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CNN Live Saturday

How IBM Has Grown the PC Market Through 20 Years

Aired August 11, 2001 - 17:09   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
STEPHEN FRAZIER, CNN ANCHOR: Well, this one's hard to believe. Tomorrow is the 20th anniversary of the IBM personal computer. And as CNN's James Hattori reports, this anniversary comes at a time when the PC industry is mired in a bit of a slowdown and is struggling to stay relevant.

(BEGIN VIDEOTAPE)

JAMES HATTORI, CNN CORRESPONDENT (voice-over): August 12, 1981, IBM unveils a boxy white desktop computer, launching a new product line and a technological revolution.

DAVE BRADLEY, IBM ENGINEER: We had no idea that it was going to be as big a project as it turned out to be.

HATTORI: IBM's Dave Bradley and the other original project engineers knew they weren't the first. The Apple II and several hobbyist-oriented machines had been around for years. But IBM's PC, using Intel chips and an operating system from an upstart company named Microsoft, was an unprecedented success.

BRADLEY: The business case that the PC company took forward to the corporation said that we would sell 250,000 machines over the five-year lifetime. As it turned out, we probably sold about 3 million.

HATTORI (on camera): Over the past 20 years, computer makers have sold an estimated 824 million PCs. Today they're a $200 billion a year industry, and a big chunk of the U.S. economy.

(voice-over): But some argue the commercial success of IBM's early model hindered the evolution of PCs. Other companies with different, equally innovative ideas couldn't compete.

PAUL SAFFO, INSTITUTE FOR THE FUTURE: We got PCs early, but in the long run it has stunted our growth in terms of having new generations of machines that really are more capable.

HATTORI: The future, many believe, is designing computers to go anyplace but the desktop. Already, PDAs, cell phones, even your car have specialized microchips that work invisibly and reliably.

SAFFO: In 20 years, the most important computers in your life will not only be the ones that you are not carrying on your person, you won't even know they exist.

HATTORI: So is the PC revolution done, or just beginning?

SAFFO: Without a doubt, we have seen a revolution in the last 20 years. But I think it's a revolution that has not delivered on its promise yet, and all it's done is really whet our appetite for what these things really could be.

HATTORI: James Hattori, CNN, San Francisco.

(END VIDEOTAPE)

FRAZIER: We're going to spend a little more time on this now. And joining us from Boston, the executive editor of "PC World" magazine, Harry McCracken. Mr. McCracken, thanks very much for joining us today.

HARRY MCCRACKEN, EXECUTIVE EDITOR, "PC WORLD" MAGAZINE: Thank you.

FRAZIER: We understand that you were using a personal computer as far back as 1978, so obviously you're aware of what James Hattori just reported. IBM was not the first. So what made it the biggest, then?

MCCRACKEN: There were several things. First of all, most of the personal computers that preceded it were from very small companies. They appealed mainly to hobbyists and people who liked to write their own programs. And I think IBM saw that they were going to be a big thing, not just for people who were already interested in technology, but first of all, for businesses of all types, and eventually for the home.

And IBM did a very good job of building something that was, first of all, very durable, well built, versatile, and just the fact that it was IBM made a big difference, because people didn't know who the small companies were, but IBM is as synonymous with computers as any company has ever been.

FRAZIER: Yes, everybody knew them, right. There's a terrific article in the August issue of your magazine, "PC World," that talks about the fact that in spite of all those strengths you just described, the PC actually was a product that IBM rushed to market with a deadline in mind and market share rather than the elegance of its internal architecture. Nobody knew it was going to set a standard that would last this long.

MCCRACKEN: They really didn't know that. But, you know, the amazing thing is that if you have any software line around from 1981, you can plug it into one of today's systems, and it will still run.

FRAZIER: In-- so really, if you're talking about one of today's systems, as powerful as they are and as elegant as they are, they have at their heart that original PC that James was reporting on.

MCCRACKEN: It's a direct descendant. You know, the 1981 PC had an Intel chip at its heart, and it was running a Microsoft operating system, and that's true today too.

FRAZIER: We have a picture here, a figure that shows the kinds of comparisons you could make between the power of that original versus a brand-new IBM personal computer, and the cost.

And here's the -- the difference is outstanding here. I mean, in today's dollars, that original one cost about $6,000, is that right, $6,000?

MCCRACKEN: That's right. You could buy a basic machine for a lot less than that, but one of the big things that's changed is, today when you buy a PC, it works out of the box. Back then, if you bought the basic model, you couldn't hook it up to a monitor, you couldn't hook it up to a printer. The operating system was extra. So by the time you had something that actually did anything, you were paying $3,000 in 1981 dollars.

FRAZIER: And what you're describing is a flexibility and user- friendliness that's almost priceless to people like me, not a hobbyist.

MCCRACKEN: That's really true. You know, IBM understood that it was important that the box be something that a-- you didn't have to be a technician to use, and very quickly there started to be lots of off- the-shelf software packages for accounting, word processing, and so forth, and add-ons to make it do more useful things.

FRAZIER: Still, though, let's be honest, as recently-- we talked about this being a 20-year anniversary, certainly at the 10-year anniversary, I could not use those computers. They drove me nuts. And you had to do things that were counterintuitive, like saving before you turned it off or you lost all the work you did, as recently as, say, '93 or '94.

So the changes really got better after that.

MCCRACKEN: Really, yes. I mean, ease of use has always been a long, hard battle, and we're certainly still not as close to the vision of a system that's really easy to use for everybody as we could be. But a lot of that progress has happened in the last 10 years or so, and a lot of that I think we can credit to the Macintosh, which is kind of the one alternative platform left which continues to influence the IBM PC platform to this day.

FRAZIER: Well, last question, then, as we say goodbye and offer our thanks. You heard Paul Saffo there being kind of negative. Would you say that the next 20 years could be as revolutionary as the past 20?

MCCRACKEN: He's absolutely right that we're just scratching the surface. And today technology giveth but also taketh away in terms of, you still need new-- to learn a lot about troubleshooting. And with the Internet as amazing as it is, there are privacy issues and security issues we need to think about.

So we're really just, I think, kind of at the start of the revolution.

FRAZIER: Well, I'll look forward to catching up with you 20 years hence. Thank you very much for coming in to join us this afternoon.

MCCRACKEN: Thank you.

FRAZIER: Harry McCracken of "PC World" magazine.

MCCRACKEN: See you then. Thank you.

FRAZIER: All right, you bet. Make a date.

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