Clones
Had Compaq or IBM changed in ’88 or ’89, Dell would not have been a factor. Now Dell is driving the industry.
–Seymour Merrin, computer-industry consultant
Apple was struggling with the new realities of the rapidly growing computer industry, but every company found itself challenged to adapt. The fear in the fledgling personal-computer industry had been that IBM would enter the market and transform everything. That fear came true in the 1980s. But the personal-computer industry transformed IBM as well.
Imitating IBM
While Apple was losing its way in the wake of IBM’s entry into the market, IBM’s own fortunes followed a strange path. When IBM released its Personal Computer, very little about the machine was proprietary. IBM had embraced the Woz principle of open systems, not at all an IBM-like move. One crucial part of the system was proprietary, though, and that part was, ironically, the invention of Gary Kildall.
Like Michael Shrayer, who had written different versions of his pioneering word processing program for over 80 brands of computers, Kildall had to come up with versions of his CP/M operating system for all the different machines in the market. Unlike Shrayer, however, Kildall found a solution to the problem. With the help of IMSAI’s Glen Ewing, he isolated all the machine-specific code that was required for a particular computer in a piece of software that he called the basic input-output system, or BIOS.
Everything else in CP/M was generic, and didn’t need to be rewritten when Kildall wanted to put the operating system on a new machine from a new manufacturer. Only the very small BIOS had to be rewritten for each machine, and that was relatively easy.
Tim Paterson realized the value of the BIOS technique and implemented it in 86-DOS, from which it found its way into PC-DOS.
The BIOS for the IBM PC defined the machine. There was essentially nothing else proprietary in the PC, so IBM guarded this BIOS code and would have sued anyone who copied it.
Not that IBM thought it could prevent others from making money in “its” market. That was a given. In the mainframe market, people spoke of IBM as The Environment, and many companies existed solely to provide equipment that worked with IBM machines. When IBM moved into the personal-computer market, many companies found ways to work with the instant standard that the IBM PC represented.
Employees of Tecmar were among the first in the doors of Chicago’s Sears Business Center the morning the IBM PC first went on sale. They took their PC back to headquarters and ran it through a battery of tests to determine just how it worked. As a result, they were among the first companies to supply hard-disk drives and circuit boards to work with the PC. These businesses took advantage of the opportunity to compete in this market with price, quality, or features. Ed Roberts’s pioneering company, MITS, had encountered a similar situation in 1976 and Roberts had labeled these companies “parasites.”
And just as IMSAI had produced an Altair-like machine to compete with MITS, many microcomputer companies came out with “IBM workalikes,” computers that used MS-DOS (essentially PC-DOS but licensed from Microsoft) and tried to compete with IBM by offering a different set of capabilities, perhaps along with different marketing or pricing. Without exception, the market resoundingly rejected these IBM workalikes. Consumers might buy a computer that made no pretense of IBM compatibility—Apple certainly hoped so—but they weren’t going to put up with any almost-compatible machine. Any computer claiming IBM compatibility would have to run all the software that ran on the IBM PC, support all the PC hardware devices, and accept circuit boards designed for the IBM PC, including boards not yet designed. But IBM’s proprietary BIOS made it very hard for other manufacturers to guarantee total compatibility.
The Perfect Imitation
Yet the potential reward of creating a 100 percent IBM PC–compatible computer was so great that it was to be assumed that someone would find a way. In the summer of 1981, three Texas Instruments employees were brainstorming in a Houston, Texas, House of Pies restaurant about starting a business. Two options they considered were a Mexican restaurant and a computer company. By the end of the meal, Rod Canion, Jim Harris, and Bill Murto had deep-sixed the Mexican restaurant and sketched out, on the back of a House of Pies placemat, a business plan for a computer company, detailing what the ideal IBM-compatible computer would be like. With venture capital supplied by Ben Rosen, the same investor who had backed Lotus, they launched Compaq Computer and built their IBM-compatible. It was a portable or, at 28 pounds, more of a “luggable,” had a nine-inch screen and a handle, and looked something like an Osborne 1.
Unlike the workalikes, the key to their machine was that it was 100 percent IBM compatible. Compaq had performed a so-called “clean-room” re-creation of the IBM BIOS, meaning that engineers reconstructed what the BIOS code had to be, based solely on the IBM PC’s behavior and on published specifications, without ever having seen the IBM code. This gave Compaq the legal defense it needed for the lawsuit that they knew they would face from IBM.
Compaq marketed aggressively. It hired away the man who had set up IBM’s dealer network, sold directly against IBM through dealers that IBM had approved to sell its PC, and offered those dealers better margins than IBM did. The plan worked. In the first year, Compaq’s sales totaled $111 million. There were soon thousands of offices where a 28-pound “portable” from Compaq was the worker’s only computer.
The idea of a clean-room implementation of the IBM PC BIOS was vindicated. In theory, any other company could do what Compaq had done.
Few companies had the kind of financial backing that Compaq could call on to compete head-to-head with IBM, even if they had their own clean-room re-creations of the IBM BIOS. However, one did have enough savvy to leverage the technology. After Phoenix Technology performed its clean-room implementation of the BIOS, it licensed its technology to others rather than build its own machine. Now anyone who wanted to build fully IBM-compatible machines without risk of incompatibility or lawsuit could license the BIOS from Phoenix. Consumers and computer magazines tested the “100 percent compatibility” claim, often using the extremely popular Lotus 1-2-3: if a new computer couldn’t run the IBM PC version of 1-2-3, it was history. If it could, it usually could run other programs, also. The claims, generally, held up.
Soon there were dozens of companies making IBM-compatible personal computers. Tandy and Zenith jumped in early, as did Sperry, one of the pioneering mainframe companies. Osborne built an IBM-compatible just before going broke. ITT, Eagle, Leading Edge, and Corona were some of the less familiar names that became very familiar as they bit off large chunks of this growing IBM-compatibles market.
Suddenly, IBM had no distinction but its name. Until now, that had always been enough. IBM had been The Environment, but now it had leaped into a business environment that it apparently didn’t control. The clone market had arrived.
Imitating Apple
Apple stood virtually alone in not embracing the new IBM standard, initially with its Apple II and Apple III, and soon thereafter with the Macintosh. Although user loyalty and an established base of software kept the Apple II alive for years, it was not really competitive with the PC and compatibles, particularly when IBM began introducing new models based on successive generations of Intel processors and the Apple II was locked into the archaic 6502. But the Macintosh graphical user interface, or GUI, gave Apple the edge in innovation and ease of use, and kept it among the top personal-computer companies in terms of machines sold. Jobs’s prediction that it would come down to Apple and IBM was initially borne out, although the clones were not to be overlooked.
Software was growing increasingly important, too. With the advent of the clone market, the choice of a personal computer was becoming a matter of price and company reputation, not technological innovation. And since people bought machines specifically to run certain programs, such as Lotus 1-2-3, Apple’s appeal was diminished. Even if Apple was selling as many machines as IBM or Compaq, its platform was a minority player, while computers using the magic combination of IBM’s architecture, Intel’s microprocessor, and Microsoft’s operating system increasingly became the dominant platform.
Why didn’t anyone clone the Mac? There simply was no Mac equivalent of Kildall’s BIOS—what made the Mac unique was incorporated in many thousands of lines of code. It was, in short, much harder to clone the Macintosh. It couldn’t be done without Apple’s approval, which the company invariably withheld.