IBM's sale of its PC business to Lenovo, the largest Chinese manufacturer of personal computers, marks the end of an era. PCs will still carry the "IBM" and "Thinkpad" brand names, but they will be made and sold by a company virtually unknown in the West. The second chapter in the history of the personal computer industry has just closed.
The first chapter concerned the primeval chaos of the early "microcomputer" days -- the era of Sinclair Spectrums, Commodore Pets, machines made by Radio Shack, Atari and Tandy, the BBC Micro and the Apple II computers. It was a time of primitive software, cassette-based operating systems, infinitesimal RAM, text-based displays and appalling screens.
It was also a time of incompatible software, when programs for one brand of computer wouldn't run on another, and the resulting fragmentation precluded the evolution of a proper industry.
At first, "Big Blue" -- as IBM was known -- disdained this unruly phenomenon. As arrogant and domineering then as Microsoft is today, IBM made colossal revenues and profits from Big Iron -- corporate mainframes and their associated networks and software. The concept of a "personal" computer was absurd to most senior executives, and their scepticism was reinforced by the fact that IBM's various attempts to make small-scale computers had all been disastrous.
Nevertheless, within its corporate fortress, there was intelligent life. Bill Lowe, director of the Entry Systems Division, decided that the company would build a personal computer, in a year, starting from scratch. From this, everything followed.
Previously, IBM had made all its own stuff -- to its own glacial timescales, but Lowe saw that it would have to create a design that assembled, in Meccano fashion, components designed and manufactured by others. This included not just the power supply and the processor and memory chips, but also the operating system, which would turn the thing from an expensive paperweight into a functioning computer.
In fact, the only thing that IBM actually developed and owned was the BIOS -- short for Basic Input-Output System -- which was the chunk of the computer's operating system built into the machine rather than read from a disk drive at startup.
Whether IBM realized the long-term implications of these decisions is a mystery. On the hardware front, maybe they thought that if they controlled the BIOS then they could control the market. After all, nobody could make PCs without infringing their copyright -- and IBM had the biggest team of patent lawyers on earth, so nobody would dare take them on.
If so, they didn't count on the ingenuity of a team of engineers working for Compaq, who "reverse engineered" the BIOS in a short time, creating something that was functionally identical without infringing IBM's intellectual property. Thus the market for PC "clones" was born.
IBM made an even bigger strategic error with the operating system. They bought an operating system (PC-DOS) from Microsoft without insisting on exclusive rights to it. Bill Gates then reversioned the operating system as MS-DOS and sold it to Compaq and thousands of other clone manufacturers. The rest is history.
IBM's loss was everyone else's gain. By making the architecture of its computer open -- albeit unintentionally -- it enabled the explosive growth of what became a vast industry in which people built significant companies round providing software or hardware for the architecture.
IBM's arrival on the PC scene changed overnight the attitude of the corporate world to these pesky "personal" computers. As the saying went, "nobody ever got fired for buying IBM." And if Big Blue was putting its name on these things, then the suits decided that they must be okay. The PC thus became the de facto standard on which the modern world was built.
I don't know how much money IBM made from the PC, but in recent years it's made little -- hence the sale to Lenovo. It just confirms what has now become conventional wisdom: it's difficult or impossible to make money from computer hardware now. Dell is the exception that proved the rule.
The action -- and profit -- has moved to software and services. Which, of course, is what the rejuvenated IBM is all about now. In that context, shedding the PC was the logical thing to do.
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