This week’s milestones in the history of technology reveal the most important—and quite neglected—technology trend contributing to the success of Apple, Google, and Microsoft, ultimately making them today’s three most valuable US companies.
Apple and Microsoft are considered the premier—and long-lasting—examples of what has become to be known as the “PC era,” the former focusing on a self-contained (and beautifully designed) system of hardware and software, the latter on software which became the de-facto standard for PCs.
On December 17, 1974, the January 1975 issue of Popular Electronics hit the newsstands. Its cover featured the Altair 8800, the “World’s First Minicomputer Kit to Rival Commercial Models.” In fact, it was the first commercially successful microcomputer (i.e., PC) kit and the start of what became to be known as the “personal computing revolution.”
Les Solomon, a Popular Electronics editor, agreed to feature the kit on the cover of the always-popular January issue when Ed Roberts, co-founder of Micro Instrumentation and Telemetry Systems (MITS), suggested to him he would build a professional-looking, complete kit, based on Intel’s 8080 chip. Stan Veit: “Roberts was gambling that with the computer on the cover of Popular Electronics, enough of the 450,000 readers would pay $397 to build a computer, even if they didn’t have the slightest idea of how to use it.”
MITS needed to sell 200 kits to breakeven but within a few months it sold about 2,000 just through Popular Electronics. Veit: “That is more computers of one type than had ever been sold before in the history of the industry.”
Visiting his high-school friend Bill Gates, then a student at Harvard University, Paul Allen, then a programmer with Honeywell, saw the January 1975 issue of Popular Electronics at the Out of Town News newsstand at Harvard Square. Grasping the opportunity opened up by personal computers, and eager not to let others get to it first, the two developed a version of the BASIC programming language for the Altair in just a few weeks. In April 1975, they moved to MITS’ headquarters in Albuquerque, New Mexico, signing their contract with MITS “Paul Allen and Bill Gates doing business as Micro-Soft.”
PC kits like the Altair 8800 also gave rise to local gatherings of electronics hobbyists such as Silicon Valley’s Homebrew Computer Club which first met on March 5, 1975. Steve Wozniak presented to members of the club his prototype for a fully assembled PC which in July 1976 went on sale as the Apple I. On December 12, 1980, Apple Computer went public in the largest IPO since Ford Motor Company went public in 1956. Originally priced to sell at $14 a share, the stock opened at $22 and all 4.6 million shares were sold almost immediately. The stock rose almost 32% that day to close at $29, giving the company a valuation of $1.78 billion. In August 2012, Apple became the most valuable company in history in terms of market capitalization, at $620 billion.
The PCs on which both Apple and Microsoft built their early fortunes were not “revolutionary” as they were a mainframe-on-a-desk, resembling in their conception and architecture the much larger machines that have dominated the computer industry for the previous three decades. They did, however, give rise to new desktop applications (e.g., spreadsheets) which contributed greatly to increased personal productivity. But within the confines of a stand-alone PC, their impact was limited.
The real potential of the PC to improve work processes and make a profound impact on productivity was realized only in the mid-1990s with the commercial success of Local Area Networks (LANs) or the linking of PCs in one building-wide or campus-wide network. That breakthrough invention saw the light of day in the early 1970s at Xerox Parc. Later, on December 13, 1977, Bob Metcalfe, David Boggs, Charles Thacker, and Butler Lampson received a patent for the Ethernet, titled “Multipoint Data Communication System with Collision Detection.”
Today, Ethernet is the dominant networking technology, linking computers not just locally but also over long distances, in a Wide-Area Network (WAN). The best-known WAN today is the Internet, a network of networks linking billions of devices all around the world. Limited mostly to academic research in its first twenty-five years, the Internet’s real potential was realized by the 1989 invention of the World-Wide Web, software running over the Internet that facilitated a higher level of linking between numerous content elements (documents, photos, videos).
On December 14, 1994, the Advisory Committee of the World-Wide Web Consortium (W3C) met for the first time at MIT. The Web’s inventor, Tim Berners-Lee, in Weaving the Web: “The meeting was very friendly and quite small with only about twenty-five people. Competitors in the marketplace, the representatives came together with concerns over the potential fragmentation of HTML…if there was any centralized point of control, it would rapidly become a bottleneck that would restrict the Web’s growth and the Web would never scale up. Its being ‘out of control’ was very important.”
The out of control nature of the Web allowed for the emergence of new companies seeking to benefit from its success in driving further proliferation of computing. The Web has moved the computer from mostly an enterprise productivity-improvement tool to becoming the foundation for myriad of innovations impacting consumers and their daily lives. Google (now Alphabet) was one of these innovations, becoming the best guide to the ever-increasing volumes of linked information on the Web.
Today, Apple is the most valuable US company at $870 billion, followed by Alphabet at $724 billion and Microsoft at $649 billion.