The Competition
There was no competition until Processor Tech came out with the memory cards.
–Ed Roberts, founder of MITS
MITS was a catalyst.
Perhaps more by chance than by design, the MITS operation inspired the creation of an entire industry. But that also meant that MITS spawned competitors, and from Roberts’s perspective, competitors were poaching on his territory. You could see it in the way he reacted to the memory situation. When MITS began delivering its 4K memory boards, it didn’t take long for customers to notice what Paul Allen already knew: the boards didn’t work. “I don’t think I’d trust an Altair memory board to do anything,” one MITS executive later admitted.
Defective Memory
Although Roberts eventually acknowledged the board’s design was awful, at the time he brooked no complaints about it, as Bill Gates soon learned. Gates was using a memory-test program he had written to check the boards as they were completed. “Every one that came off the line wouldn’t work,” Gates said, and he told Roberts as much. The resulting confrontation between the slight 18-year-old and the burly Air Force veteran permanently damaged their relationship. Roberts considered Gates a teenage smart aleck and simply ignored him. “I think that was a fundamental failing of Ed’s,” another MITS employee said. “If he said the memory boards worked, they worked.” Unfortunately, they didn’t.
When Bob Marsh, an out-of-work Homebrew Computer Club hobbyist, started a company called Processor Technology in April 1975 and began selling 4K boards that did work, Roberts took it as a declaration of war. MITS was making little or no profit on the Altair computers and desperately needed the memory-board sales that Processor Technology was cutting in on.
Roberts retaliated by using Gates and Allen’s software as a weapon. The BASIC language was a popular item; the MITS 4K board was not. So MITS resorted to a venerable marketing ploy: it tied the price of BASIC to the purchase of the memory board. Customers who bought MITS boards paid $150 for BASIC. Those who didn’t buy the boards paid $500 for BASIC—more than the price of the machine.
The tactic backfired, and the effect on the market was dramatic. Hobbyists, seeing the 4K boards as worthless and BASIC as overpriced, bought the Processor Tech memory and made their own paper-tape copies of BASIC, distributing the copies for free. By the end of 1975, most copies of BASIC in use on Altair computers were pirated.
Processor Technology survived the BASIC price ploy and developed more Altair-compatible products. Other companies also began to produce memory boards that could be used in the Altair. Roberts railed at those he regarded as squatters in his territory. The memory-board companies responded by crashing David Bunnell’s first World Altair Computer Convention. When Roberts denounced certain memory-board firms in his newsletter, calling them “parasites,” two Oakland, California, hobbyists christened their new memory-board company Parasitic Engineering.
The only board company to win approval from MITS was Garland and Melen’s Cromemco (named for Crothers Memorial Hall, their graduate dormitory at Stanford). Garland and Melen had gotten sidetracked from their plan to connect the Cyclops digital camera to the Altair. The interface board that was intended to perform this feat had taken on a life of its own, and had become a video interface board for displaying text and pictures generated by the Altair on a color television. The Dazzler, as they called the board, neatly solved the Altair’s I/O problem. Roberts saw it as noncompetitive (MITS had nothing like it), and displayed it prominently with his Altair computers at a conference the following spring.
The First World Altair Computer Convention
Figure 22. Harry Garland and Roger Melen Garland (left) and Melen were the first customers of MITS and the first to deliver an Altair-compatible third-party product. Later they developed their own line of personal computers under the Cromemco name.
(Courtesy of Roger Melen)
The first World Altair Computer Convention, held in Albuquerque in March 1976, was the first of the microcomputer conventions. Hundreds of people attended this event, but it was intended strictly as a MITS Altair affair. Every one of the dozen or so speakers and presenters was there at MITS’s invitation, including one who demonstrated a backgammon game he had written for the Altair. Cromemco was the only hardware company invited. Garland and Melen were there in person, the burly Melen a match for Roberts in size but far more reticent, the diminutive Garland bubbling with enthusiasm.
Figure 23. World Altair Computer Convention The sign announcing the first “World” Altair Computer Convention captures the grandiose aspirations and amateurish execution that typified the early days of personal computing. (Courtesy of David H. Ahl)
A number of uninvited companies sent out representatives to walk the floor and pass out circulars inviting viewers to see competitive equipment on display in hotel rooms upstairs from the conference center. Among that group were reps from Bob Marsh’s Processor Technology, whose memory boards were threatening to eat into Roberts’s profits.
The presence of the show-crashers irked MITS management. David Bunnell was so perturbed by the crashers that he went around tearing down their signs.
MITS had more to worry about than the board companies who were competing against MITS’s components. Other firms were springing up that challenged MITS’s core product, its computer. Don Lancaster’s Southwest Technical Products and Sphere were both working on computers built around Motorola’s recently released MC6800 processor.
Roberts had proposed building a 6800 machine, too. But some of his employees, including Paul Allen, opposed this new venture as a distraction.
“No, Ed,” Allen objected. “We’ll have to rewrite all our software for the 6800. We’ll have two instruction sets to support. That just doubles our headaches.”
Roberts prevailed. MITS did develop a 6800 machine, starting work on it late in 1975. Named the Altair 680b and attractively priced at $293, that computer was substantially different from the original Altair 8800. Components from the 8800 could not be used in the 680b, nor could the original Altair BASIC.
When the new computer magazine Byte unveiled Southwest Tech’s 6800 computer in November 1975, the announcement was soon followed by MITS’s announcement of its 680b. Additional engineers were hired to work on the new design, and new employees were added. The struggle to keep up with the orders for the 8800 and the determination to rush out the 680b had swelled the ranks of MITS employees from 12 to more than 100 in just a year.
The Role of Software
One of MITS’s new employees was Mark Chamberlain, a quiet University of New Mexico student with a knack for understatement and a taste for assembly-language programming. Chamberlain had worked on a Digital Equipment Corporation PDP-8 computer, probably the closest thing to a microcomputer that most universities had at the time. “I had done a lot of assembly code…and got so turned on to it that they just couldn’t keep me out.” When a professor mentioned that a small company named MITS was looking for programmers, Chamberlain made an appointment to talk to its software director, Paul Allen.
Allen wasn’t sure where MITS was headed and wanted Chamberlain to know the risks involved. Allen had willingly accepted these risks but wasn’t about to inflict them on the unaware. He hired Chamberlain but warned him, “If it doesn’t work out—well, it doesn’t work out.” Chamberlain appreciated Allen’s candor and commenced writing software for the 680b, a machine that “was not enormously successful,” Chamberlain recalled dryly. They had already encountered serious difficulty with the product. “Lots of [the 680b machines] were ordered, but when I came on board at MITS, the whole project was already in trouble. They had to go through a complete redesign.” Despite the revamping, the 680b never really took off. But Chamberlain found plenty of other work to do at MITS. Roberts had other machines in mind, and each of them required new software.
Meanwhile, Allen and Gates were putting increased effort into their own company, Microsoft. Throughout 1975, Gates, Allen, and Rick Wyland, who was hired to write 6800 BASIC, were branching out with their versions of BASIC, including developing versions for other companies. The relationship between Microsoft and MITS was becoming less clearly defined as the two companies grew.
The fact that Bill Gates had yet to write the disk code for the Altair 8800 didn’t help matters, especially because Gates, on leave from Harvard, was considering returning to school. Paul Allen, in his role as MITS software director, nagged Gates about finishing the code. According to Microsoft legend, in February 1976 Gates checked into a motel with some pens and a stack of yellow legal pads. When he came out, he had finished the disk code.
Figure 24. Bill Gates Gates temporarily abandoned his glasses while speaking at the first World Altair Computer Convention in Albuquerque in 1976. (Courtesy of David H. Ahl)
By 1976, the switch from dynamic memory to static memory (two means of maintaining information in memory) seemed to have solved the vexing problem with the memory board, but MITS still had to either troubleshoot the dynamic boards already in the field or buy them back. Early in that year, MITS revamped its quality-control procedures in an attempt to increase efficiency in manufacturing. MITS was already shipping the 680b and planned to ship the upgraded 8800 by midyear. A rudimentary disk operating system written around Gates’s disk code was scheduled to be released in July 1976.
Anyone who owned an Altair had probably written a program for it at one time or another. Mark Chamberlain was now maintaining a library of software submitted by Altair users, thereby setting a precedent for the industry. Chamberlain was distributing such programs as widely as possible throughout the community of users, which was a smart move. Sharing of software vastly increased the value of the machine. In particular, he sought software for the new 680b. When Paul Allen announced the price for the 680b BASIC, customers recognized an already familiar tactic. The BASIC cost nothing with the new 16K memory board, but $200 when purchased without it.
The S-100 Bus
By the middle of that year, the competition that Roberts had long feared was becoming a reality. A new company named IMSAI imitated the Altair design and brought out its own computer, the IMSAI 8080. PolyMorphic Systems introduced what looked like a serious competitor to the Altair, the Poly 88. And, in July 1976, Processor Technology grabbed the front cover of Popular Electronics with its Sol computer, named after the magazine’s editor. Even MITS’s loyal board supplier Cromemco was developing a CPU board designed around the new Zilog Z80 microprocessor as the successor to the Intel 8080 chip that was the heart of the original Altair computer. The Z80 was designed by Federico Faggin, who had left Intel to start his own semiconductor company after his work on the Intel 4004. This new microprocessor was catching a lot of attention among the high-tech hobbyists.
None of the new microcomputer companies represented an immediate threat to MITS’s market share for microcomputers. In that arena, MITS reigned uncontested. But all of the machines from these start-ups could, in principle, use the same circuit boards as the Altair. They all had the same 100-line bus structure and, as Roberts viewed things, that bus was the key to compatibility in that it allowed competitive boards to be plugged into the Altair. He typically referred to the system as the “Altair bus” and wanted others to do the same. When some didn’t comply, David Bunnell suggested sarcastically that they call it the “Roberts bus.” The bus-naming story typifies the curious mix of competitiveness and camaraderie in the nascent computer industry. The bus became a major point of contention between MITS and the rest of the microcomputing world.
Roberts’s position was simple: he and Yates had designed the bus just as they had designed the Altair. Therefore, it was the Altair bus. His competitors preferred not to share his view. The advertised name for the device grew to absurd lengths in order to credit just about every manufacturer. It was billed as the “MITS-IMSAI-Processor Tech-PolyMorphic bus.” Garland and Melen talked about the bus-name problem on a flight from San Francisco to Atlantic City, where PC 76, an early microcomputer conference, was held in August 1976. Garland and Melen were about to release a CPU board for the Altair bus and were reluctant to refer to it by a lengthy list of competitors’ names. They agreed about two things: the name of the bus should not favor any one company, and it should suggest an item that’s been engineered. For instance, the name could consist of a letter and some numbers. They liked the name “Standard 100,” and in keeping with their theme, shortened it to “S-100.” That, they thought, sounded sufficiently official.
Their next goal was to secure the approval of other hardware vendors. Melen recalled, “On the same airplane were the people from Processor Technology, specifically Bob Marsh and Lee Felsenstein. I had a can of beer in my hand, and in the course of our discussing the Standard, the airplane hit a little bump, and I spilled my beer on Bob. He agreed [to the new name] very quickly, to get rid of me and my beer can.” The name S-100 became the common coin, although MITS and Popular Electronics stubbornly clung to the name “Altair bus” for a long time. Seven years later, Ed Roberts was still adamant about it: “The bus was used by MITS for two years before anybody else was producing a computer. It’s the Altair bus. Calling the Altair bus the S-100 bus is like calling Mona Lisa ‘Tom Boy.’ I’m the only one in the world who’s irritated by that, but I’m irritated.”
In addition to the S-100 companies, MITS was witnessing disturbing signs of competition from other, even more unnerving sources. MOS Technology, a semiconductor company, was doing well with Chuck Peddle’s KIM-1, a low-cost hobbyist computer built around its own bargain-basement 6502 chip. This fact alone may have occasioned no immediate alarm, but two months later, in October 1976, Commodore bought MOS Technology. For the first time, a large and well-established company with extensive channels of distribution for electronics products would be selling a microcomputer.
Roberts was justly worried. He remembered how Texas Instruments had stomped all over the calculator business.
But an even more ominous threat was looming. Tandy Corporation, having “just gotten through killing off Lafayette [Electronics],” as Peddle put it, was casting about for a computer to sell in its hundreds of Radio Shack stores. “What Radio Shack wanted to do was to come up with a packaged machine,” Peddle said, “because they knew their guys couldn’t support, and couldn’t design, this kind of thing.” Radio Shack, with its stores all over the country, could sell thousands of personal computers at rock-bottom prices.
With semiconductor companies and electronics distributors getting into the act, the competition was gearing up.