1984 - 1996: Consolidation of Power

The Mighty Wintel Empire

The infamous quote "There is no reason anyone would want a reckoner in their habitation" past Digital Equipment Corporation founder Ken Olsen in 1977 is a perfect study of the prevailing corporate attitude towards personal computing in the early years.

Computers were mainframes, and minicomputers that could cost up to a 1000000 dollars were often sold in single digit numbers (per month), not to mention their initial hardware price represented just a fraction of the overall upgrade and service contract.

The environment in the decades before the microprocessor revolution were convivial and fraternal regarding the sharing of ideas and inventions. Between the depression expectations of the companies involved and the need for early allies to create a wide base of support for the budding industry, the early on days of the PC saw a spirit of cooperation that has so completely eroded information technology is hard to believe information technology e'er existed.


Ken Olsen, co-founder of Digital Equipment Corporation (DEC), a true stalwart of the early on days of the PC. Even though he's infamously quoted about computers not needed in every dwelling house, it'south said this was taken out of context. Information technology hasn't affected his legacy either.

As the integrated excursion industry became more lucrative, former colleagues that had started out in a close knit community created an industrial diaspora as ideas and applications (and the lure of wealth) began to exceed the existing company'south power to bring them to fruition. Modest companies that started out with esprit and enthusiasm shortly became the monoliths that had prompted many to leave their previous jobs.

Intel could trace its being to the breakup of Shockley Electronics and Fairchild Semiconductor, the departure of Federico Faggin and Ralph Ungermann to start Zilog, as well every bit David Stamm and Raphael Klein who left to constitute Daisy Systems and Xicor Incorporated, respectively.

Intel'due south Andy Grove was determined not to see his company gutted as Fairchild was. Lawsuits became object lessons to those employed at Intel, every bit a means of protecting its IP (which Fairchild had failed miserably at) and a method of tying up a competitor's financial resource while delaying its fourth dimension to market place for products.

Intel could trace its existence to the breakup of Shockley Electronics and Fairchild Semiconductor. Adamant to avert the same fate, lawsuits became object lessons to employees, a means of protecting its IP, and a method of tying up a competitor'south financial resources.

Some of these suits were completely justified. More than than a few competitors saw the success of the 8088/8086 as an invitation to direct re-create Intel's design including NEC, who afterwards won the second legal battle when it defended its reverse engineered 8086 clone V series, while some became use of the patent and legal system to wage economic state of war on competitors.

When a grouping of employees led by Gordon Campbell left to capitalize on the EEPROM market place past starting Seeq Technology, Intel promptly sued the new company on Grove'due south lodge. At Arthur Rock's behest, the lawsuit too targeted the venture upper-case letter firm that had supplied the get-go-up uppercase, which oddly enough included Intel's Gordon Moore as an investor. Funds poured into both Seeq and the legal defence force, with a relatively peaceful resolution beingness reached through the moderating influence of Intel's chief legal counsel, Roger Bovoroy, afterward Seeq had stepped into a legal minefield regarding talk of a licensing arrangement with Zilog.

The next major disharmonize turned into the longest running and nigh acrimonious battles in the industry, and it occurred in large role considering moderating influences were nowhere to be seen. Bovoroy had left Intel, and of the 8 original founders of AMD, but Jerry Sanders remained -- bit architect and vocalization of reason Sven-Erik Simonsen being the final to depart.


Jerry Sanders led AMD for over thirty years and earned a reputation as a charismatic, outspoken CEO (Robert Cardin)

Intel's relationship with AMD became openly hostile in September 1984 when the printing asked Jerry Sanders how AMD got its Intel-licensed EEPROMs to market faster than Intel had itself. Sanders began a lengthy tirade on Intel's lack of manufacturing power.

With Intel anxious to go rid of AMD as a second source partner for the 386, Sanders' outburst added an ignition source to an already volatile situation. The present understanding called for a cross-license of product, just Intel declined AMD'southward offers (a storage controller and a graphics chip, the Quad Pixel Display Manager), forcing AMD to make up the shortfall in royalties to Intel for its 286 license.

Litigation started in 1987 with AMD claiming there to have been a breach of contract. Intel responded with a countersuit for copyright infringement (Intel's 287 FPU), followed by an antitrust conform from AMD then a second copyright suit past Intel over AMD'south AM486 IP.

Both sides won their respective suits and some sense of lodge had been restored by 1995. AMD received $10 million and the rights to build the 386 in 1993 as well every bit $18 one thousand thousand with the rights build the 486 and outsource upward to twenty% of its x86 production, while Intel received $58 million from AMD for patent infringements.

More importantly for Intel, it stalled AMD's growth during a boom flow of microprocessor growth and personal computing in detail. At a time when AMD was looking to accept the next stride to higher echelons of semiconductor companies -- albeit still relying heavily on licensed production -- the visitor'due south expansion was severely concise. Worse was to follow for AMD as the original license agreement signed with Intel was due to expire on December 31, 1996.

As their original license agreement was ready to expire, Intel negotiated a much tougher ane where AMD would have no admission to Intel'south microcode later the 486 architecture and future AMD processors afterward the 586-class could not exist compatible with Intel sockets.

Intel negotiated a much tougher agreement just before the old one expired. In exchange for the continued use of existing Intel IP, AMD would take no admission to Intel's microcode after the 486 architecture and future AMD processors afterwards the 586-class could non be compatible with Intel sockets. This finer meant that AMD was at present racing against Intel'due south R&D timetable non just to produce its ain processor architecture but as well supporting chipsets and mainboards. Offering a cheaper alternative to an Intel CPU for what was otherwise an Intel-based system would no longer exist enough.

For Intel, the AMD suits were just i of a number centering on the '338 patent, "the Crawford Patent", that information technology was pursuing in the early 1990s, including those confronting UMC (which Intel won) every bit well as Chips and Technologies and Cyrix, both of which ended with settlements.

The early on years of the microprocessor industry, equally with previous IC industry, were based on a vertically integrated model with the company both designing and manufacturing fries. The mid-80s ushered in the rise of the fabless semiconductor company who'd produce the design simply outsource product to either an independent visitor who only made chips (the pure-play foundry model pioneered by TSMC), or a design business firm with manufacturing ability who could produce chips for other companies if the IP was licensed and there was no conflict of involvement.

A number of companies sprang up armed with technical knowledge only non the uppercase to invest in manufacture: NexGen (IBM), Cyrix (Texas Instruments, SGS-Thomson, IBM), Chips and Technologies (Hitachi and Toshiba), and Western Pattern Center beingness the most prominent. The list likewise includes Acorn, a pocket-sized British visitor who began designing the Acorn RISC Automobile processors (improve known by the acronym ARM), to be fabricated by VLSI Technology.


The BBC Micro was designed and built past Acorn Computer for the BBC Computer Literacy Project. The machine too served to simulate and develop the ARM architecture which is widely used in tablets and cellphones today.

None of the x86-based architecture companies lasted the altitude, merely they still contributed to the furtherance of the industry. Chips and Technologies was run on a shoestring budget but produced consolidated chipsets for the IBM PC-XT and its clones, vastly reducing the manufacturing cost as well as the first IBM uniform VGA graphics adapter which laid, the groundwork for the first moving ridge of 2D graphics add-in board vendors.

Cyrix became a popular underdog in the processor market and combined excellent integer with mediocre floating-point performance like AMD'south designs. A lengthy battle with Intel over the right to fabricate x86 designs drained resources and was fabricated much worse by Cyrix's contract with foundry partner IBM who sold Cyrix-designed chips under the IBM name at lower toll.

An ailing Cyrix would exist acquired past National Semiconductor in 1997 and onsold to VIA forth with National's pre-existing x86 license with the exception of the MediaGX line which would stop its days as Geode under the AMD banner.

NexGen would be a peripheral player in the CPU market every bit its chips, like Cyrix'due south, did non utilise Intel IP and were completely of its ain design. Where Cyrix was pin-compatible with Intel sockets and thus had a prepare market for the budget buyer, NexGen's Nx586 required its own 463-pivot socket and NxVL chipset, which severely limited opportunities in the market once Intel'south 430FX Triton chipset replaced the underperforming Neptune.

NexGen'south market position was made all the more precarious past the rate of Intel's development and incremental clock speed increases along with the rapid devaluation of previous models. This would bear witness besides rapid of change for the company. NexGen's follow upwardly processor, the Nx686, would never see the lite of solar day in that guise, equally AMD bought the company when its own in house 686-course K6 project failed to come across functioning goals. The last K6 that entered service would be a development of the NexGen blueprint.

While the estimator hardware business was beingness molded through vicious legal strategy, the battle for supremacy in the software market was no less intense. The success of the IBM PC and clones spawned three software empires almost overnight: Microsoft, Lotus, and Aston-Tate.

The battle for supremacy in software was no less intense. The success of the IBM PC and clones spawned three empires well-nigh overnight: Microsoft, Lotus, and Aston-Tate.

The early huge success of VisiCalc had turned the two halves of the business into trigger-happy opponents in the courtroom, a battle sparked primarily by the generous 37.v% royalty payment for retail and 50% for OEM copies that publisher Personal Software (afterwards named VisiCorp) owed developer Software Arts. During the turmoil, Mitch Kapor, atomic number 82 developer of 2 versatile add-ons for VisiCalc, VisiPlot and VisiTrend, sold his interest in the code to VisiCorp and set Lotus Software. Banking on both IBM and Microsoft's DOS succeeding in the market, Kapor and programmer Jonathan Sachs developed Lotus ane-2-3.


Bill Gates and Mitch Kapor, founder of Lotus Software (Cringley.com)

Lotus one-2-3'south IBM compatibility proved an outstanding success, becoming a compelling reason to purchase the IBM PC just as VisiCalc had with the Apple 2. The spreadsheet program's success was in part due to coding specifically for the PC's Intel compages.

Rival spreadsheet Context MBA was a more than comprehensive software package simply had been written in USCD's p-System to permit apply with many architectures (a hedge against IBM and Microsoft failing in the market place) at the price of responsiveness due to the translation layer used to communicate with those dissimilar architectures.


Lotus one-2-3 Release 3.0 for MS-DOS. (Wikipedia)

Lotus, equally many companies before and since (including Intel), succumbed to 2nd-system syndrome where a huge first product success brings pressure level to follow up with a comparable or preferably, a bigger, better production. The company released the underwhelming Symphony and Jazz spreadsheet programs which failed to sustain the momentum gained by 1-2-3, and Lotus retreated from software innovation to the purchasing of IP.

As the company grew information technology savage into the pattern of litigating to maintain its position afterward Jim Manzi assumed the visitor presidency. A suit against Paperback Software in 1987 was won in June 1990, while others claiming Mosaic Software violated the "look and experience" of 1-2-3 in the software VP Planner and TheTwin were won in June 1990 and January 1991. Additionally, Borland Software was required to remove 1-ii-3 macros from its Quattro Pro spreadsheet program.

What Lotus was to PC spreadsheet programs, Ashton-Tate would duplicate with dBase, its database software. Vastly successful at kickoff, afterward versions would be successively less influential and the company's slide from prominence was accelerated by the decease of founder George Tate, which saw the marketing-orientated Ed Esber become CEO. With the company's fortunes tied to a single product, Ashton-Tate purchased IP in the grade of the Frameworks office suite from Forefront Corporation along with the MultiMate word processor program, but corporate disorganization geared on reaction rather than action doomed the company.

Lotus' fortunes waned as Microsoft claimed market after market place.

Lotus' fortunes waned as Microsoft inexorably claimed marketplace after market. A classic example would seem to exist the case of Aldus' PageMaker desktop publishing program which was developed for integrating Apple tree'due south LaserWriter printer with the Macintosh computer. The success of the program led Aldus to develop a give-and-take processing programme under the name Projection Flintstone since early versions of PageMaker had no direct text input. Upon finding out the Flintstone was a year away from completion, Bill Gates demonstrated Microsoft'south competitor Word for Windows to Aldus founder Paul Brainerd claiming that it would send in 6 to 9 months when in reality it was two years away from beingness published. Project Flintsone was summarily shelved.

Though information technology certainly aided in the company's rising, Neb Gates' Microsoft survived non due to sleight of hand, but because it finer separated management and administration from those producing the product. It had set up clearly defined brusque, medium and long-term strategic goals, the longest being a reflection of Pecker Gates' personality: to be number one.

Microsoft had grown at a biggy rate thank you to IBM, just by the tardily 80s information technology was becoming apparent that while IBM was under assail from a slew of more agile competitors, all of them relied on Microsoft's Os and supporting applications. The expansion of the computing market and its associated software from business organization platform to personal calculating coincided with the growth of the Net and its accessibility.

While IBM was under attack from a slew of more agile rivals, all relied on Microsoft's OS and supporting applications.

The system evolved from small, mostly closed and incompatible networks that were restricted to academics and developers. The adoption of common standards (notably TCP/IP and HTTP) and encouraging the commercialization of the Internet was upwards until that indicate largely government-funded. With the subsequent expansion of the net from research, data and fourth dimension sharing into a reflection of what the average consumer wants (email, online shopping, and interaction with a larger community), spider web browsers became big business concern.

Of the outset wave of browsers, the NCSA's Mosaic was the most successful and was licensed to many companies. Mosaic developer Marc Andreessen went on to found Netscape Communications, and Netscape Navigator rapidly became the overwhelming browser choice of consumers with over 80% market share within the get-go year of introduction.

Microsoft'south answer was to license a version of Mosaic from Spyglass to produce Internet Explorer but uptake was slow until the company made the decision to parcel IE with the Windows 95 operating system as a free application, instantly increasing its visibility and cutting royalties to Spyglass to just the base license fee.

Microsoft would later pay Spyglass $8 million to avoid legal activeness. Nonetheless, it wound upwardly facing long running anti-trust proceedings brought by the European Union and U.S. Department of Justice anyway for including IE with Windows, for making it difficult to use a third-party browser with Windows and for making threats to withdraw Compaq's Windows licensing after Compaq's conclusion to bundle Netscape Navigator with its systems.

The determination to bundle IE with Windows enabled Microsoft to eclipse Netscape's market share in iii years. By 2002 IE usage had peaked at most 96% and would remain the manufacture leader for some other decade until a fundamental shift in the perception of personal calculating would alter the residual of power.

Net Explorer historical usage information (Wikipedia)

That shift was a result of making the personal estimator more personal as people discovered that calculating was less a static workstation than it was a constant companion. If non for work, and so mobile computers could certainly be used for entertainment, way accompaniment, and in some cases psychological need.

Mobile personal computing began at the low end of the spectrum with calculators, while "portable" more accurately meant "luggable" given the bulk of early components such as CRT screens and floppy disc drives every bit well every bit the general standard for miniaturization of the time. The first wave of truthful laptop designs were very expensive business concern condition symbols conforming to an Intel processor powered system with a half-clamshell non-backlit LCD screen usually capable of displaying iv to 8 lines of text, although the Hewlett-Packard HP-110 also included a 480x120 pixel graphics mode (480x200 with the HP-110 Plus), while the GriD Compass 1101 managed 320x240 for its $8,000 to $x,000 price tag.

Cheaper, less featured models also poured into the market from a host of manufacturers such every bit Epson (HX-twenty), Sharp (PC-5000), and Kyocera, whose Kyotronic 85 was also licensed out to Olivetti, Tandy, and NEC. The reduced feature set stemmed in large part from the need for cheap low power processors, something that would be addressed as Intel introduced 386SL model from 1990, some iv years afterward the 386 debuted.

Intel would spend $100 million in developing the 386, but the industry in general was in beloved with the 286 thanks to its low toll and the number of vendors offering versions of the chip. With a manufacturing cost of $141, up from $34 for the 286, the 386's price of $900 represented a sizeable increase in expenditure for an industry not quite ready for 32-bit computing.


The PS/two was IBM's try to recapture control of the PC market by introducing an advanced nevertheless proprietary architecture. Manufacturers stuck to "Wintel" solutions merely many PS/2 innovations went on to go standards.

Intel's "Carmine Ten" entrada was design to featherbed arrangement builders and get consumers to identify their computing needs by the manufacturer of the processor.

Compaq's DeskPro 386 and ALR'due south Admission both debuted in September 1987, a total seven months before IBM'south PS/2 underlined IBM's fading status. With Microsoft publicly chafing at an industry clinging to xvi-bit (and in some cases eight-flake) compatibility, the OEMs that usurped IBM'due south position had rapidly found their place every bit a "market leader" was largely illusionary. Intel'south "Ruby X" marketing campaign in October 1989 made a concerted attempt to force the manufacture into 32-chip computing, bypassing system builders and appealing to the ownership public.

Big full-folio advertisements featuring the numbers 286 with a large carmine "X" sprayed over the acme of them began a strategy to become consumers to identify their computing needs by the manufacturer of the processor.

The entrada was designed more to marginalize the 286 licensees (Harris, AMD, IBM, Fujitsu, and Siemens) as it was to sell Intel'due south 386s, and it apace established in the consumer's mind that companies pushing the 286 (including Intel's own OEM partners) were selling obsolete technology while elevating Intel's brand as market leader.


Early on Intel Within Advertisement 386sx (Flickr user intelphotos)

The Red X campaign presented obvious proof that Intel had little need for second source partners and belatedly spurred the x86 chip producers into making their own 386-class chips. The mark of AMD's design and manufacturing prowess was shown with the starting time eighteen six-inch wafers, which were ready by August 1990 and yielded only a single defective Am386 die.

Between March 1991 and the terminate of the yr the Am386 racked upwards $200 million from sales of two million processors, gaining a 14% share of the market, while another ii million were sold in the first three months of 1992. Sales would remain buoyant even as Intel transitioned to the 486, which came in a number of guises including both 32-bit and 16-bit external/32-chip internal varieties in improver to Overdrive models, merely sales hid a larger truth.

The 386 had required four and a half years to achieve a 25% marketplace share while the 486 achieved the aforementioned in i year less, with the impending Pentium likely to meliorate that past a considerable margin (it would reach the feat in eighteen months).

The Pentium era would encounter Intel distance itself from competitors and elevating its brand to consumers direct by adopting a copyrightable model name. The company would capitalize and expand on Red 10 marketing with their long running "Intel Within" entrada that fabricated Intel'due south brand the common identifier when the consumer was faced with a variety of organization vendors. The programme included Television receiver advertising with its soon to exist well-known v-notation jingle also every bit subsidized advertising for vendors who highlighted Intel's brand during the advertising.


Early Intel Inside advertising "Spot Intel" (Flickr user intelphotos)

Within 3 years, 1200 companies joined the entrada and the combined exposure elevated Intel's sales 63% in the starting time full year of performance. Less publicized would be the company's move into component manufacturing when it committed to building its ain motherboards, driving hundreds of board manufacturers from the market while raising quality assurance levels with the OEMs who sourced the components.

The Pentium era would see Intel distance itself from competitors and elevating its brand to consumers directly by using a copyrightable model name.

Such was the program's success that the OEM became a secondary consideration after option of processor for many shoppers -- a complete reversal in five years, assuming many consumers prior to 1989 actually had any preference in CPU manufacturer. AMD in particular from this indicate forrad would exist contesting confronting the Intel brand every bit much as Intel engineering science, only they would be far from the only companies under threat.

Apple tree and IBM joined past Motorola formed the AIM alliance in July 1991 to develop a commercial PowerPC RISC-based compages as an culling to the growing influence of x86 "Wintel" solutions. IBM would also hedge its bets by inbound into a ten-twelvemonth articulation venture with Intel in November of the aforementioned year to develop processors. The big loser in the power struggle would exist December'due south promising Alpha XP 64-bit RISC architecture. Existence declined by IBM every bit a developmental selection followed DEC's ain decision to refuse Apple's invitation to utilise the 21064 in future Macintoshes 5 months earlier.

All of Intel's efforts could have been wiped out with Dr. Thomas Nicely'south discovery of errors in the Pentium processors lookup table during June 1994, a little more a year later on the compages's introduction. Agin publicity stemming from Dr. Nicely's lack of received support from Intel caused the consequence to enter the mainstream via a CNN television report.

Intel's official response was that all chips acquit errors. In recent times, 50,000 of its own 486s had been turned into primal rings and Cyrix had halted product of its 486DX to set up a floating-indicate bug, but Intel, recently elevated into the public centre, was under the scrutiny of consumers who expected a defective production to be replaced, regardless of what information technology was.

The murmur of discontent became a clamor as IBM suspended Pentium shipments, and Intel'due south response was decisive in the face of the before equivocation. Intel chose to maintain its brand over firsthand profit, offering a public apology and a replacement processor to affected customers. Intel sustained a $475 meg write-downwards on a meg affected processors, but averted a big loss in marketing momentum.

The Pentium FDIV issues, while referenced frequently by detractors, barely caused a ripple in the market, with Intel recording a 31% growth in overall semiconductor sales the post-obit yr and its CPU market share rising to 77% worldwide by units and 82% by revenue. As Intel subsumed the motherboard market, it likewise began relegating chipset manufacturers into also-ran condition.

Of the 76 million chipsets shipped in 1995, Intel contributed a mere 1.5 million while SiS, VIA, OPTi, and Acer Labs (ALi) produced almost 33 million between them.

By the terminate of 1996, Intel's new motherboard business enabled chipset production to account for twoscore million of the 71.4 1000000 total produced, dooming low-end chipset manufacturers to early on retirement and raising the overall quality of available components (there was a thriving marketplace for inexpensive boards using grossly overstated specification -- in some cases fifty-fifty non-functional fake components).

Intel'due south motherboard business doomed low-end chipset manufacturers to early retirement and raised the overall quality of available components.

Eventually AMD managed to get its 586-grade processor into the market place in March 1996. Appear the previous September as '30% faster than the Pentium' on a clock for clock basis, the design fell far brusk of the rhetoric as well as the competing Cyrix 6x86. The planned K5 name was dropped in favor of SSA/v prior to its release. After the CPU core and cache structure were reworked, the 2nd wave (and start to use the K5 name) shipped in Oct 1996.

Much improved, information technology even so did little to motivate sales. As with Cyrix's part, AMD'due south tended to generate more than oestrus than the Pentium, limiting its entreatment to overclockers. AMD's follow up, the K6, proved to be what the previous design had aspired to.


The K6 was based on the Nx686 microprocessor that NexGen was designing when it was caused by AMD (Wikipedia)

With Intel beginning to transport Pentium II samples to OEM vendors the calendar month earlier, AMD'southward K6 launch in Apr 1997 provided much needed marketing exposure and enabled the company to terminate product of the K5 inside a few months.

High-profile orders from DEC for the Venturis FX-2 and from IBM for the budget Aptiva line would help bring the K6 into the market place. Nevertheless, overall market share would slip to nether 10% in big role due to Intel'south mobile Pentium sales and a stiff overall last quarter leading into the holiday season where AMD'southward 4.4% of sales paled against Intel'due south 91.1%.

AMD'southward 586-course processor fell far short of its faster-than-Pentium rhetoric and a reworked, much improved revision did niggling to motivate sales. The follow upwards K6 finally proved to be what the previous pattern had aspired to.

The inflow of the "Chomper" K6-II in May 1998 would lift AMD to 12% of x86 sales for the year as personal computer sales broke through the 100 million barrier. The K6-Ii would boss the sub-$1,000 desktop market with its improved performance and friendly price tags (the 366MHz version started at $187), outselling Intel's Celeron and Cyrix's MII combined two to ane in its first full quarter of availability.

By the late 1980s, personal computing was seeing the full furnishings of the economies of scale. CPUs and chipsets consolidated the function of many individual integrated circuits into fewer and more cost effective parts while processors exhibited plenty speed that a range of capable CPUs was bachelor via binning and speed reduction for low-power mobile and low-cost products.

The limiting factor in growth became the ability to manufacture the chips fast enough to satisfy need. Sales of personal computers grew in backlog of 10% a twelvemonth on the back of habitation productivity applications and the developing 3D graphics market, which had begun blooming with the inflow of the 3dfx Voodoo Graphics lath and major games such as Valve'south One-half-Life in 1998.

A sign of the shift in personal computing arrived on February viii, 1999, when Free-PC appear its campaign offer free Compaq PCs with Internet access in exchange for usage tracking and on-screen advertising. Past the fourth dimension the campaign finished in February 2000, 25,000 customers had signed upwardly and many small reckoner sales companies had been put out of business concern.

The directly model of shaping the internet and those who employ it would in the time to come become more indirect equally personal computing moved into the new millennium.

This article is the fourth installment on a series of five. If you lot enjoyed this, read on every bit we wrap up the series with a trivial more on the Intel-AMD rivalry and ARM'due south role in bringing personal calculating to the next step in its evolution.

Header prototype via Flickr user creative_stock