The Home Computer Arrives

In 1975, Micro Instrumentation and Telemetry Systems (MITS), a small firm based in Albuquerque, New Mexico, introduced the world’s first microcomputer, the Altair 8800. Lacking its own monitor and keyboard, the Altair 8800 was intended for the serious home enthusiast. Bill Gates (William Henry Gates III) and Paul Allen developed a modified version of the BASIC programming language for the Altair. They registered the Microsoft trade name in November 1976 to market the new language as MS-BASIC. Steven Jobs and Stephen Wozniak, two computer enthusiasts based in Silicon Valley, the heart of the semiconductor industry, were inspired by the example of the Altair. Using a cheaper 8-bit microprocessor, the MOS Technology 6502, they built their own microcomputer. Encouraged by the response of fellow enthusiasts, they began small-scale production of the Apple I computer in 1976. Snubbed by the companies offered the commercial rights but convinced of the commercial potential of the microcomputer, Jobs and Wozniak raised venture finance and set up Apple Computer in 1977. The Apple II computer, the world’s first commercial microcomputer, had generated $2.5 million in sales revenue by the end of the year.

The immediate success of the Apple II energized the computer industry. Other companies, particularly calculator manufacturers, were quick to see the potential of the standalone, desktop computer and began to develop rival products. Like Apple, they hoped to appeal simultaneously to the potential home user and the small business. The U.S. company Commodore Business Machines, founded by Jack Tramiel in 1958, introduced the PET 2001 only two months after the launch of the Apple II. By 1980, a number of U.S. companies were producing microcomputers (all of which were mutually incompatible) and companies such as Epson were selling compact, cheap printers to complement microcomputers. In Britain, Clive Sinclair, developer of the first pocket calculator, introduced the Sinclair ZX80 home computer in 1980. The ZX80 became the cheapest microcomputer on the market. It was designed to use a television set as a display screen rather than a dedicated monitor.

The fall in the price of microcomputers was largely due to the astonishing decrease in the costs of microchip manufacture. No other industry has matched the semiconductor industry for sustained reduction in costs coupled with faster performance. While U.S. companies such as Intel and Motorola dominated the microprocessor market, Japanese companies such as Fujitsu and NEC (Nippon Electric Company) began to make major inroads into the memory-chip market. In 1970, Intel’s first RAM (random access memory) chip had a mere 1K (kilobyte) capacity. Over the next decade, the capacity of RAM chips rose to 4K in 1973, 16K in 1976, and 64K in 1979. Japanese manufacturers were able to rapidly penetrate the memorychip market by taking an approach different from that of the U.S. memory-chip companies. Instead of investing time trying to get more memory on the same size of chip, they opted for the simpler approach of making bigger chips. They also championed the CMOS chip design, which consumed less power than the NMOS chip and was more resilient.