Let’s see how to put all the pieces together and create a complete system.

 

During the 1950’s, 1960’s, and most of the 1970’s, IBM’s computers were all big. IBM ignored the whole concept of microcomputers for many years.

Eventually, IBM created microcomputers. But IBM’s first microcomputers, the IBM 5100 and IBM System 23, weren’t taken seriously — not even by IBM.

The IBM PC

When many IBM customers began switching to Apple 2 microcomputers to handle spreadsheets, IBM got alarmed, so IBM decided to develop an improved microcomputer, called the IBM Personal Computer (IBM PC), which would be more powerful than Apple 2 computers.

To invent the IBM PC, IBM created 3 secret research teams who competed against each other. The winner was the research team headed by Philip “Don” Estridge in Boca Raton, Florida. His team examined everything created by the other microcomputer companies (Apple, Radio Shack, Commodore, etc.) and combined their best ideas, to produce a relatively low-cost computer better than all competitors.

Don’s team developed the IBM PC secretly. IBM didn’t announce it to the public until August 12, 1981.

The IBM PC was a smashing success: IBM quickly became the #1 microcomputer company — and Apple dropped to #2.

Improved versions

After inventing the IBM PC, IBM invented improved versions:

After 1987, IBM invented many other improved versions.

While IBM was inventing improvements, IBM’s competitors invented imitations called clones, which were often better than IBM’s originals. Here’s how they all compared.…

Hard drive

The PC didn’t have a hard drive. Here’s what happened afterwards:

RAM

RAM has grown:

CPU

The PC and XT each contained an Intel 8088 CPU chip at 4.77MHz. Most XT clones ran twice as fast (and thus called turbo XT clones) because they contained an 8088-1 chip at 10MHz.

The AT contained an Intel 286 chip (which works more efficiently than an 8088) at 6MHz. In 1986, IBM switched to 8MHz. AT clones ran at 12MHz.

The PS/2 came in many models: depending on how wealthy you were, you could choose an 8086 chip at 8MHz, a 286 chip at 10MHz, a 386SX chip at 16MHz, a 386DX chip at 16, 20, or 25 MHz, or several 486 models.

Modern computers contain an Intel Pentium chip or AMD Athlon chip. They run at about 2800MHz (which is 2.8GHz).

Keyboard

The PC’s keyboard contained 83 keys:

The keyboard was designed by Don Estridge personally. To fit all those keys on the small keyboard, he had to make the Enter and Shift keys smaller than typists liked.

Above the top row of keys, he put a shelf to hold pencils. To make room for that shelf, he put the 10 function keys at the left side of the keyboard, even though it would have been more natural to put the F1 key near the 1 key, the F2 key near the 2 key, etc.

The XT’s keyboard was the same, but XT clones rearranged the keys to make the Enter and Shift keys bigger.

The AT’s keyboard made the Enter and Shift keys bigger and included 1 extra key (making a total of 84 keys). In January 1986, IBM began selling a bigger AT keyboard that included 101 keys and put the function keys in the top row (near the pencil ledge) instead of at the left.

Modern computers include 3 extra keys to handle modern Windows (making a total of 104 keys) and often include even more keys, to handle the Internet!

Removable disks

For the PC, IBM used 5¼-inch floppy disks holding just 160K. Then IBM switched to 180K, then 360K. The XT used 360K disks also. The AT used 1.2M disks. All those disks were 5¼-inch.

The PS/2 used 3½-inch disks instead, because they were sturdier, more reliable, easier to carry, and permitted the drive & computer to be smaller. Those 3½-inch disks typically held 1.44M. (Exceptions: the cheapest PS/2 models handled just 720K; some experimental models could handle 2.88M.)

Modern computers use CD and DVD disks instead of floppy disks.

Video

The PC’s base price didn’t include a monitor — or even a video card to attach the monitor to.

Color versus monochrome When IBM announced the PC, it announced two kinds of video cards. One kind attached to a color monitor and was called the Color Graphics Adapter (CGA). The other kind attached to a monochrome monitor and was called the Monochrome Display Adapter (MDA).

Which was better: CGA or MDA?

CGA could handle these display modes:

MDA could handle this display mode:

Hercules A company called Hercules invented the Hercules graphics card, which resembled the MDA but could also display black-and-white graphics on the monochrome monitor. Several companies made video cards imitating the Hercules card; those imitations were called Hercules-compatible graphics cards.

Hercules could handle these display modes:

EGA In September 1984, IBM invented the Enhanced Graphics Adapter (EGA) and an EGA monitor to go with it. That combination was better than CGA: it produced more colors and higher resolution. It could handle these display modes:

Unfortunately, it was too expensive for most folks.

VGA The PS/2 came with an even better color monitor, called a Video Graphics Array color monitor (VGA color monitor), and a VGA chip on the motherboard to go with it. That combination produced even more colors and even higher resolution. It could produce many thousands of colors (262,144 colors!), though you could display just 256 of them simultaneously. IBM figured out a way to make the VGA chip cheaply, so it became popular. It could handle these display modes:

VGA downgrades For folks too poor to afford the
VGA chip, IBM invented an cheaper good chip, called the
Multi-Color Graphics Array chip (MCGA chip), which produced fewer simultaneous high-resolution colors. It could handle these display modes:

For folks who couldn’t afford a VGA color monitor, IBM invented a cheaper VGA monitor, which displayed shades of gray instead of colors.

VGA upgrades Modern computers come with better VGA monitors and chips, producing a resolution of 1024´768 or even higher.

Power supply

Inside the system unit, the PC contained a power supply, which transformed AC current to DC and could produce 63½ watts of power. It also contained a fan that acted as a farting ass: it sucked hot air from inside the computer and blew it out the computer’s backside.

The XT contained a stronger power supply that could produce 135 watts, to help it handle the hard drive.

The AT contained an even stronger power supply: 192 watts. AT clones contained an even stronger power supply: 200 watts.

Modern computers use modern circuitry, which is more energy-efficient and doesn’t require so much power. Some modern computers get by with just 135 watts. Tall towers containing extra circuitry sometimes contain bigger power supplies: 200 or 300 watts.

In modern computers, the power supply does not act as a farting ass. Instead, it pushes the air in the opposite direction. It sucks in air from outside the computer, so it acts as a nose: it breathes in fresh air.

Don’t put your new computer back-to-back with an old computer. If you do, the new computer will breathe in the old computer’s hot farts!

Bus

A computer’s motherboard contains slots, to hold printed-circuit cards.

8-bit PC bus The PC’s motherboard contained 5 slots, to hold printed-circuit cards. The motherboard’s 62 wires running to and through the slots were called the bus. Since it was in the PC, it was called the PC bus.

Of the 62 wires, just 8 carried data. The other 54 wires were “bureaucratic overhead” that helped control the flow.

Since just 8 wires carried data, the bus was called an
8-bit data bus, its slots were called 8-bit slots, and the printed-circuit cards you put into the slots were called 8-bit cards.

The XT’s motherboard used the same PC bus but included 8 slots instead of 5.

16-bit AT bus The AT’s motherboard used a wider bus: 98 wires instead of 62. Of the 98 wires, just 16 carried data, so the bus was called a 16-bit data bus. It was called the AT bus. That 98-wire technique was called the Industry Standard Architecture (ISA, pronounced “eye suh”). The bus was therefore also called the ISA bus, its slots were called ISA slots, and the printed-circuit cards you put into the slots were called ISA cards.

32-bit bus Later computers used an even wider bus: a
32-bit data bus!

If you had a PS/2 computer based on a 386 or 486 chip, it used a 32-bit bus called the Micro Channel. That technique was called Micro Channel Architecture (MCA). Into its slots, you put MCA cards.

If you had a clone containing a 386 or 486, and the clone was fancy, it used a 32-bit bus technique called Extended ISA (EISA, pronounced “ee suh”). Its bus was called the EISA bus; into its slots, you put EISA cards.

If your computer is modern (containing a Pentium or Athlon or Sempron or Duron or K6), it uses a 32-bit bus technique called Peripheral Component Interconnect (PCI). Its bus is called the PCI bus; into its slots, you put PCI cards. The nice thing about PCI cards is that the computer can automatically figure out what each card’s purpose is, so you can just plug the card into the slot and start using the card immediately: that feature is called plug & play, though sometimes it works imperfectly (which is why cynics call it plug & pray).

1-bit USB bus If your computer is very modern, it contains a 32-bit PCI bus but also contains a second bus, called the Universal Serial Bus (USB), which is a 1-bit bus that’s slow but has 3 nice properties: all USB devices are plug-&-play, external (so you can install them without opening the system unit’s case), and
hot-swappable (so you can insert, remove, or swap the devices safely even while the power is still on). The typical modern computer has 1, 2, 3, or 4 USB slots, which are on the system unit’s back wall and called USB ports.

Multimedia

The PC’s price included no mouse, no microphone, no modem, no speakers (except for a tiny internal speaker that just beeped), and no CD or DVD drive, because all those devices were too expensive then. The XT, AT, and PS/2 had the same disappointments.

Modern computers come with a mouse, a microphone, a modem, stereo speakers (2 of them or 3 or 5!), and a DVD drive.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

I’d like to tell you about a company that makes reliable, powerful computers, charges you very little, and is a pleasure to call if you ever need technical help.

Hero companies rise but then fall because they suffer through this business cycle:

What’s in store for you

This chapter portrays the players.

 

To get the lowest prices for decent computers, buy from Best Buy, Staples, Walmart, Sam’s Club, Target, or the online Microsoft Store.

Here’s what they charged when this section was written in February & March 2022. Every Sunday, prices change and usually drop, so you’ll probably pay less!

Laptop computers

Here’s what those outlets charged for laptop computers with Windows 11:

Here are examples of that pricing:

All-in-one computers

Here’s what those outlets charged for all-in-one computers with Windows 11:

Here are examples of that pricing:

Tablet computers

Here’s the cost of tablet computers (having touchscreens):

Here are examples of that pricing.

Walmart sells these by “Onn” (which is Walmart’s own brand):

Amazon makes these:

Best Buy sells these by Samsung:

Apple makes these:

Microsoft makes these:

 

Smartphones

Here’s what Verizon charged for smartphones (having touchscreens):

Here are examples of that pricing:

Service Besides paying for the phone, you must also pay for service.

In the U.S., these 3 big companies run phone networks, which send out phone signals from cellphone towers:

T-Mobile usually charges less than Verizon and AT&T.

Instead of paying one of those companies directly, you can pay a smaller company, called a mobile virtual-network operator (MVNO), which charges you even less than T-Mobile and uses the phone signals from the big 3. The most interesting MVNO is Mint Mobile, which advertises just $15 per month (if you prepay $45 to cover the first 3 months, then pay $180 to cover the next 12 months).

But all those phone carriers (the big 3 and the MVNOs) give you many choices, difficulties, confusions, and misleading ads:

Details:

Hewlett-Packard (HP) and Compaq were 2 separate companies, but in 2002 HP bought Compaq.

How HP arose

Hewlett-Packard (HP) was started by two young Stanford University graduates — Bill Hewlett and Dave Packard —in 1938, in a garage in Palo Alto, California, where they built their first product: an audio oscillator (electronic test instrument used by sound engineers), which they sold to several customers, including Walt Disney, who used 8 of them to test the sound in movie theaters showing the movie Fantasia.

Those boys weren’t sure whether to call the company “Hewlett-Packard” or “Packard-Hewlett”, so they flipped a coin. Hewlett won. They formalized the partnership on January 1, 1939.

The company grew:

During World War 2, HP sold the U.S. Navy devices that generated microwaves and jammed radar. Later, HP made other lab equipment, medical equipment, plotters, printers, minicomputers, and pocket calculators but was scared to enter the field of personal computers. HP developed a reputation for making equipment that was high-quality and pricey.

How Compaq arose

The first company that made high-quality IBM clones was Compaq. Compaq began selling them back in 1983. (Before Compaq, the only IBM clones available were crummy.)

Compaq began in a restaurant. While eating at a House of Pies restaurant, two engineers drew on the paper placemat their picture of how the ideal IBM clone would look. Instead of being a desktop computer, it would be a luggable having a 9-inch built-in screen and a handle, the whole computer system being small enough so you could pick it up with one hand. Then they built it! Since it was compact, they called it the Compaq Portable Computer and called the company Compaq Computer Corporation.

They began selling it in 1983, helped by venture-capital funding from Ben Rosen. They charged about the same for it as IBM charged for the IBM PC.

They sold it just to dealers approved by IBM to sell the IBM PC. That way, they dealt just with dealers IBM said were reliable — and they competed directly against IBM in the same stores.

They succeeded fantastically. That first year, sales totaled 100 million dollars.

In 1984, they added a hard drive into the computer and called that souped-up luggable the Compaq Plus. They also built a desktop computer called the Deskpro. Like Compaq’s portable computers, the Deskpro was priced about the same as IBM’s computers, was sold just through IBM dealers, and was built well — a marvel of engineering, better than IBM’s.

Later, Compaq expanded: it built IBM clones in all sizes, from gigantic towers down to tiny handheld computers. Compaq computers got the highest praise — and ridiculously high prices.

On many technological issues, Compaq was the first company to innovate. For example, when Intel invented the 386 chip, the first company to use it was Compaq, not IBM.

How Compaq cheapened

Compaq was founded by Rod Canion. Under his leadership, Compaq developed a reputation for high quality and high prices. Engineers said Compaq’s computers were overdesigned (built more sturdily than necessary for average use and therefore too expensive).

Worried about Compaq’s high prices, some Compaq employees went on a secret mission, without telling Rod: they sneaked into a computer show, pretended they weren’t from Compaq, pretended they were starting a new computer company, and tried to buy computer parts from Compaq’s suppliers. Compaq’s suppliers offered them lower prices than the suppliers were offering Compaq — because Compaq had developed a reputation as an overly fussy company to do business with.

The secret missionaries went back to Compaq and reported their findings to the board of directors, who were becoming upset at Compaq’s astronomically high prices; so in 1991 the board fired Rod and replaced him with a cost cutter, Eckhard Pfeiffer (from Germany). So Pfeiffer became the new CEO. He lowered Compaq’s prices, gave up the idea that Compaq should have super-high quality, and began selling through a greater variety of dealers and through mail-order.

His low-price wide-distribution strategy worked well. More people bought Compaq computers. Sales zoomed, though Compaq’s “quality reputation” declined. To compete against a company called “Packard Bell” (which sold junky computers cheaply through department stores), Compaq imitated Packard Bell: Compaq lowered its prices and its service.

In February 1995, Compaq started this nasty new service policy:

Eventually, Compaq dropped that nasty policy: tech-support calls became free during the “initial period” (1 year on hardware questions, 3 months on software questions, longer if your Compaq was expensive).

HP Pavilion

In 1995, HP began manufacturing an IBM clone called the Pavilion, sold through local computer stores, electronics stores, office-supply stores, and department stores. Here’s why the Pavilion became popular:

Compaq’s reaction

Compaq started having financial difficulties, for 2 reasons:

So in 1998, Compaq’s board of directors fired Eckard.

In 1999, the board finally decided to make Compaq’s next CEO be Michael Capellas, a low-key friendly computer technician that everybody liked. Most important, he was liked by Ben Rosen (the venture capitalist who funded the Compaq’s founder and was still chairman of the board).

Michael created computers that were low-cost but exciting. By the year 2000, Compaq was selling more computers than any other manufacturer. Yes, it was selling more computers than IBM, Gateway, HP, Dell, and the rest of the gang.

Merger

The Compaq-versus-HP debate ended in 2002, when HP bought Compaq, with approval from Michael Capellas and Ben Rosen. The combo was called a “merger”. The combined company is called “Hewlett-Packard”, though Compaq lovers prefer to call it “Hewlett-paq” or “Hewpaq”.

Michael Capellas became the assistant to HP’s CEO and got the title “President”, but a few months after the merger he quit HP and took on a new challenge: he became the new head of WorldCom, which had gone through a scandal. WorldCom picked him because it wanted to be led by somebody who’s reputable!

Split

In 2015, Hewlett-Packard split into 2 companies:

In the rest of this book, when I say “HP” or “Hewlett-Packard,” I mean “HP Incorporated.”

Recommendation

I recommend computers by HP. That’s the brand I prefer, because less goes wrong with HP computers that with computers by Toshiba, Dell, Acer, and other companies.

HP tests its computers more before selling them, includes less weird junk in them, and sells them at low prices. HP’s keyboards have better layouts, and HP’s built-in speakers produce better sounds.

Though Compaq was the first company to make good IBM clones, its clones were expensive. The first company that sold fast IBM clones cheaply was PC’s Limited, founded in 1984 by a 19-year-old kid, Michael Dell. He operated out of the bedroom of his condo apartment, near the University of Texas in Austin.

At first, his prices were low — and so were his quality & service.

In 1987, Dell raised his quality and service — and prices. In 1988, he changed the company’s name to Dell Computer Corporation.

Dell’s ads bashed Compaq for having higher prices than Dell and worse policies about getting repairs — since Dell offered on-site service and Compaq didn’t.

Dell tried selling through discount-store chains but gave up and decided to return to selling just by mail. While HP/Compaq stayed king of retail sales, Dell became king of mail-order sales.

Dell computers came with this guarantee: if Dell doesn’t answer your tech-support call within 5 minutes, Dell will give you $25! Dell doesn’t make that guarantee anymore.

Dell gave lifetime toll-free technical support for hardware questions and usually answered its phones promptly. Unfortunately, Dell reduced Windows technical support from “lifetime” to “30 days”.

Dell’s downfall

Though Dell’s tech support used to be good, now it’s terrible — because Dell decided to save money by sending most tech-support calls to Bangalore, India, where your call is answered by a person whose English is hard to understand, who doesn’t understand American slang, and whose computer knowledge is minimal. After receiving many complaints from business customers, Dell’s adopted this new policy: if you buy an expensive “business” computer from Dell, Dell will have your call answered in the USA; but if you buy a cheap “consumer” computer from Dell, Dell’s gonna still treat you like dirt and have your call answered in India.

Carly Fiorina, who was HP’s CEO, laughed at Dell and asked “Is Dell really a computer company?” since Dell doesn’t really research, invent, manufacture, or service computers anymore: it just rebrands and markets computers built by others and gives hardly any support. What a disappointment!

Alienware

Alienware is a company that makes high-speed computers, for use in playing high-speed action games and doing high-speed video editing. In 2006, Dell bought Alienware, so Alienware is now wholly owned by Dell.

How to get Dell

If you want a free Dell catalog or want to chat with a Dell sales rep, phone 800-BUY-DELL.

If you want to buy a Dell computer, don’t react to the first ad you see: Dell sells the same computer at many different prices. For example, prices in Dell’s catalogs, magazine ads, and Web sites all differ from each other. The cheapest way to buy a Dell computer is often at Costco warehouse clubs. Another way to buy a Dell computer cheaply is at Walmart.

 

Acer, Gateway, and eMachines used to be 3 separate companies.

In 2004, Gateway bought eMachines. In 2007, Acer bought Gateway. So now Acer, Gateway, and eMachines are all under the same ownership.

Here are the details.…

eMachines

eMachines was the first major company that advertised modern computers for under $400 and let you buy them in many stores.

History Here’s how the eMachines company began…

Tandy Corporation owned Radio Shack and a chain of discount computer superstores called Computer City. Tandy had trouble running Computer City and sold that chain to CompUSA. Computer City’s president (Stephen Dukker) was dismayed at becoming a CompUSA vice-president, so he quit. In September 1998, he started his own company, eMachines, which invented cheap computer systems (under $500) and sold them to retail stores such as CompUSA. To start eMachines, he used money invested by 2 Korean companies: Trigem (which made eMachines’ computers) and Korea Data Systems (KDS) (which made eMachines’ monitors).

He was wildly successful. 9 months later, in June 1999, his company become the third-biggest seller of desktop&tower computers in retail stores: just Compaq and Hewlett-Packard sold more desktop&tower computers than he. In the next month, July 1999, he shipped his 1 millionth computer. In March 2000, eMachines went public, with stock selling for $8 per share. In September 2000, he shipped his 3 millionth computer.

But afterwards, eMachines fell on hard times. For example, in January 2001, eMachines’ revenues (sales figures) were just half of the previous January’s. That was because the prices of fancy computer decreased, so consumers decided to buy them instead of the crummy computers that eMachines sold.

Its board of directors got worried. In February 2001, the board fired Stephen Dukker and hired, as the new head, Wayne Inouye, who was Best Buy’s senior vice president in charge of computer merchandising. In May 2001, the company was delisted from Nasdaq, because the shares were selling for less than $1 each. In November 2001, the board agreed to sell the whole company to KDS’s owner, Lap Shun “John” Hui, and his private company, called EM Holdings, for $1.06 per share, 161 million dollars total.

By April 2002, eMachines had sold a total of 4 million computers since the company began. That wasn’t much more than the 3 million sold by September 2000.

eMachines became number 2 in retail U.S. sales, far behind Hewlett-Packard (which sold the Hewlett-Packard and Compaq brands). Analysts worried that eMachines might go bankrupt; but in 2001, eMachines improved its computers (which had been miserable) and its tech support (which had been atrocious before Wayne Inouye spent 20 million dollars extra on tech support and customer service in 2001). Then eMachine computers became finally worth getting: they were good computers at rock-bottom prices. Consumer surveys show that computers from eMachines were more reliable and better serviced than computers from most other computer brands.

To guard eMachines from going bankrupt, the company accepted no returns from computer stores and kept few computers in stock: it repeatedly waited for small shipments to arrive by boat from its suppliers in Asia, so it occasionally ran out of computers.

When I went to buy a computer in 2001, I found myself buying an eMachines computer, because eMachines offered much lower prices than any other computer manufacturer. eMachines lived up to its new slogan, which was “the best computer and service little money can buy”.

The computer I bought came with one “defect”: whenever I moved the mouse, the computer made a buzzing sound. I finally figured it out: the eMachines company was too cheap to include a microphone and too stupid to remember to turn off the microphone jack, which picked up interference from mouse & monitor motions. I solved the problem by giving the computer a command to disable the microphone jack.

eMachines improved. In 2003, the eMachines company’s revenue was 1.1 billion dollars (a huge number!), even though eMachines had just 138 employees.

eMachines computers remained popular for many years afterwards. They were sold in Walmart, Best Buy, and many other stores. The eMachines contribution to the world of cheap computers was: distribution!

“Free” computer Back in 1999, eMachines offered an extra $400 rebate if you’d sign a 3-year contract to make Compuserve your Internet service provider. The cheapest eMachines computer would cost you “$474 minus a $75 rebate minus a $400 Compuserve rebate”, making the final price be about $0. Stores advertised it as being a “free computer”. That kind of ad was popular in November 1999 and sold many eMachine computers.

Such ads neglected to mention that the price did not include a monitor and that you had to sign a 3-year Compuserve contract, at a cost of $21.95 per month, so the contract would cost you a total of “36 months times $21.95”, which is $790.20. Those ads were declared “misleading” by many state governments in the year 2000 — and banned.

Gateway

Gateway was the first company to sell lots of computers by mail. Gateway became the mail-order king — until Gateway stumbled and Dell zoomed ahead. Gateway’s stumbling is what motivated Gateway to buy eMachines.

How Gateway arose Gateway began because of cows. In the 1800’s, George Waitt began a cattle company. According to legend, he got his first herd by grabbing cattle that jumped off barges into the Missouri River on the way to the stockyards. His cattle business passed to his descendants and eventually to his great-grandson, Norm, who built the Waitt Cattle Company into one of the biggest cattle firms in the Midwest. The company was on the Missouri River, in Iowa’s Sioux City (where Iowa meets South Dakota and Nebraska).

Norm’s sons — Norm Junior and Ted — preferred computers to cows, so on September 5^th, 1985, they started the “Gateway 2000” company in their dad’s office. They told him computers are easier to ship than cows, since computers can take a long journey without needing to be fed and without making a mess in their boxes.

22-year-old Ted was the engineer and called himself “president”; Norm Junior was the businessman and called himself “vice president”. Their main investor was their grandma, who secured a $10,000 loan. They hired just 1 employee: Mike Hammond.

At first, they sold just parts for the Texas Instruments Professional Computer. Soon they began building their own computers. By the end of 1985, they’d sold 50 systems, for which customers paid a total of $100,000.

Gateway grew fast:

That chart shows how many computers were sold during the year, the total money customers paid for them and for add-ons, and how many employees Gateway had at year’s end.

Here are highlights from the history of Ted Waitt and his employees during those years:

Gateway became huge (with offices worldwide in France, Germany, Ireland, Australia, and Japan) but was still headquartered in North Sioux City, a small town that was behind the times: it didn’t have any traffic lights yet.

Gateway got along well with its neighbors: in fact, 2 former mayors of Sioux City became Gateway employees!

Gateway became a rapidly growing cash cow but didn’t lose its sense of humor: each Gateway computer shipped to customers in a box painted to look like a dairy cow: white with black spots.

Ben & Jerry’s Ice Cream sued Gateway for copying the idea of putting cow spots on packages. Meanwhile, Gateway sued a shareware distributor called Tucows for using spotted cows to sell computer products. Those suits got settled.

Gateway’s ads Gateway became famous because of amazing photographs in its ads.

Gateway was the first big mail-order manufacturer to give honest pricing: the advertised price includes everything except shipping. The price even included a color monitor. All components were high-quality. A Gateway system was a dream system, with dreamy ads and a low price. Gateway had a friendly slogan: “You’ve got a friend in the business.”

How Gateway fell On Millennium Day (January 1, 2000), Ted Waitt decided to semi-retire: he turned Gateway’s day-to-day operations over to Jeff Weitzen, who’d worked at AT&T for 18 years then Gateway for 2. Jeff became Gateway’s president and Chief Executive Officer (CEO), though Ted remained chairman of Gateway’s Board of Directors.

Jeff was proud to be chosen as the man to take Gateway past the millennium. He had many inspired ideas — most of which were wrong.

He moved Gateway’s executive offices to downtown San Diego, to attract executive talent who wouldn’t put up with South Dakota’s remoteness and harsh winters. Then Ted moved Gateway’s executive offices to a San Diego residential suburb called Poway, so employees living in San Diego’s suburbs wouldn’t have to commute into the city. Meanwhile, manufacturing was still back in South Dakota. The company was schizophrenic.

Another example of corporate schizophrenia was Jeff’s decision to “think outside the box”: sell not just a box full of hardware but also sell service.

Gateway’s revenues plummeted, Gateway’s profits turned into losses, shares of Gateway stock became nearly worthless, and Ted Waitt became non-rich.

I can’t blame all of Gateway’s problems on Jeff: the whole computer industry had a tough year in 2000, when consumers decided new computers weren’t different enough from old computers to be worth upgrading to. But Jeff’s moves were in the wrong direction.

In January 2001, a year after Jeff took over, he resigned, and Ted Waitt became the CEO again — but too late: Gateway had lost its luster. The prince and king of mail-order had become a pauper. Upon becoming CEO again, Ted’s first act was to run an ad bragging that Gateway would match the prices of 6 big competitors: IBM, HP, Compaq, Sony, Toshiba, and Dell. That ad was stupid. Gateway was supposed to be a mail-order discounter: all it could brag about was that it wasn’t more expensive than retail? The ad bombed. So did the company. In 2001, Gateway made no profit: it lost a billion dollars. Here’s how Gateway fell:

Then Ted laid off employees, closed international sales offices, closed Gateway Country Stores, made Gateway a tiny company, and reduced Gateway’s reliance on mail-order computer sales: he tried to diversify into selling big-screen TV sets, digital cameras, and DVD players. Details:

I felt sad about Gateway. I was one of the first journalists to recommend Gateway. I was sorry to see Gateway go downhill.

The seeds of Gateway’s downfall were already planted back in December 1993, when Gateway went public. That’s when Gateway first lost sight of its roots, raised prices (to make the stockholders happy), and I stopped recommending Gateway: I switched to hungrier companies instead.

When Gateway bought eMachines in March 2004 (for 30 million dollars plus 50 million shares of Gateway common stock), the eMachines CEO (51-year-old Wayne Inouye) became the Gateway’s CEO. He replaced 41-year-old Ted Waitt (though Ted remained chairman of the board of directors). That move was easy for Wayne, since Gateway’s headquarters (in Poway, California) was just 50 miles from the eMachines headquarters (in Irvine, California).

Acer itself

Acer is a huge consortium of Taiwanese computer companies. It makes “Acer computers” and “Acros computers”. They’re especially popular in Southeast Asia and Latin America but have also been sold in U.S. computer stores and department stores.

Acer’s split In 2001, Acer split into 3 companies:

Combo & shut-down In 2007, Acer bought Gateway (and Gateway’s eMachines division); but in 2013, Acer shut down the eMachines division.

 

Here are other choices to consider.…

Micro Express

Walmart, Best Buy, and Staples sell normal computers. If you want a fancier computer, consider Micro Express, which is a mail-order company that sells high-speed computers less expensively than Alienware. Micro Express sells cheaper computers also. Micro Express has a good reputation.

To configure your own favorite combination, phone Micro Express at 800-989-9900 or 949-460-9911 or write to Micro Express (at 8 Hammond Drive #105, Irvine CA 92618) or better yet, visit its Website at www.MicroExpress.net.

Micro Center

Though eMachines sold computers for under $500, the first major company to sell good computers for under $500 was Micro Electronics Incorporated (MEI), which runs a chain of stores called Micro Center. It manufactures a computer called the PowerSpec and sells the system unit for under $500. It also sells fancier versions at higher prices.

You can buy PowerSpec computers at a Micro Center superstore (a pleasant place to shop!) or mail-order (800-382-2390).

Industrial nuts

To get the lowest computer prices, many people phoned a secret group of amazing companies that advertised in Computer Shopper. That group was called the industrial nuts because the employees were industrious, the prices were nutty, and they were in 2 Los Angeles suburbs: “City of Industry” and “Walnut”. The owners and employees were mostly Chinese.

These 24 industrial nuts eventually went out of business:

But these 2 are still in business:

Alternatives

In many towns, entrepreneurs sell computers for ridiculously low prices in computer shows and tiny stores. Before buying, check the computer’s technical specifications and dealer’s reputation. If the dealer offers you software, make sure the dealer also gives you official materials from the software’s publisher; otherwise, the software might be an illegal hot copy.

For further advice, phone me anytime at 603-666-6644.

 

What’s the most important computer company? IBM? Microsoft?

No! The most important computer company is Apple. That company had the greatest influence on how we deal with computers today.

Apple was the first computer manufacturer to popularize these ideas successfully:

Apple didn’t invent any of those ideas, but Apple was the first company to popularize them, make people want them, and thereby change our idea of what a computer should do.

Though just a small percentage of the computers sold today are made by Apple, we all owe a big debt to Apple for how that company improved our world.

Here’s how Apple arose and changed our lives.…

Original Apple

The original Apple computer was invented by Steve Wozniak, who was an engineer at Hewlett-Packard. In 1975, he offered the plans to his boss, who said Steve’s computer didn’t fit Hewlett-Packard’s marketing plan, so the boss suggested Steve start his own company. Steve did.

He worked with his friend, Steve Jobs. Steve Wozniak was the engineer; Steve Jobs was the businessman. Both were young: Steve Wozniak was 22; Steve Jobs was 19. Both were college drop-outs. They’d worked together before: while high-school students, they’d built and sold blue boxes (which attach to phones to illegally make long-distance calls free). Steve & Steve had sold 200 blue boxes at $80 each, totaling $16,000 in illegal money.

To begin Apple Computer Company, Steve & Steve invested just $1300, which they got by selling a used Volkswagen Micro Bus and a used calculator.

They built the first Apple computer in their garage. They sold it by word of mouth, then by ads saying the price was $666.66.

The first Apple computer was primitive: it had none of the features for which Apple became famous later: it had no color, no 3½-inch floppy disks, no CD-ROM disks, no mouse, no icons, no pull-down menus, no touch screens, no laser printers, no desktop publishing, no pretty fonts, no paint & draw programs.

Apple 2

In 1977, Steve & Steve invented a slicker version, called the Apple 2. Unlike the original Apple, the Apple 2 included a keyboard and displayed graphics in color. It cost $970. It became popular because it was the first computer for under $1000 that could display colors on a TV. It was the only such computer for many years, until Commodore finally invented the Vic, which was even cheaper (under $300).

At first, folks used the Apple 2 just to play games and didn’t take it seriously. But 2 surprise events changed the world’s feelings about Apple.

MECC The first surprise was that a Minnesota government agency decided to buy lots of Apple 2 computers, put them in Minnesota schools, and write programs for them. That agency, called the Minnesota Educational Computing Consortium (MECC), then distributed the programs free to other schools across America, so schools across America discovered that personal computers could be useful in education. Since the only good educational programs came from Minnesota and required Apples, schools across America bought Apples then wrote more programs for Apples, so Apple became the “standard” computer for education — just because of the chain reaction that started with a chance event in Minnesota. The chain reaction spread fast, as teachers fell in love with the Apple’s color graphics.

VisiCalc The next surprise was that a Harvard Business School student and his friend at M.I.T. got together and wrote the first spreadsheet program, called VisiCalc. They wrote it for the Apple 2 computer, because it was the only cheap computer that had a reliable disk operating system. (Commodore’s computers didn’t have disks yet, and Radio Shack’s disk operating system wasn’t reliable yet. Apple’s success was due to Steve Wozniak’s brilliance: he invented a disk-controller card that was amazingly cheap and reliable.)

The VisiCalc spreadsheet program was so wonderful that accountants and business managers all over the country bought it — and had to buy Apple computers to run it on.

Apple 2+ In 1979, Apple Computer Corporation shipped an improved Apple 2, called the Apple 2+.

Its main improvement was that its ROM chips contained a better version of Basic, called Applesoft Basic, which could handle decimals. (The old Apple 2’s ROM chips handled just integers.)

Another improvement was how the Reset key acted.

Slots In the Apple 2+ and its predecessors, the motherboard had eight slots, numbered from 0 to 7, which could hold printed-circuit cards.

Apple 2e In 1983, Apple shipped a further improvement, called the Apple 2 extended, expanded, enhanced (Apple 2e). Most programs written for the Apple 1, 2, and 2+ also ran on the Apple 2e. Unlike the Apple 2+ keyboard (which contained just 52 keys), the Apple 2e keyboard contained 11 extra keys, making a total of 63.

Unlike its predecessors, the Apple 2e omitted slot 0, because the Apple 2e’s motherboard contained lots of RAM (64K) and didn’t need a RAM card.

The Apple 2e contained an extra slot, called slot 3A. It resembled slot 3 but held a more modern video card that came in two versions: the plain version let your Apple display 80 characters per line; the fancy version did the same but also included a row of 64K RAM chips, so your Apple contains 128K of RAM altogether.

The Apple 2e was invented in 1983, the same year as the IBM XT.

Apple 2c In 1984, Apple created a shrunken Apple 2e called the Apple 2 compact (Apple 2c). It was smaller and lighter than the Apple 2e, cost less, and consumed less electricity.

Advanced hobbyists spurned the 2c — and stayed with the 2e instead — because the 2c didn’t have slots for adding cards. But the typical consumer didn’t need extra cards anyway, since the 2c’s motherboard included everything a beginner wanted.

Apple invented an improved Apple 2c, called the Apple 2c+, whose disk drive was 3½-inch instead of 5¼-inch. Apple’s
3½-inch drive was technically superior to Apple’s 5¼-inch drive but angered users, since most educational software still came on 5¼-inch disks and wasn’t available on 3½-inch disks yet.

Apple 2GS In 1986, Apple created an improved version of the Apple 2e and called it the Apple 2 with amazing graphics & sound (Apple 2GS).

Apple 2 family All those computers resembled each other, so most programs written for the Apple 2 also worked on the Apple 2+, 2e, 2c, 2c+, and 2GS.

Apple has stopped marketing all those computers, but you can still buy them as “used computers” from your neighbors.

Clones Instead of buying Apple computers, some folks bought imitations, such as the Pineapple, the Orange, the Pear, and the Franklin. The imitations were popular in the U.S., Hong Kong, and Soviet Union.

Apple sued most of those companies (because they illegally copied Apple’s ROM) and made them stop building clones. But Apple permitted one clone to remain: the Laser 128 (which imitated the Apple 2c), because that clone’s designer imitated the functions of Apple’s ROM without exactly copying it.

Apple 3

Back in 1980, shortly after the Apple 2+ was invented, Apple began selling the Apple 3. It was fancier than the Apple 2+ but too expensive (it listed for $4995, plus a monitor and hard drive) and couldn’t run some of the Apple 2+ software. Few people bought it.

When the IBM PC came out and consumers realized the PC was better and cheaper than the Apple 3, interest in the Apple 3 vanished. Apple gave up trying to sell the Apple 3 but incorporated the Apple 3’s best features into later, cheaper Apples: the Apple 2e and the Apple 2GS.

Lisa

Back in 1963, when Steve & Steve were kids in elementary school, Doug Engelbart invented the world’s first computer mouse. He was at the Stanford Research Institute. During the 1970’s, researchers at Xerox’s Palo Alto Research Center (Xerox PARC) used his mouse as the basis of a fancy computer system, called the Alto. Xerox considered the Alto too big and expensive to sell well but invited the world to see it.

In 1979, Apple employees nudged Steve Jobs to go to Xerox and see the Alto. Steve was impressed by the Alto and decided to invent a smaller, cheaper version, which he called the Lisa, because that was his daughter’s name.

The Lisa changed the computer world forever. Before the Lisa, personal computers were awkward to use. The Lisa was the first affordable personal computer that made good use of a mouse, icons (pictures & symbols you can click with the mouse), horizontal menus (lists of topics that appear across the screen’s top), and pull-down menus (which you see when you click items on the horizontal menus). Those features made the computer easier to learn — and fun! The Lisa was the first computer whose business programs were truly fun to run. Because it was so easy to learn to use, customers could start using it without reading the manuals. Everybody praised the Lisa and called it a new breakthrough in software technology.

The Lisa was “affordable” but just by the rich: it cost nearly $10,000. For the Lisa, Apple invented special business programs that were fun and easy to use; but the Lisa could not run Apple 2 programs, since the Lisa had a completely different CPU.

Apple gradually lowered the Lisa’s price.

Early Macs

In January 1984, Apple introduced the Macintosh (Mac), which was a stripped-down Lisa. Like the original Lisa, the Mac uses a mouse, icons, horizontal menus, and pull-down menus. The Mac’s price was low enough to make it popular.

The Mac was even more fun and easy than the Lisa! It appealed to beginners scared of computers. Advanced computerists liked it also, because it felt ultra-modern, handled graphics fast, and passed data from one program to another simply.

The Mac’s original version ran too slowly, but later versions ran faster. Since the Mac was so easy to use and priced low enough, many people bought it. Lots of software was developed for it — much more than for the Lisa, so Apple eventually stopped selling the Lisa and a compromise called the Mac XL.

Original Mac Apple began selling the Mac for $2495. The Mac’s original version included 3 parts: the mouse, the keyboard, and the system unit.

That Mac was called the original 128K Mac because it included 128K of RAM (plus 64K of ROM).

Then Apple invented an improvement called the 512K Mac because it included 512K of RAM. Apple wanted to call it the “Big Mac” but feared that customers would think it a hamburger.

Mac Plus In January 1986, Apple shipped an improved Mac, the Mac Plus, which had a bigger RAM, bigger ROM, better disk drive (double-sided instead of single-sided), bigger keyboard (more keys), and a port that let you add a hard-disk drive more easily. Those improvements permitted hardware & software tricks that let Mac programs run faster.

Mac SE In 1987, Apple shipped an even fancier Mac, the Mac SE. It ran software 15% faster than the Mac Plus because it contains a cleverer ROM (256K instead of 128K) and fancier support chips. It was also more expandable: it let you insert extra circuitry more easily. Unfortunately, the keyboard cost extra: you could buy the standard keyboard (which had 81 keys) or the extended keyboard (which had 105 keys).

Mac 2 When Apple introduced the Mac SE, Apple also introduced a luxury model, the Mac 2. It contains a faster CPU chip (a 16-megahertz 68020) and 6 slots for inserting printed-circuit cards. Instead of sticking you with a 9-inch black-and-white monitor, it let you use any kind of monitor you wish: choose big or small, black-and-white or gray-scale or color. The monitor cost extra; so did the keyboard (standard or extended) and video card (which you put into a slot and attached the monitor to).

Since the Mac 2 let you choose your own monitor, the Mac 2 was called a modular Mac.

 

Performas versus Quadras In 1990, Apple stopped selling all Macs I’ve mentioned so far — the 128K Mac, 512K Mac, Mac Plus, Mac SE, and Mac 2. Apple switched to Macs that are more modern.

Power Macs After watching the Performa-versus-Quadra war, Apple decided on a compromise: all new Macs would include a keyboard (like a Performa), but you could typically choose your own monitor (like buying a Quadra).

In 1994, Apple began selling powerful Macs, called
Power Macs. Each contained a fast CPU chip (called the
Power PC), but the price didn’t include a monitor.

Mac clones In 1995, Apple’s executives began letting other companies make clones of Macs, in return for a licensing fee. The most successful clone maker was Power Computing, whose clones ran faster than Apple’s originals. Clones were also made by Radius, Motorola, and Umax.

But in 1997, Apple had a change of heart and withdrew the licenses of all the clone makers except Umax. Apple restricted Umax to making just clones that are “junk” (priced under $1000).

Umax no longer bothers to make Mac clones.

iMacs

In 1998, Apple began selling simplified Macs, to help beginners use the Internet. Each simplified Mac is called an Internet Mac (iMac).

Apple sold it in 4 styles. Here are the details.…

Classic iMac The classic iMac looked out-of-this-world!

It looked like an airplane’s nose cone — or an ostrich egg from outer space. It was translucent — which means you could almost see through it, like trying to look through a frosted shower-stall door to see the sexy woman inside. Intriguing! Every reviewer who saw it loved it, and so did Apple’s customers. I bought one myself. It was great! That nose cone included a
15-inch CRT, pair of stereo speakers, and fax/modem. The price also included a keyboard, mouse, and software.

The translucent case was tinted in a wild color. The first iMac was in a color called Bondi Blue (named after Australia’s Bondi beach); later iMacs were in colors called Blueberry, Strawberry, Grape, Lime, Tangerine, Indigo (blue), Graphite (black), Snow (white), Blue Dalmatian (white spots on a blue background), and Flower Power (a floral print inspired by the 1960’s). Apple got lots of praise for creatively avoiding beige, and many companies imitated Apple’s wild color schemes.

The eMac After inventing the classic iMac, Apple invented the eMac, which was an iMac with a bigger screen: 17-inch instead of 15-inch. It was designed for schools; “eMac” means “educational Mac”. It was originally sold just to schools, but Apple later let everybody buy it. It came in just one color: white.

New iMac Next came the new iMac, which looked totally different: even more out-of-this-world!

It was a white hemisphere (so it looks like a mound of mashed potatoes), with an arm coming out of its top. At the arm’s end, instead of a hand, you saw an LCD thin-screen monitor. (The original version’s screen was 15-inch; Apple later offered 17-inch and 20-inch versions also.) The monitor hovered in front of the arm and hid the arm from your view, so the monitor seemed to hover by itself mysteriously in the air, like a UFO propelled by aliens.

People who used the new iMac were said to “do the mashed potato”, “play with their hovercraft”, and “kiss aliens”.

Since the new iMac looked so mysteriously intriguing, many IBM-clone manufacturers copied Apple’s idea of using a flat-screen LCD monitor. Those companies bought so many 15-inch LCD screens from suppliers that Apple could no longer get enough supplies for itself, and suppliers raised their prices, forcing Apple to raise its prices by $100. But eventually prices came back down.

Newest iMac Apple has stopped selling the classic iMac, the eMac, and the new iMac. Now Apple sells instead the newest iMac. It resembles the new iMac but has no white hemisphere; instead, all the system-unit circuitry hides inside the LCD monitor. The first version of the newest iMac was white plastic; the current version (introduced in August 2007) is aluminum instead.

Modern Mac prices

Now Apple sells just 4 kinds of normal computers.

MacBook Back in 1991, Apple began selling a laptop called a PowerBook. In 1999, Apple began selling a cheaper laptop, called an iBook.

Apple’s stopped selling the PowerBook and iBook. Instead, Apple sells a newer laptop, called the MacBook, which comes in 4 varieties:

The iMac Apple’s all-in-one computer is called the iMac. It includes a 24" screen an starts at $1299.

Mac mini The Mac mini is a system unit that’s cheap (starting at just $699) because its price doesn’t include a keyboard, mouse, screen, speakers, microphone, or video camera. If you already own a keyboard, mouse, and screen from an older Mac computer (or even from an IBM-compatible computer), you can attach them to the Mac mini to build your own computer system.

Mac Pro The Mac Pro is a system unit that acts like the Mac mini but is much faster and costs much more: it starts at $5999.

 

Discounts

You can buy directly from Apple by phoning 800-MY-APPLE or using the Internet to go to store.apple.com or visiting Apple’s stores (which are in just a few cities). You can also buy Apple’s computers from chain stores (such as Best Buy, Walmart, and Target), local Apple dealers, and these mail-order dealers:

MacMall usually has more exciting ads, but Mac Connection usually charges less for shipping and installation. Both companies are owned by bigger companies:

I’ve been showing you Apple’s list prices. Unlike IBM clones, whose prices drop each month, Apple’s list prices stay constant for many months, then drop suddenly. But while Apple’s list prices stay “constant”, Apple secretly gives bigger discounts to dealers, who in turn give “deals” to customers. The deals usually involve getting $20 off, or paying full price but getting a free $50 gift card, or getting $100 off because it’s an outdated model that Apple no longer sells or will replace by a better model a few weeks from now.

Service

When you buy a Mac, you get 3 months of phone support (so you can phone Apple for free help answering questions about how to use your Mac) and a 1-year limited warranty (which says Apple will fix the hardware if it breaks during the first year and you carry your Mac to an Apple-authorized repair center).

Most of your questions and difficulties will be during the first 3 months, when Apple’s help is free. After the first 3 months, pay consultants and repair shops when necessary.

Should you buy a Mac?

When the Mac first came out, computer experts loved it and praised it for being easier than an IBM PC.

Then Microsoft invented Windows, which made the IBM PC resemble a Mac.

Apple faces a new problem: since practically everybody has switched to buying Windows computers instead of Macs, most programmers aren’t bothering to write Mac programs anymore. So if you have a Mac, you’re stuck running old programs written long ago, in versions less pleasant than new Windows versions. As a result, the Mac has actually become harder to use than a Windows computer!

The big exception to Mac’s downfall is the graphics-art community. Years ago, before Windows became good, the Mac became the standard for folks in the graphics-arts community (such as ad agencies, newspapers, magazines, artists, and companies running printing presses). They still use Macs.

Some universities standardized on Macs because Apple Computer Inc. gave those universities a discount. When the discounts expired, many of those universities shifted to buying Windows computers instead.

iPod, iPhone, iPad

After inventing the Mac (in 1984) and the iMac (in 1998), Apple invented the iPod in 2001. It’s a handheld box that plays music.

Then Apple invented the iPhone, in 2007. It became the most popular smartphone.

Then Apple invented the iPad, in 2010. It became the most popular tablet.

Who runs Apple?

After being founded by Steve Wozniak and Steve Jobs, Apple’s leadership changed.

Steve Wozniak got in an airplane crash that hurt his head and gave him amnesia, so he left the company and enrolled in college under a fake name (“Rocky Clark”). After he graduated, he returned to Apple Computer Company quietly. Steve Jobs managed the company.

Though Apple was successful, Steve Jobs’ strategies upset some computerists.

For example, Apple’s ads claimed that the Apple was the first personal computer (it was not the first!); Apple launched a big campaign to make businessmen buy Apple Pascal (though Apple Pascal didn’t help the average businessman at all); Apple prohibited its dealers from displaying games (though Apple later relented); and Apple prohibited authorized dealers from selling Apples by mail order.

Apple Computer Inc. donated computers to schools for three reasons: to be nice, get a tax write-off, and lure schools into buying Apples (to be compatible with the Apples that the schools received free). But if Apple were really nice, it would have lowered prices to let low-income consumers afford them. Apple sold just to the “chic”, not the poor.

Steve & Steve both left Apple and went separate ways.

Apple’s next head was John Sculley, a marketer who used to be a vice-president of Pepsi. He made Pepsi the #2 soft drink (just behind Coke) and kept Apple the #2 microcomputer company (just behind IBM).

In 1993, he had Apple invent and sell a handheld computer called the Newton. Instead of including a keyboard, it included a tablet you could write on with a pen. The computer tried to read handwritten words but couldn’t read handwriting accurately enough. Apple’s board of directors ousted him for spending too much effort on the Newton and not enough on the Mac.

Apple’s next head was Michael Spindler, an efficient German who dropped Apple’s costs and prices. But in 1995, Apple’s profits plunged for 3 reasons:

In 1996, Apple’s board of directors fired Michael and replaced him with Gil Amelio. To cut costs, Gil fired lots of employees. In 1997, the board fired him and put Steve Jobs back in charge. In 2011, Steve died from cancer.

Now Apple is run by Tim Cook, who’s popular and gay. He’s successful: he’s made Apple become even more profitable than when Steve Jobs was in charge, though Apple’s latest improvements are undramatic, boring.