PCs for home use took a while to compute but IBM has not looked back

Its name was the 5150, it was squat and beige, its microchip had 1/400th of the power of today's chips and its internal memory was smaller than a typical attachment on an e-mail. And it cost $3,005 on August 12th, 1981 - the day it was introduced.

IBM's little computer - not the first commercially released PC but definitely the one that made computing a mainstream rather than hobbyist activity - turned 20 last Sunday. This modest revolutionary brought unimaginable changes to the world within two decades, and hailed a future whose consequences we still are struggling to understand and address.

In appearance and capability, it wasn't exactly Star Trek material. The 5150's specifications - a vision of jaw-dropping technical power for home users in 1981 - must seem ridiculous to any teenager today. But they'll bring back fond memories to early PC fanatics, who remember why floppy disks were called "floppy".

The 5150 came standard with a 4.77 MHz 8088 chip, 64k of memory, a single 51/4 inch floppy diskette drive, a four-colour monitor, and ran on Microsoft's DOS version 1.0. There was a cassette jack on the back for playing cassette-based games. Optional software included BASIC Interpreter and Pascal Compiler as well as VisiCalc.

VisiCalc, the first spreadsheet program and ground-zero for the concept of the "killer app", gave home and business users a reason for buying such an expensive toy. Instead of doing endless sums by hand, people could now get instantaneous calculations on how a small expenditure or savings might affect a whole range of variables. Suddenly, the 5150 had a market.

And a market much larger than IBM had suspected. The company thought the home market was new, overlapped into businesses and was therefore worth a dabble. But it didn't expect it to amount to much.

Internal predictions were that IBM might sell about 200,000 PCs over three years. They sold that many in a few months - a figure that stunned many because it was greater than all the IBM big computers in existence at the time.

Two desktop-sized computers had already begun to colonise a small home market - the Apple II and Radio Shack's TRS-80, both released in 1977. However, both companies were seen more as hobbyist ventures.

Most observers agree that the arrival of giant IBM, and its enormous marketing budget and power, propelled the PC into the mainstream.

"IBM gave computing an air of respectability," says Mr Ken Batty, IBM's head of PC marketing for Britain and Ireland, and a part-time computing historian.

But what prompted IBM to get into this then-tiny market?

"Our salesmen started coming back saying: 'our customers have got these microcomputers called Apples on their desks and they're running a program called VisiCalc'," says Mr Batty. "The tendency then was to say this was a hobby; this was a game. But the salesmen said they're using them to answer the questions they need to run their businesses. And alarm bells went off."

At the time, managers had to go to the programmers in their computer systems department if they wanted to do spreadsheet-type calculations. This priesthood would then spend several months writing a program to do the calculations.

A dozen engineers were sent from IBM's upstate New York headquarters, to Boca Raton in Florida, to come up with a competitor to the Apple machine.

Unheard of for IBM, the team selected components from other companies as well as IBM parts, using Intel chips and some Digital parts, he says.

Then came the move that has gone down as one of the biggest blunders in computing history. IBM needed an operating system (OS) - a program that would control the operations of the computer - and went to a college dropout, Mr Bill Gates, who had a small start-up called Microsoft.

Mr Gates was only supposed to be offering IBM some computer programs but instead he flogged a new operating system.

The only problem was it didn't actually exist - he and his cohorts had simply emulated an operating system on top of another program so that it looked like something unique was running the computer. When IBM said yes to this proposal, Mr Gates searched for an OS that Microsoft could buy and fine-tune.

For $30,000, it bought QDOS - Quick and Dirty Operating System - from another start-up, Seattle Computer Products. This was renamed MS-DOS - or Microsoft Disk Operating System.

IBM failed to secure exclusive rights to DOS, allowing Microsoft to sell it to other computer makers. In so doing, IBM relinquished potential monopoly control of the PC market and the IBM-compatible, or "clone" market was born.

Many commentators believe the PC market really emerged at that point because many competitors sprang up to offer continual innovation along with pricing pressure.

When IBM was having financial woes in the 1990s, its failure to secure exclusive rights to DOS was often cited as its downfall. However, the company recovered, and remains one of the largest and healthiest of computing titans in the current downturn.

But it took some time for IBM's famed corporate culture to take the market seriously. The 5150 did well but IBM fumbled the ball again when it decided not to use Intel's new 386 chip in 1987. Instead, it thought it would improve the way its PCs worked with the old 286.

A small manufacturer called Compaq stepped in and designed its latest model PC around the 386 - grabbing IBM market share and launching another computing success story.

Mr Batty believes the PC revolution really comes down to certain developments "at the right place, at the right time, and the sheer genius of two or three players".

Pivotal moments, he says, were the widespread adoption of the computer mouse; the Mac and Windows graphical interface, which meant users didn't have to type in commands; the growth of the games and office applications markets; and, of course, the arrival of the internet.

And what does he think will be the key development of the future?

"Short term, the growth of wireless computing. Longer term, I don't know, I really don't know. But we do have the chance to change the world."