22
Meet Me at the Faire
On April 16, 1977, the first annual West Coast Computer Faire opened at the San Francisco Civic Auditorium. The primary organizer of the event was Jim Warren, yet another individual who stood at the intersection of technology and the counterculture in 1970s Silicon Valley. For ten years, Warren had been a math teacher at the Catholic women’s College of Notre Dame in Belmont, California, until he was asked to leave in 1967 due to the increasing publicity of the nudist parties he was holding at his house. Looking for something new to occupy his time, Warren took up programming on the advice of a friend.1
While doing contract programming for the Stanford Medical Center under the name Frelan Associates, Warren fell in with the Midpeninsula Free University, a counterculture educational organization that maintained a course catalog that anyone could contribute any topic to so long as they paid a $10 registration fee. These classes would then be offered free of charge in ad hoc classrooms around the region. Warren served three terms as the general secretary of the university and founded and edited a newsletter for the organization called The Free You.2
Through this work, Warren met Bob Albrecht and Dennis Allison of the People’s Computer Company, who were looking to expand their publishing operations. Albrecht and Allison were receiving an increasing number of submissions on programming tools and programming languages but did not want to feature these topics in their newsletter for fear of harming the publication’s accessibility to non-technical people. Instead, they asked Warren to edit a limited three-issue magazine devoted to a new version of BASIC submitted by two programmers in Texas that fit into 2K of memory called Tiny BASIC. Dr. Dobb’s Journal of Tiny BASIC Calisthenics and Orthodontia debuted in January 1976 and proved so popular that publication continued well past its planned three-issue run under the more general name Dr. Dobb’s Journal of Computer Calisthenics and Orthodontia.3 Dr. Dobbs was the first magazine devoted entirely to microcomputer software.
Alongside programming articles, Dr. Dobbs provided reports on an emerging new trend in 1976: computer fairs. These events were generally organized by local computer clubs and provided a space where attendees could listen to talks by noted figures in the nascent microcomputer industry, check out the latest available computers and peripherals, and meet up to share their knowledge and enthusiasm with each other. The earliest fairs were primarily held in the Midwest or on the East Coast, which Warren considered an affront because he felt the most interesting developments in microcomputing were occurring on the West Coast. When he complained about this fact to the editor of the Homebrew Computer Club newsletter, Bob Reiling, the duo decided they should organize a Bay Area fair themselves.4
After being rebuffed by Stanford, Warren approached the San Francisco Civic Auditorium to serve as a venue for what he envisioned as a “Renaissance faire” for computer geeks. He almost scuttled the whole thing when the auditorium quoted a rental price of $1,200 per day. After breaking down the numbers with Reiling, they decided that if they could attract 60 exhibitors and 7,000 attendees, they would break even and perhaps realize a small profit. Warren worked tirelessly to promote the event by convincing topflight local companies like Processor Technology and Cromenco to attend, soliciting the largest hobbyist and evangelist groups like Homebrew, the Southern California Computer Society, the People’s Computer Company, and the People’s Computer Center to serve as sponsors, and starting a newsletter called the Silicon Gulch Gazette solely to promote the event.5
At the time of the West Coast Computer Faire, the most successful fairs in the country were attracting around 4,000 people. Warren and Reiling figured the concentration of computer enthusiasts in Silicon Valley would allow them to attract 7,000 people. They were blown away when thousands of people formed five huge lines around the entrances to the auditorium and waited more than an hour to enter the show floor without complaint. Nearly 13,000 people attended the two-day event.6
The huge crowds at the West Coast Computer Faire served notice that the market for microcomputers had spread beyond a few hobbyists tinkering with electronics in their basements or garages. This realization in turn attracted mass-market electronics companies to explore the microcomputer market more seriously and set the stage for a new generation of fully assembled computers designed not for the hardcore computer hacker, but for the average consumer. The event also served as the coming out party for the most significant computer gaming platform of the late 1970s: the Apple II.
***
The genesis of Apple Computer was the same seminal event that launched Processor Technology and encouraged a host of hobbyist projects: the March 1975 inaugural meeting of the Homebrew Computer Club. As the call went out to interested parties, an HP engineer named Allen Baum saw a flyer advertising the meeting on a bulletin board at work and brought along his high school friend and fellow HP employee Steve Wozniak.7 At the time, Wozniak had started tinkering with a time-sharing terminal design and hoped to connect with other terminal enthusiasts at the meeting.8 He felt out of place when talk turned to microprocessors because he had not kept up with their development. As the meeting continued, he realized that the Altair computer everyone seemed excited about was like the Cream Soda Computer he had built several years before save that the TTL hardware had been largely replaced by a single microchip. Inspired, Wozniak decided to start a new computer project.9
Wozniak’s computer borrowed features from several sources. His basic plan was to merge the computing capability of a system like the Altair with the terminal he was developing. This meant it would support a keyboard for input rather than switches. From the calculators he designed at HP, Wozniak borrowed the idea of incorporating a small ROM chip to store a simple monitor program in memory so that the computer would be ready to accept commands immediately after powering up. Finally, Wozniak drew on his love of video games to incorporate video output to a standard television. Choosing a processor for the computer proved challenging due to the expense. After briefly considering the Motorola 6800, Wozniak pivoted when he saw advertisements for the 6502 debut at the September 1975 Wescon. As the 6502 was similar to the 6800 but available at the cheaper price of $25, Wozniak attended the show and purchased one to serve as the heart of his new machine.10
Wozniak created his computer to share with his new friends at Homebrew and provide an entrée into being more involved in that community,11 so he gave schematics away for free. His friend Steve Jobs, who began attending Homebrew meetings periodically after Wozniak showed him the computer, noticed that while many attendees were taking copies of the schematics, few of them possessed the requisite skill to assemble the computer. Jobs suggested he and Wozniak form a company to build the computer boards themselves to sell as kits. Although he could not see a viable business, Wozniak agreed to go along with the idea.12 The name for their venture came as Wozniak drove Jobs home from the airport after he returned from one of his frequent journeys to the commune in Oregon. Jobs was partaking of one of his fruitarian diets and had been participating in the apple harvest at the farm, so he suggested the name Apple Computer.13
Wozniak and Jobs formally established Apple on April 1, 1976, with each partner taking 45% of the firm. The other 10% was granted to Ronald Wayne, an older engineer whom Jobs befriended at Atari and recruited into the company both because he had experience starting his own slot machine company years before and because Jobs felt it would be valuable to have on older hand to adjudicate disagreements between Wozniak and himself. Within 11 days, however, Wayne judged the whole venture too risky and sold his entire stake for $2,300.14
As Wozniak and Jobs began showing off the completed computer in early 1976, they attracted the attention of entrepreneur Paul Terrell. In December 1975, Terrell had become one of the first Altair dealers in the country and established a store in Mountain View called the Byte Shop. MITS dropped him when he violated the company’s policy on dealer exclusivity, but Terrell shifted to IMSAI computers to great success and began franchising his operation to create the first national computer store chain. Terrell agreed to buy 50 computers, but only on the condition that they came fully assembled rather than as kits. This condition transformed the Apple I, as Jobs and Wozniak named their computer, into one of the first microcomputers available preassembled, though this distinction merely meant all the components were soldered onto the board and the buyer would still need to purchase a keyboard, power supply, and case separately. In July 1976, Apple began advertising the Apple I in magazines, and Jobs and Wozniak started making deals with other local computer stores to carry it. Roughly 200 were sold over the next few months at a price of $666.66.15 By then, Wozniak was already dreaming up the next model.
The Apple I was an exercise in adapting Wozniak’s existing TV Terminal quickly to have something available to show the Homebrew Computer Club. The Apple II was reengineered from the ground up to deliver enough speed and audiovisual capability to play a flawless adaptation of Breakout. Once again powered by the 6502, the computer incorporated faster RAM and could output bitmapped 4-color graphics at a resolution of 280 × 192 or 16-color graphics at a resolution of 40 × 48.16 It could also produce simple sounds through an onboard speaker and supported paddle controllers. As Wozniak was putting the finishing touches on the computer, he was also completing a version of the BASIC programming language for the Apple I, so he resolved that the Apple II would ship with what he named Integer BASIC loaded in ROM to serve as a simple operating system. Like the Altair, the computer also included slots for new circuit boards to expand its capability.
In August 1976, Jobs and Wozniak brought the Apple I to the Atlantic City Computer Festival, where it was overshadowed by Lee Felsenstein’s Sol-20 due to the latter computer’s sleek case. Jobs realized the Apple II could not just be a board like its predecessor: it would need to have a case, an integrated keyboard, and a power supply too. He contracted with a fellow Homebrew attendee named Jerry Manock to produce a foam-molded plastic case and with former Atari engineer Rod Holt for a revolutionary power supply design that generated significantly less heat than other models and became an industry standard.17
With its integrated case and keyboard, the Apple II required a greater financial investment to bring to market than the Apple I, so Jobs and Wozniak started looking for funding. Jobs brought the computer to Nolan Bushnell and Joe Keenan at Atari, but the company had its hands full closing the Warner deal and trying to prepare the VCS for launch, so they declined to invest. Bushnell did, however, introduce the duo to Don Valentine. Valentine also declined to put money in initially because he could tell Jobs knew nothing about selling in the mass market or about putting together a business plan. He suggested they bring a more experienced executive on board and recommended Mike Markkula.18
A trained engineer with a sharp analytical mind, Armas “Mike” Markkula was recruited into the Fairchild Semiconductor marketing department from Hughes Aircraft in 1966.19 He did not join the exodus of talent to the “Fairchildren” initially despite several offers, but in 1971 he relented in the face of continued decline at Fairchild and took a job as North American marketing manager at Intel.20 In 1975, Markkula retired at only 33 years old after being passed over for the top job in sales and marketing. He could afford to do so because his Intel stock options had made him a multimillionaire.21
For the next 18 months, Markkula served as a business consultant one day a week while indulging in hobbies and volunteer work until Valentine called to suggest he check out Apple.22 When he arrived at the Jobs family garage, Markkula was blown away by the Apple II not only for its capabilities but for the elegant design of the PC board.23 He ended up writing a business plan for the company and investing himself. On January 3, 1977, Apple Computer incorporated with Jobs, Wozniak, and Markkula each taking a 26% share.24 Markkula served as chairman of the board and head of marketing but did not want to run the day-to-day affairs of the company, so he hired a good friend from his Fairchild days named Michael Scott to serve as president.25
Worried that a larger firm like Texas Instruments or IBM might eventually wake up to the potential of the microcomputer market, Markkula decided a slick corporate image would be key to positioning the Apple II as a new standard in microcomputing. To that end, he contracted with the Regis McKenna agency, known as the premiere high-tech marketing/PR firm after helping Intel launch its line of microprocessors. The firm developed a new rainbow-colored logo for the company and built a booth for the Apple II’s debut at the West Coast Computer Faire.26 Full-page color ads began appearing in June 1977, the same month the Apple II began shipping in a configuration with 4K of memory, two paddle controllers, and an audio cassette interface for $1,298.
Apple hoped to make a splash at the West Coast Computer Faire, but it was only sporadically covered by the press that attended the event. While the Apple II featured impressive capabilities, this power came with a prohibitively high price that turned off many potential customers.27 Instead, the darling of the event was a second fully assembled computer that outdid Apple by including a monitor while still selling for under $1,000. This computer was developed by 6502 creator MOS Technology for its new parent company, Commodore International.
***
Commodore co-founder Idek Jacek Trzmiel was born in Poland on December 13, 1928.28 After the German conquest of Poland in September 1939, the Jewish Trzmiel family was forcibly relocated to the Litzmannstadt Ghetto in Lódz, where Idek worked in a garment factory until the ghettos were liquidated in 1944. The Trzmiels were shipped to the Auschwitz concentration camp, though after just a few days Idek and his father were assigned to a work crew that built new satellite facilities for the Neuegamme concentration camp around the city of Hanover. The elder Trzmiel died in the camps; Idek was liberated by U.S. forces in April 1945.29 He stayed in Europe for two years finding work where he could and married a fellow camp survivor named Helen Goldfarb in July 1947. Four months later, the Hebrew Immigrant Aid Society (HIAS) paid for ocean liner tickets so the couple could immigrate to the United States. Upon arrival, Idek took the name Jack Tramiel.30
The Tramiels settled into a HIAS building in New York City, and Jack worked as a handyman at a lamp store while learning English from the movies.31 In 1948, he joined the U.S. Army and served two tours, first as a cook from 1948–1950, and then as a typewriter repairman for less than a year in 1951–1952. In between the two stints and after leaving the Army for good, he worked as a repairman at the Ace Typewriter Company in New York, where he befriended fellow employee Manfred Kapp. In 1954, Tramiel and Kapp established a used typewriter business before buying a company in the Bronx called the Singer Typewriter Company to sell new and used machines.32
Tramiel and Kapp soon began importing Italian adding machines from a company called Everest that were particularly well received in Canada. They proceeded to convince the manufacturer to give them exclusive Canadian rights and relocated to Toronto in 1955 to establish Everest Office Machines. In 1958, they added a line of portable typewriters from Czechoslovakia and incorporated a new company on October 10 called the Commodore Portable Typewriter Company. While the typewriters were successful, Commodore experienced a constant cash flow crisis as it attempted to import them in sufficient quantity to meet demand. At first, they relied on factoring, a process in which accounts receivable are sold to a third party at a discount to generate short-term cash. Looking for better terms, in 1959 Tramiel and Kapp sold a portion of Commodore to Atlantic Acceptance Limited, one of the largest financing companies in Canada. Atlantic president C. Powell Moran became the chairman of Commodore and funded its further growth through loans. In 1962, the company went public under the name Commodore Business Machines.33
In 1965, Atlantic Acceptance suddenly collapsed after a routine deposit was rejected for insufficient funds. A subsequent investigation by the Canadian Royal Commission revealed Atlantic had been falsifying its financial records for years to acquire loans that were then funneled into a web of subsidiaries in which Morgan held a personal stake. Most of this money was then either lost in poor business ventures or pocketed for personal gain. The Atlantic Acceptance collapse remains the largest financial scandal in Canadian history, and Commodore was stuck in the middle of it. Tramiel and Kapp evaded punishment because the Commission could not find concrete evidence of wrongdoing despite heavy suspicion; Morgan was spared jail time only because he died of leukemia in 1966.34
Despite emerging from the Atlantic Acceptance debacle legally intact, Commodore teetered on the edge of bankruptcy. No financial institution wanted to touch a company tainted by a serious financial scandal, but a Canadian investor named Irving Gould took a chance on the firm and bought a controlling share in 1966. Tramiel remained as president, while Gould became the chairman. Gould sold off the Commodore factory to reduce debt, so Tramiel contracted with Ricoh to produce adding machines in Japan.35
While overseas, Tramiel saw some of the earliest electronic calculators and pivoted Commodore into the new market by making deals with Japanese firms like Casio to manufacture calculators that he could sell under the Commodore name.36 In 1969, Commodore began manufacturing its own calculators again using a chip from Texas Instruments, and the next year it relocated to Palo Alto, California, in the heart of Silicon Valley. By 1973, Commodore had become a major force in handheld calculators with factories in California, Virginia, and England and offices in Japan. In 1968, the company realized a profit of $130,000 on sales of $4.1 million. By 1973 those numbers had grown to $1.3 million and $32.8 million, respectively.37
In 1974, Commodore began to decline in the wake of TI’s entry into the calculator market. Unable to compete on price with its vertically integrated competitor, Commodore took a loss of $4.4 million in 1975. Tramiel responded by closing the Virginia factory and the Japanese office and tightening payment terms for customers. Meanwhile, Gould incorporated a new parent company as Commodore International in the tax-free Bahamas for which Commodore Business Machines and its international sales offices became subsidiaries. Tramiel felt Commodore would need to vertically integrate like TI to survive and decided to buy a chip company.38
Meanwhile, MOS Technology parent Allen-Bradley was growing increasingly unhappy with its chip subsidiary as anticipated synergy never occurred and the calculator chip business took a massive hit during the price wars. Rather than liquidate the firm, Allen-Bradley let the founders buy it back for next to nothing.39 MOS remained in a perilous state, however, due both to a continuing lawsuit with Motorola over the 6501 and 6502 processors and the death spiral of the calculator market. Consequently, the company agreed to be acquired by Commodore in September 1976.40
At the time of the purchase, 6502 lead designer Chuck Peddle already had one foot out the door. While bringing the 6502 to market in 1975, Peddle decided the team should build a simple development system for the chip in order to entice users. The result was a $30 package containing a ROM chip sporting a debugger and monitor program and a photocopied set of instructions describing how to build the machine, called the Terminal Interface Monitor, or TIM. MOS co-founder Don McLaughlin felt TIM was not user friendly and advocated for a second design that morphed into the Keypad Interface Machine, or KIM-1, that was sold as a PC board complete with a calculator-style keypad and LED readout.41 Although the KIM-1 was envisioned as a development system, Peddle was surprised to discover some customers were buying it for use as a simple computer. He eventually realized this behavior was due to increasing interest in microcomputers among a less technically savvy group of consumers who did not want to assemble a kit. Peddle resolved to build a computer for that market.
At first, MOS management was supportive of Peddle’s computer initiative, but as losses continued to mount, it withdrew its backing. Peddle was ready to leave MOS, but then Jack Tramiel bought the company. Commodore VP of engineering Andre Souson proved more receptive to Peddle’s computer and agreed to help him pitch Tramiel on the project. The Commodore owner still only had eyes for the calculator business despite his setbacks, so Peddle and Souson pitched the microcomputer as the next evolution of the HP-65 programmable calculator. Tramiel understood this concept had potential and placed Peddle in charge of bringing Commodore into the computer business.42
From his days at GE, Peddle was intimately familiar with the time-sharing mainframes used by institutions like Dartmouth, and he resolved to develop a computer that could provide an experience akin to using a CRT terminal on a system like the DTSS.43 This meant building a machine that could drive a character-based CRT display, integrating BASIC in ROM memory, and shipping a complete package with a keyboard and a monitor. Peddle contracted with Micro-Soft for a 6502 version of BASIC in October 1976 and considered buying Apple to jump-start hardware development. When Jobs and Tramiel could not come to terms, Peddle began working on the prototype himself with an engineer named Petr Sehnal.44
While Peddle designed the computer, Andre Souson thought up a name for it. Sousan wanted a three-letter designation to fit in with the TIM and KIM-1 and decided on PET due to the Pet Rock fad currently sweeping the United States. He then added the number 2001 to the name as an homage to the Stanley Kubrick science fiction film 2001: A Space Odyssey to convey a futuristic vibe. Peddle decided the letters should also stand for something, so he coined the phrase Personal Electronic Transactor.45
The Commodore PET 2001 was announced at the January 1977 CES at a price of $495, a shockingly low price for a computer that shipped with both a monitor and a keyboard.46 The low price was largely possible through vertical integration, as not only could Commodore buy 6502 chips at cost, but the company was also able to use a calculator keyboard it had already designed rather than contracting with an external company. The keyboard situation was not perfect, however, as the calculator-style keys did not allow for touch typing.
That March, Commodore exhibited the PET publicly for the first time at the Hanover Fair in Germany. Its North American debut came the next month at the West Coast Computer Faire, by which time the price had risen to $595.47 When not showing off the prototype at trade shows, Peddle scrambled to finish the design with a team that consisted of Sehnal and Bill Seiler on hardware and John Feagans and Jack Tramiel’s youngest son, Leonard, on software. The two biggest changes during this period were a shift from a molded plastic to a metal case because it could be created by a Commodore office furniture subsidiary in Canada and an additional model with 8K of RAM that retailed for $795.48
The PET prototype was complete by the June CES, but Commodore still had cash flow problems due to the stumbling calculator business and could not afford to begin production. Noting the demand for the computer at the trade show, Tramiel began taking preorders right away to fund manufacturing. By sending Commodore a check for $795, a customer was guaranteed delivery of a system within 90 days. The ploy worked, and PETs began rolling off the assembly line in September 1977.49
In 1977, Apple sold several hundred computers, while Commodore sold a few thousand. Not only did Commodore beat the Apple II on price, but the company also had well-established distribution networks in both the United States and Europe, while Apple Computer was still getting on its feet. The Apple II was technically superior to the PET in many ways, but Wozniak, for all his brilliance at circuit design, was not a trained engineer. His eccentric approach to hardware creation was looked down upon to an extent in the hobbyist community, which influenced the portrayal of the Apple II in the computer magazines that tended to extoll the PET while ignoring Wozniak’s creation.50
The PET was also more user friendly in several ways. For one thing, the BASIC Commodore licensed from Microsoft was more versatile than the Integer BASIC Wozniak had created himself. More significantly, the PET shipped with a display while the Apple II did not even ship with an RF modulator to allow the user to hook it up to a TV or monitor himself. This was because like so many video game manufacturers, Apple ran afoul of the FCC. Rather than pack the computer with shielding and increase an already steep price, the company claimed the computer was intended for an industrial setting, where interference regulations were less strict, rather than for home use. Including an RF modulator would have called attention to the deceit, so it was sold separately. This was hardly a problem for the hobbyist community but made the computer more difficult to assemble for the general public.51 While price and ease of use propelled Commodore ahead of Apple, the PET was still only the second-best-selling fully assembled computer of the year. The best seller was the TRS-80, a product of electronics retailer Radio Shack and its parent company, the Tandy Corporation.
***
Friends Norton Hinckley and David Tandy established the forerunner of Tandy Corporation in 1919 in Fort Worth, Texas, as a shoe findings business called the Hinckley-Tandy Leather Company. After an initial period of prosperity, Hinckley-Tandy managed to weather the Depression despite a few close calls, but leather rationing during World War II almost killed the business. To survive, the firm started supplying leather to the government for use in therapeutic craft projects for recuperating servicemen. After the war, David’s son Charles pushed the firm more aggressively into leather crafts. This did not sit well with Hinckley, who felt leatherwork crafts were a fad and remained focused on the shoe findings trade. Hinckley and Tandy ultimately decided to part ways, and on May 31, 1950, David and Charles incorporated a new firm called the Tandy Leather Company.52
By 1955, Tandy was the largest supplier of leather kits in the country, and Charles Tandy engineered an acquisition by a Boston-area tannery company called American Hide and Leather because it had a listing on the New York Stock Exchange. A renamed Tandy Industries became a subsidiary of American Hide and Leather. The deal turned sour almost immediately when the new parent company changed its name to General American Industries and began an unsuccessful conglomerating initiative in which it used Tandy’s profits to shore up bad business decisions in other areas. A power struggle ensued in 1957 that ended in 1960 with Charles Tandy in full control of the parent. He moved General American Industries to Fort Worth and renamed it the Tandy Corporation.53
Now that Tandy was a public company, Charles Tandy felt pressure to grow revenue for the shareholders. He targeted the consumer electronics market for expansion, both because he felt it would become a growth industry and because the do-it-yourself hobbyist ethos complemented his existing leathercraft business. After being rebuffed by two electronics chains, Tandy purchased a nearly bankrupt Boston chain of nine stores called Radio Shack in 1963 and turned the company around by reducing inventory to a small number of specialty items for do-it-yourself hobbyists, switching to a policy of only carrying private label products backed by strong quality guarantees and national advertising, and aggressively opening new stores across the United States. Within two years, the company had returned to profitability.54
In the early 1970s a boom in the popularity of citizen band (CB) radios drove Tandy’s sales and profits to record heights despite a nationwide recession. The company expanded to 3,865 retail outlets with plans to continue opening new locations aggressively. Electronics were now the most important part of Tandy’s business by far, so in 1975 all the other product areas – including the original leathercraft business – were spun off into two new corporations. Tandy now consisted solely of the Radio Shack electronics stores and the manufacturing companies that produced product for them.55
In 1976, the CB radio bubble burst, and Tandy was left scrambling for new products to sustain its continued growth.56 At the same time, a new manufacturing VP installed in 1975, John Roach, began bulking up Tandy’s engineering capability to develop new products that could overcome the Radio Shack reputation for old-fashioned electronics. Roach planned to push hard into the calculator market; a Radio Shack buyer named Don French proposed a different idea. French had been buying and assembling early computer kits since the Mark 8 appeared in Radio Electronics in 1974, and he felt the do-it-yourself nature of these kits fit perfectly into the Radio Shack product line. French faced resistance from the sales and marketing side of the company, but found a champion in Roach,57 a math and physics major in college who had done some programming in graduate school and was originally hired by Tandy in 1967 to manage its data processing department.
During a swing out to the West Coast to procure CB radio and calculator parts, Roach and French stopped at National Semiconductor to learn about its SC/MP microprocessor. The marketing manager for the chip was unavailable, so they were briefed by an engineer named Steve Leininger who had already been experimenting with using the SC/MP in a CRT terminal. When the meeting ended, they asked Leininger if there were any computer stores nearby, and he directed them to the Byte Shop. When they arrived at the store later that day, they were surprised to see Leininger behind the counter. An avid microcomputer fan and member of the Homebrew Computer Club who moonlighted as a clerk at the store, Leininger walked the executives through the products currently on the market. Impressed after these two meetings, Roach asked if Leininger would consider a consulting gig on a Tandy computer project.58
When he returned to Fort Worth, John Roach asked his head of engineering, Jack Sellers, to set up an interview with Leininger. When Roach checked back in after a month, he learned that Sellers had chosen to ignore the suggestion. Roach flew Leininger down to Texas immediately on a Saturday and hired him to design a kit to bring Radio Shack into the computer business.59 Leingier began designing the kit in May 1976 with Don French, who defined many of the computer’s features.60
Despite being hired for his SC/MP experience, Leininger told Roach they should build the machine around the 8080. He later pivoted to the Z80 after a visit from a Zilog sales rep. Like Commodore, Tandy prioritized keeping costs down, so the computer incorporated only 4K of RAM and 1K of video RAM, which limited the machine to black-and-white character-based graphics at a resolution of 64×16. Leininger felt it important to include a monitor as well despite the cost edict and managed to do so by using a converted black-and-white television from RCA that was available at a substantial discount because the model had been discontinued.61
Management hoped to sell the kit for $200, but Leininger did not believe he could create a decent machine for less than $500. This nearly killed the project, as Radio Shack had a history of customers returning kits that were “defective” due to assembly errors, so asking a customer to spend $500 on a product that may not work right when assembled due to user error seemed like a bad idea. Radio Shack’s head of merchandising, Bernie Appel, suggested they create a preassembled computer instead, and Radio Shack president Lew Kornfield agreed this was the best course of action.62 Kornfield and Charles Tandy remained uncertain about the viability of a microcomputer and set the initial production to 1,000 units, though they quickly upped the run to 3,000 in order not to lose money on startup costs.63 They figured that if the computer was a flop, it could at least be put to work in Radio Shack stores for inventory tracking or bookkeeping.
Leininger completed a prototype of what Tandy called the TRS-80 before the end of January 1977. Unlike Apple and Commodore, Tandy did not attend the West Coast Computer Faire three months later, but coverage of the long lines waiting to enter the venue gave the company some hope its computer might be successful after all.64 On August 3, 1977, Tandy officially unveiled the TRS-80 at a press event at the Warwick Hotel in New York City and revealed it would ship complete with a cassette drive, keyboard, and monitor for just $600.65 The entry of one of the country’s largest electronics chains into the microcomputer market with a relatively cheap product drove acceptance of the computer as a general consumer product, and before the end of the year articles began appearing stating that a future in which a computer sat in every home was now on the horizon and Radio Shack was leading the way. This coverage led in turn to increasing public interest in the TRS-80 and a large volume of orders.66
The first TRS-80 units came off the assembly line in the middle September 1977. By November, the system was on back order.67 With its extensive retail network and marketing reach, the system gained greater exposure than either the Apple II or the Commodore PET and surpassed both computers in sales. By the end of 1977, the company had shipped 5,000 computers and still had unfilled orders for thousands more.
***
The release of the Apple II, Commodore PET, and TRS-80 in 1977 signaled a new phase for the microcomputer industry as kit computers from companies like MITS and IMSAI, known more for unreliable products and poor delivery schedules than consumer-friendliness, were supplanted by larger, professionally managed companies. In 1978, the microcomputer began its transition from a hobbyist toy to a home accessory. While still not a mass market item, the personal computer garnered extensive press and increasing sales. Tandy led the way with sales of 100,000 units for its TRS-80 computer. Commodore was a distant second with its PET computer at 25,000 units sold. Apple followed just behind with 20,000 units of its more expensive Apple II. IMSAI, the former market leader in the kit world, sold just 5,000 units.68 It would be gone before the end of 1979.
Due to their limited memory and primitive cassette drives, the PET, Apple II, and TRS-80 were not useful for most business or productivity functions. Therefore, one of the primary uses for all three computers was playing games. Games had also been a major selling point of the kit computers from MITS and others, but because these machines were targeted at hobbyists who wanted to create their own programs, no computer game publishers emerged to support them. Instead, computer users tended to copy games from book or magazine type-in listings or trade programs they had developed or modified themselves with each other. Now that less technical people who did not necessarily want to develop programs on their own were buying computers, a new computer game industry began to emerge.