Apple saw PC lead evaporate

By Ian Fried
CNET News.com Staff Writer
August 10, 2001, 4:00 a.m. PT

By the time the IBM PC was introduced in August 1981, the Apple II had already been on the market for four years and the Macintosh was well into development.

Apple was the darling of the fledgling industry, having shipped nearly 300,000 of its Apple II machines. So confident was Apple in its position that the company took out a full-page ad in The Wall Street Journal, welcoming Big Blue into its market.

"Welcome, IBM. Seriously," read the headline. The ad went on to project that 1 million people would buy a PC in the next year and said that Apple looked forward to "responsible competition" in delivering the American technology of the PC to the world.

The welcome turned out to be an invitation for IBM to become synonymous with the PC and relegate Apple to a niche player that today accounts for about 5 percent of PC sales.

At the time, IBM knew it was playing catch-up with Apple.

"We had this project and thought to ourselves that it had better work because Apple was already out there," said Bill Lowe, the executive in charge of the IBM PC development effort. "Apple was attracting lots of attention from IBM developers, and we wanted IBM developers to work on IBM products."

While Apple gets credit for popularizing the PC, it also was not the first PC maker. Some give that title to MITS, which sold the Altair in the 1970s. But computing industry pioneer Alan Kay gives credit to the Linc, from Lincoln Labs. Kay said the Linc sold desktop units in the 1960s, particularly to medical companies.

Kay, who helped develop the PC at Xerox's famed Palo Alto Research Center and went on to work at Atari and Apple, said that at first the Linc was more of a kit, noting that early models required the customers to come to Lincoln's Massachusetts headquarters for a summer to assemble their own machines. But eventually the process became more automated.

But it was the Apple II that proved to IBM there was a market for the PC. It was on the Apple II that computer users got the first look at the spreadsheet VisiCalc, which many call the first "killer application."

"If the IBM PC wasn't an Apple II knockoff, what was it?" Kay said. Still, Jef Raskin, who was developing the Mac at the time, said taunting IBM with the ad was a mistake.

"One doesn't go around tweaking tiger tails," said Raskin, who left Apple in February 1982 in a well-publicized spat with Apple co-founder Steve Jobs.

Apple struggled with whether to license its operating system, which it feared would turn its products into commodities. Those fears proved to be sound, given that chipmaker Intel and software maker Microsoft have built their consistently profitable businesses around the PC. Meanwhile, IBM and others have struggled to stay in the black in the PC business.

VisiCalc co-author Daniel Bricklin said that choosing a closed path has been both good and bad for Apple, limiting its market but allowing the company to continue to innovate.

And although Apple has lost the bulk of the PC market to other names, the company has fared better than other contemporaries, such as Osborne, Commodore, Tandy and Atari, most of which have dropped off the computer landscape and none of which make their own PCs anymore.

Staff writer Charles Cooper contributed to this report.