, hosted a party on Wednesday in San Jose, California, to celebrate the anniversary of IBM's first PC.
In attendance were chief executives of some of the largest PC makers: Michael Capellas of Compaq Computer Corp, Carly Fiorina of Hewlett-Packard Co and Ted Waitt of Gateway Inc.
All have acknowledged that PCs aren't as profitable as other areas, such as computer-related services, where many companies are putting their money to fuel future sales growth.
Gateway founder Waitt said the next "killer app" for PC companies won't be a new software program or a bigger hard drive.
It will be services, such as installing and maintaining PCs and their networks.
"Technology is going too fast, and the people in the market need to catch up," Waitt said. "The next big thing will be helping the people get the most out of technology so they can improve productivity."
Microsoft is trying to increase sales of products other than PC software as growth in that market slows. The company is trying to beef up its MSN Internet service and will introduce Xbox, its first video-game console, later this year. Microsoft also is pushing to sell more software for running networks, and plans to distribute more services and programs via the Web.
The PC isn't ready to go away, though. Microsoft's bread and butter remains PC software, which generate two-thirds of its revenue. PC makers say they must continue to sell the machines in order to land service contracts.
They are planning for an eventual rebound in PC sales, perhaps next year when consumers upgrade their machines to get Microsoft's new Windows XP operating system.
Absent from Wednesday's celebration of the PC's birth were top executives from IBM. The largest seller of computers and related services has exited the business of selling PCs to consumers. Chairman Louis Gerstner a decade ago began pushing IBM towards services, a process now being emulated by rivals including Compaq and Hewlett-Packard.
"The desktop segment is hurting -- and it is not just a cyclical issue," Gerstner said earlier this year. "This is a mature business, and it no longer drives the economics of the IT industry."
For years, critics such as Larry Ellison, chief executive of Oracle Corp, have predicted that PCs would decline in popularity and be replaced with smaller terminals hooked to the Internet. So far, the skeptics have been proven wrong. Products such as handhelds haven't become as popular as personal computers, yet.
"Over the last 20 years, I've seen four or five predictions of the demise of the PC," said Rod Canion, who co-founded Compaq. "I don't see the PDA displacing the PC."
Intel's Grove said the PC industry doesn't control the key element that could drive future growth -- the Internet. The telecommunication lines are controlled by a different industry where competing interests as well as government regulations may damage the PC industry.
"It is capable of keeping the genie from expanding out of the bottle and from moving to the next level," Grove said.
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