According to Frank Lynn, Founder of Frank Lynn & Associates, A new and formidable business computer race began 25 years ago when IBM launched a new business PC to counter the emerging Apple II.
(Frank Lynn & Associates, Chicago, IL) – According to Frank Lynn, Founder of Frank Lynn & Associates, “A new and formidable business computer race began 25 years ago when IBM launched a new business PC to counter the emerging Apple II. The events that led to this launch reverberated throughout the computer industry and set the stage for numerous other initiatives and technology developments.”
One way to truly measure the progress of the technology industry and specifically the computer industry is to reflect on some of the early events that set the stage.
Today, Frank Lynn & Associates, an international channel strategy consulting firm based in Chicago celebrates the 25th anniversary of the launch of IBM’s original PC. In 1981 IBM chose Frank Lynn & Associates to provide assistance in designing the distribution strategy for the PC. At the time computer dealers were relatively scarce, and IBM was considering department stores, its network of typewriter dealers, and other curious channels of distribution.
The Frank Lynn team undertook a landmark study that concluded businesses, rather than consumers, would be the early buyers, and that businesses wanted to buy from computer specialty stores. IBM followed this advice and effectively legitimized the computer dealer channel. Today, the dealer channel has grown to over 100,000 businesses in the U.S. and splintered into various sub-categories such as system integrators, value-added resellers, consultants, network integrators, security specialists, etc.
1980 saw some of the most memorable events and decisions in IBM history. At the time, the lowest-priced business computer IBM offered cost about $7,000. Hobbyists could tinker around with kits, but when Apple launched the Apple II, IBM quickly realized it had to counter with an entirely new type of computer, a personal computer, and a new way of selling this PC. This triggered a chain of events within the inner sanctum of IBM that most people thought would never occur.
Bill Lowe and a small team of engineers recognized the need for a competitive entry against the Apple threat (and Commodore and Atari) and quickly went to IBM’s Central Management Committee (CMC) and dared to suggest that IBM should introduce a low-priced PC within one year, not the traditional five years that IBM historically had taken to design and launch new systems.
The challenges to conduct such a campaign were readily apparent. IBM didn’t have a microprocessor to do the job. Going against the grain of IBM’s traditional “always manufacture your own” approach, a search was launched and IBM settled on a company to make the microprocessor, know as Intel.
Next, IBM had no operating system to run the machine. Again an external search led to the discovery of a brash young man known as Bill Gates, who claimed to have an operating system, but really didn’t at the time. Armed with his commitment from IBM, Bill Gates negotiated the purchase of the rights to an operating system known to the world now as DOS.
An error by IBM came back to haunt them by failing to secure company ownership and rights to the DOS operating system for their new PC. This gave fantastic early momentum to Bill Gates in growing the powerhouse Microsoft.
Nevertheless, IBM’s decision to launch the PC with an “open architecture” set the stage for the technology industry we know today. Scores of companies set up shop to sell peripheral devices, add-in cards and software that could now work on the IBM machine. Many of today’s leading technology companies owe their start to IBM’s “open architecture” decision.
Although IBM had never sold a computer through anyone but its own sales force, Lowe and the rest of the team recognized direct sales would be cost-prohibitive and the call went out for a consulting and research organization that understood indirect channels of distribution. IBM quickly found Frank Lynn & Associates and teamed them with Professor Lou Stern from the marketing department at Northwestern University’s graduate business school.
The research, later acknowledged by Phil Estridge, the Director of IBM’s Entry Systems Division, moved IBM, and the computer industry, into the distribution model that now covers the entire world. In a letter to Mr. Lynn, Estridge wrote, “Please accept a grateful THANK YOU! for the efforts put forward by your company and your people that helped us announce and will now help us deliver the IBM Personal Computer.” In a handwritten addendum, Estridge wrote, “Frank . . . we quite literally could not have done it without you – many thanks!”
Regrettably, Estridge died just three years later in the crash of a Delta Airlines L1011 at the Dallas/Fort Worth airport.
The IBM PC launch occurred on August 12, 1981, when IBM announced its new PC available for sale through ComputerLand stores and Sears Business Centers. IBM sold more PCs in the first quarter than its most optimistic forecast for the whole year. Since that day, Frank Lynn & Associates has been involved in numerous projects with IBM and other technology leaders and continues to be the market leader in channel strategy consulting in the technology industry.
Bob Segal, Principal of Frank Lynn & Associates, joined the firm shortly after the launch and worked on many of the follow-on PC projects. He now leads the firm’s technology industry practice and has written a more complete history of distribution channels in the computer industry. For questions, send Bob an email at
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According to Frank Lynn, Founder of Frank Lynn & Associates, A new and formidable business computer race began 25 years ago when IBM launched a new business PC to counter the emerging Apple II.
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