Looking Back 25 Years
More interesting to us was the software side of the story. IBM wanted to sell hardware and found a Harvard drop-out named Bill Gates that said he could supply the operating system on the required timeline. Gates bought the software from a local Seattle company and then customized it to meet the needs of IBM.
While Gates only paid $50,000 for that software he was clearly already a good businessman and licensed it to IBM such that he could also sell it to others. That decision, of course, meant that many other companies could start with IBM's open description of the PC, build their own systems and license the same software.
That's what happened but let's look at what might have happened if either IBM or Microsoft had made some different decisions. That is, if IBM had decided to make the PC proprietary or if Microsoft had either given IBM exclusive rights to the software or had decided to give it away the way Linux is given away--that is, source code and the freedom to change it.
Apple already had the Apple II which is certainly a contributing factor for IBM to quickly want into the market. The Apple II can be a case study for the closed hardware and closed software approach. It is reasonable to assume that IBM (and MS-DOS) would have ended up with small market share as well if someone else came along with open hardware--something that was extremely likely.
What if IBM had had exclusive rights to the operating system software? It seems that there are two possibilities: either IBM could have sold rights to other computer manufacturers or another operating system would have been developed. In the first case the real difference is that software profits would have shifted from Microsoft to IBM. Possibly, if IBM had elected to open up information on the software the same as was done with the hardware, other applications software developers could have ended up with greater market share. In the second, we would likely have had competition in the operating system software early on.
Let's look at one other possibility--free operating system software. Assuming this meant free as in freedom--source code available to all--this would likely have created a lot of incompatibilities as each hardware vendor decided to make their computer "better"--meaning different--and customized the software to only work on their system.
But, there was operating system competition (CP/M already had been shipping on some systems including those made by NEC). Also, there were free applications. Possibly the most famous was PC Write by Bob Wallace, an ex-Microsoft employee. It was relatively common for retailers to include PC Write on computers they sold as a free add-on.
So, what happened? That is, why did competition go away in software but not hardware? All along, IBM was being "open". The lock-in was coming from the software vendor. Initially that was just the operating system but, as Microsoft grew, so did their offerings. Their office applications had a market advantage because of inside software knowledge.
Everyone knew what the hardware did. That was IBM being open. But, vendors did not know what was inside Microsoft software. Thus, it was easy for Microsoft to write "better" applications programs because they knew the secrets of the operating system including what would be different in the next version.
How does Linux make this different? Like the openness of IBM's hardware design, Linux offers this openness in software design. Thus, software applications developers start out with equal knowledge of what it takes to write a good application. That doesn't mean that everyone will implement a good application but it does mean it is possible.
In addition, starting on this equal footing has encouraged vendors to adopt open standards for information interchange. For example, the OASIS standard for document formats means that you can move documents between OpenOffice.org, Kword and AbiWord. Again, Microsoft is dragging its feet on OASIS format support because they lose their inside knowledge advantage.
In any case, let's thank IBM for bringing us the PC--the most common Linux hardware platform. And let's hope it doesn't take another 25 years to get a full set of compatible applications programs in place.