Could This Be The Wrongest Prediction Of All Time?

In yet another fantastic Computer Chronicles episode, Stewart and Gary are this time talking to computer entrepreneurs. The year is 1984.  Among the guests are Gene Amdahl, Adam Osborne, and the co-founder and CEO of Vector Graphic Inc., Lore Harp.

The context is a general discussion about the PC industry, asking where can entrepreneurs successfully innovate, and how is it possible for start-ups to compete with IBM.

Gary’s question to Lore:

I know that you’ve been involved very closely with the whole industry as it’s switched toward IBM hardware; what are your feelings about the PC clones?

…and Lore’s response:

In my opinion, they are not going to have a future …
I don’t think they are going to be a long term solution.

The Computer Chronicles, 1984

Little did she know that IBM would stop being a serious PC competitor within ten years, and would stop selling PCs altogether in twenty.

What fascinates me about this crazy-bad prediction is that she brings up some interesting points, but then manages to come away with the exact wrong conclusion.  Listing her remarks one by one:

1. Clones are not creating any value—putting hardware together and buying software that are available to anyone

That the clone makers were putting together off-the-shelf hardware and software is incontrovertible.  However, the question she should have asked is “why would anyone pay a premium for the same batch of off-the-shelf hardware and software just because it says ‘IBM’ on the front?”  In other words, the off-the-shelfness (I made that word up) of the PC industry was a threat to IBM, not to the clone makers.

2. Clones are not creating anything that makes them proprietary

I guess that was the prevailing business wisdom at the time—you create value by creating something proprietary and lock-in customers to your solution.  What would she think of today’s industry around open source software?

Of course IBM ended up following exactly this strategy themselves—creating a proprietary system:  the PS/2 running OS/2.  The market refused to accept it and to become beholden to one vendor.  In the end, it was actually the PC clone makers lack of proprietary technology that ensured their eventual triumph over IBM.

3. If IBM takes a different turn, software vendors will follow suit, leaving out clone makers

As with her other remarks, this one also turned out to be quite prescient—IBM did indeed take a different turn and created the PS/2 with Micro Channel running OS/2.  But rather than the software vendors following IBM, they abandoned IBM.  Microsoft quit development of OS/2 and bet the company on Windows and Windows NT.  The software industry followed the clone makers, not IBM.

4. Clone makers cannot move as quickly as IBM (?!?!?!) because IBM will have planned their move in advance

What is hilarious about this statement is that of all the myriad things one could say about Big Blue, “moving quickly” is not one of them.  Anyway, as already mentioned, IBM planned their move years in advance and introduced their own proprietary hardware and software system.  The clones moved even quicker and standardized on ISA/EISA and Windows.  The rest is history!


Full episode:  https://archive.org/details/Computer1984_5

Whatever happened to Lore Harp and Vector Graphic?