Trying to shed IBM’s reputation for being a sluggish corporate giant, its Boca Raton lab director, Bill Lowe, claimed that he and his team could develop a personal computer in one year. He made this claim while attending an executive meeting in New York. The executives’ response: “You’re on. Come back in two weeks with a proposal.” One analyst was quoted as saying that “IBM bringing out a personal computer would be like teaching an elephant to tap dance.”
Lowe gathered a team of 12 strategists to plan the hardware, software, manufacturing and sales strategy to bring the PC to market. The team used outside vendors for parts, software applications and signed retailers in and out of IBM’s corporate network for sales distribution. This was outside the norm of the usual product development for IBM, and it broke all the rules.
Lowe’s team went to Intel for the microprocessor and a little-known company called Microsoft for the operating system, MS-DOS. Information Unlimited Software Inc. was tapped for a word-processing application called Easy Writer, and Personal Software Inc. provided a spreadsheet application called VisiCalc. ComputerLand, Sears & Roebuck and IBM Product Centers handled retail sales distribution. The systems were assembled in IBM’s Boca Raton assembly plant.
The IBM 5150 Personal Computer was announced in a press conference at New York’s Waldorf Astoria on Aug. 12, 1981. The $1,565 cost included the system unit with 16 kilobytes of memory (expandable to 256 kilobytes), a 40-kilobyte read-only memory chip with Microsoft Basic programming language built in and a keyboard. For data storage, the system could attach to an audio cassette player, and the user could hook up to a television for video. If you wanted the 5.25-inch floppy disk drive, that cost extra.
IBM considered a system configured for home or school to include the system unit with 64 kilobytes of memory, a keyboard, a single 5.25-inche= diskette drive and a monochrome monitor. This system would set you back $3,005. For a business, the company recommended color graphics, two diskette drives and a printer, for a total cost of about $4,500.
IBM hired the advertising agency, Lord, Geller, Federico, and Einstein, to help market its new computer to the consumer. The goal was to take the fear out of computers and portray the computer to the public as a simplistic piece of equipment. IBM also wanted to quell its image as a stuffy corporate giant. It needed a friendly, familiar face to accomplish this. The agency chose Charlie Chaplin as the PC’s champion.
Some feared that choosing Chaplin would damage IBM’s conservative image. The silent movie star was married four times (one marriage was to a 16-year-old girl), was a known womanizer and was investigated by the FBI as a suspected communist during the McCarthy era in the 1950s.
In spite of it all, IBM went ahead with the advertising plan. The “Tramp” advertising campaign was launched with great success. IBM went from zero market share to capturing more than 40 percent of the personal computer market in its first two years.
The IBM PC “clone” market was ushered in by Columbia Computer in 1982. These clones were so-called IBM PC- compatible computers that were manufactured without IBM’s input or permission. They were less expensive than the IBM PC by a wide margin. More clone companies followed, such as Eagle Computer and Compaq. By 1987, IBM-compatible computers dominated the market.
IBM left the personal computer business and sold its PC division to Lenovo of China in 2005.
Photo Credits: IBM Archives – IBM Corporation