How Compaq Copied Then Crushed IBM’s PC

IBM was a giant of the computer industry and when it released its own version of a PC it instantly became the most popular PC and set the market standard. Everybody shifted from building whatever they were making to creating something that was as close as possible to the IBM PC.

So if you wanted to build an IBM clone it was as simple as licensing the operating system on IBM computers from Microsoft and getting the same parts used on the IBM PC from computer parts manufacturers.

The reason for this was because of the BIOS which was quite literally the only part of the IBM PC that was proprietary.

BIOS or the basic input/output system is the program a computer's microprocessor uses to start the computer system after it is powered on.

Rod Canion, Bill Murto, and Jim Harris were the founders of Compaq before starting Compaq they worked at Texas Instruments, one day they realized that they were bored of the normal day-to-day corporate life and decided that they wanted to start a company.

The Compaq PC was launched in November 1982. The selling point of the IBM PC was clear: it was exactly like the IBM PC but it was cheaper and portable.

In their first year of Business, they set a business record for the largest first-year sales in history which was $111 Million. By the end of 1983, Compaq had sold 53 000 computers. IBM saw the success of the Compaq portable and began to feel threatened.

They couldn’t understand why a little company called Compaq was out marketing and outselling them. So despite IBM’s best efforts, Compaq kept growing and growing, expanding from 6 employees when they started to more than 1 000 just 2 years later.

In 1984 their sales hit $329 Million, In 1985 they hit $503 Million in sales.

Because of how dominant IBM was in the 80s computer industry they always got first access to all Intel Chips, so every time Intel released a new Chip IBM would be first to get it and the rest of the computer industry would just follow them.

In 1986 using cutting-edge Intel Chips Compaq launched the Deskpro 386 which at the time was the fastest and most advanced computer on the market.

This caught IBM by surprise because they were used to getting first access to intel Chips but the Intel 386 Chip was offered to everyone at the same time and Compaq beat IBM to the punch by being the first to release a computer featuring the advanced 386 Chip.

The Deskpro 86 brought more success for Compaq with sales topping $1 Billion in 1987.

IBM realized that it was losing a ton of market shares to clones of its IBM PC and began suing companies that manufactured these clones. Rumors began to spread that IBM was going to Sue Compaq.

IBM believed Compaq was using a large number of their patented technology without permission. IBM had thousands of Patents and an army of lawyers given enough time they would have found patent violations that Compaq was guilty of.

IBM and Compaq eventually settled with Compaq agreeing to pay $130 Million to settle the lawsuit.

The threat of IBM was seemingly gone after the settlement that was until April 2nd, 1987. On that Day IBM released its IBM personal system 2, the second generation of the IBM PC.

The IBM personal system 2 had better technical specs. It utilized a system design called microchannels which meant that it was able to do more than one task at once like printing and simultaneously allowed you to type documents most computers at the time were only capable of doing one task at a time.

Because of this about $12 Billion worth of software that had been bought by companies and individuals simply didn’t run on the IBM PC.

Compaq CEO Rod Canion organized a meeting of 9 companies, amongst those companies were Intel, Microsoft, and 6 of the biggest PC manufacturers at the time except for IBM.

They came up with the Extended Industry Standard Architecture which was a framework for the collaboration of all these companies to build compatible computer systems that were better than IBM’s PCs.

It was a response to IBM's Microchannel computer. No longer could IBM dictate to the computer industry what the standard of a PC is rather the Computer Industry had set its own standard.

The clones were divorcing from trying to be like IBM and going their own way. In 1989 following the announcement of EISA, Compaq’s Earnings hit an all-time high.

In the same year, IBM’s earnings dropped by a 3rd to an all-time low.

[donjindra]

The BIOS was actually simple. It wasn't that hard to recreate it from a spec. I myself wrote the keyboard and floppy disk portions just for the learning experience.

Btw, Microsoft did not write DOS 1.0. They purchased it from Seattle Computer Products Tim Paterson).

[gamewizardks]

Why doesn't this video have more views? Great history about the IBM/Compaq rivalry here. Subscribed!

[doomslayerdave]

After Canion was let go Compaq brought in the executive behind their European division that moved the company towards cheaper commodity computers. You have to remember that Compaq was basically IBM Jr. with their pricing. They were more expensive than other clones and this mentality killed them after the AT clones became the cheaper standard. In 1990 they still charged 1500 or more for a 286. Everyone else was half as much. Going into the 1990s Compaq got trounced by everyone else and became just another beige box in a sea of them. It saved the company until HP came along.

[markshade]

Microchannel did NOT make multitasking possible and it was NOT incompatible with the main software.

It was proprietary in terms of making expansion cards for it but using it was Some other companies did use it too.

[joegoldman]

Great job and this was a pleasure to watch there was one serious error at the end compact did not merge with HP HP bought them up for a bitter bitter bitter fight

[awuuwa]

0:13 by what metric is GNU/Linux the least popular operating system?
GNU/Linux is the most popular operating system, except on the desktop.

But even on the desktops there are other operating systems which are less popular than GNU/Linux, such as the BSD operating systems.

[laughingvampire]

any operating system is a wise option because no one is going to try to run ALL software in the same machine, this is why even people who just use windows have a machine for work/college and a gaming pc and they don't mix both because they want the gaming pc to be as fast as possible crunching as much FSP as possible and that is the opposite of portable. People who edit video will even use multiple computers to just leave them rendering while they do work on other computers.

so all you have to know is choose what software are you going to use, what is going to be your workflow and then pick the best operating system for that use case, and the same person will probably end up using the 3 operating system in different computers for different use cases of their workflow. Is just like with video games, you pick the console or pc based on what games you are trying to play.

[markshade]

And your video presentation of the time period that Compaq settled is WAY wrong. The settlement was in 1983. At that time there was NO Acer, Dell, etc. at the time of the settlement.

The settlement took place when the PC industry was still in it's infancy. There were very few nationwide companies at that time. Even Tandy had not released their long lived fakilie of machines yet at that time.

And for what it's worth, at the time of the release of thr IBM PC, it still was notnyet the standard. It took a bit of time foe them to overtake the PC market.... The home market was even slower than the business market. Home buyers didnt take on the IBM PC as the default standard for a good while.

[ps]

Compaq got crushed at the end. If u only know how to copy, u have no future.

[captainkeyboard]

I miss these events like I miss old-fine music. Now I know a bit more about microcomputers than I wish I knew before. 💙

[victorgw]

Its not copying, its reverse engineering!

[ClassicStreetIron]

Get it right, Microsoft bought what became MS-DOS for a pittance and then proceeded to make millions.

[pranav]

But this video literary takes everything from the movie/ doc called Silicon Cowboys. That movie goes in depth ofc lol.

[andrewnorris]

Nice! Also check out Silicon Cowboys 2016 TV series.

[lotfizaboub]

I think Compaq merged with Dell and not HP I remmber.

[jamesdecross]

"…an even less wise choice…" = nonsense!

[erinburke]

There's something wrong with the YT algorithm if this video doesn't have a million views.