12 August 1981: IBM launches the PC

IBM 5150 PC © Getty Images
IBM’s tap-dancing elephant

“Elephants don’t gallop”, so said legendary investor Jim Slater of companies too big to grow quickly. But they might be persuaded to dance.

Companies didn’t come much bigger than IBM, the ‘Colossus of Armonk’. IBM’s problem was that it was big, boring and slow to innovate. Its gig was selling computers the size of your living room to other boring companies. But during the 1970s, a revolution was underway.

As technology advanced, computers shrank, and so did the price. For the first time, ordinary punters stood a chance of owning one. Smaller, more nimble companies such as Apple, with their faster research and production times, were making hay. IBM was missing out.

IBM was infamous for the slow pace of development for its products – about five years, far too slow to keep up with the pace of change. As one observer wryly noted, “IBM bringing out a personal computer would be like teaching an elephant to tap dance”.

Luckily for IBM, it had a man who could do just that. His name was Don Estridge. A top boffin in the lab department, Estridge volunteered to lead project ‘Chess’. With his small band of scientists, they set out to design and build a personal computer to rival the Apple II. They worked round the clock, and by April 1981, the personal computer (PC) was all but ready. It had taken them just one year.

What IBM did next was truly revolutionary – so much so, in fact, that IBM surprised itself. It invited outsiders to make components for its computer and approached a little-known company to write its software – Microsoft.

On 12 August 1981, the IBM PC 5150 was unveiled at the Waldorf Astoria in New York. You would have had to shell out $1,565 to get your hands on one, but that wasn’t bad when you think that 20 years earlier, a computer would have cost you $9m. That’s assuming you had somewhere big enough to put it.

The IBM PC was small – about the size of a typewriter, and it proved overwhelmingly popular; a “roaring success” as Newsweek put it. By the end of 1982, shops were queueing up to sell it and IBM’s little computer paved the way for home computing.

• Stay up to date with MoneyWeek: Follow us on TwitterFacebook and Google+

One Response

  1. 12/08/2014, Don't panic wrote

    You forgot to mention the BBC computer designed by the UK’s Acorn Computers.
    More advanced than the IBM PC and released a few years earlier.
    Acorn evolved into todays ARM Holdings who design the processors for more than half of the worlds smart phones including Apple.

Comment on this article

MoneyWeek magazine

Latest issue:

Magazine cover
Avoid the dinosaurs

Why smaller stocks are better bets

The UK's best-selling financial magazine. Take a FREE trial today.
Claim 4 FREE Issues

Vote in the MoneyWeek Readers' Choice Awards

Vote for your favourite financial services company in the inaugural MoneyWeek Awards, and you could win a year's subscription to MoneyWeek magazine. Find out more and vote here.


Shale gas 'fracking' promises to transform Britain's energy market. Find out what it is, what it means, and how to invest.

Which investment platform?

When it comes to buying shares and funds, there are several investment platforms and brokers to choose from. They all offer various fee structures to suit individual investing habits.
Find out which one is best for you.