As an aside, most histories conclude that IBM "fucked up" and allowed a PC clone ecosystem to grow-up, so they only dominated PCs for 7 years or so, and after that it was too late to put the genie back in the bottle.
But if you look at the market for business PCs back in 1981, it was completely open anarchy surrounding the CP/M-80 "8-bit PC standard". There were hundreds of vendors, including some big names in the computer industry. (IBM certainly didn't care about Commodore and etc. And as the article mentions, this took tons of support time from understaffed DR.)
So I think IBM quite strategically wanted to define the "16-bit PC standard", which they controlled for most of the decade. And Microsoft was the most compliant vendor. (There were antitrust restrictions on IBM too...)
On a larger level, it sounds like DR thought 16-bit was just a repeat of the early 8-bit computer industry and didn't really understand what IBM was up to.
On the software end, after reading a couple of books about MSFT in that era (pre-Win 3.0), I think it is clearly manned by people who are smart and determined to be dominant in the business. I think they are more serious than a lot of their competitors.
I think the key was that Microsoft could see the market was expanding exponentially. I think grasping the effects of exponential change is difficult for the human mind but I think Gates, et al grasped that.
Exchanging a smaller short term reward for control of something exponentially growing is obvious in hindsight but a brilliant insight at the time.
There other insight was to go for the business and not home market like so many, frankly, better products in the 80s. The difference being that businesses replace their equipment once it’s been written off. The cycle times for home and educational users being much longer.
A meaningful gamble IBM made at the time was whether the BIOS was copyrightable - Williams v. Artic wasn't a thing until 1982, and it was really Apple v. Franklin in 1983 that left the industry concluding they couldn't just copy IBM's ROMs.
IBM themselves concluded that they fucked up with the PC. The PS/2 line was their second bite at the apple; the Micro Channel bus was proprietary. If they couldn't actually put the genie back in the bottle, it wasn't for lack of trying.
In 'Managing Technical People', 1997, page 199, Watts Humphrey says that, after several failed attempts to produce a PC by IBM procedures, they set up an independent team that could skip the procedures as necessary to get the job done. This worked in the short term but it had two side-effects that were catastrophic in the long term: they lost control of the operating system to Microsoft, and they also lost control of the chips to Intel. He says both of these side-effects would have been caught by the checks inherent in the normal IBM procedures.
They might have caught the mistakes but I think the resulting product would have been a flop.
If IBM hadn't done what it did somebody else would have dominated the market with a product to fit the same niche. Perhaps somebody "downmarket" in the more consumer space who managed to punch upwards -- maybe Apple who had some business success with the Apple II + VisiCalc, etc. or maybe Kaypro or somebody in the CP/M space. Or perhaps somebody else "upmarket" like DEC, who came too late the personal computer space with products that nobody really bought (DEC Rainbow, etc) but maybe they'd have had more success if IBM hadn't gotten in there.
The market wanted a relatively open product to innovate in. When the PS/2 came along a few years later with proprietary bus, etc and tried to put the genie back in the bottle, it flopped.
One of my favorite scenes from Pirates of Silicon Valley is when Steve Ballmer (played by John DiMaggio, yes, the voice of Bender) narrates an audience aside, positively giddy with Ballmer glee at how his clever friend Bill put one over on those stodgy fellows from IBM and got them to give away the golden goose. It was like harpooning the great white whale. While it was a telefilm and thus a fictionalization, near as I can tell things happened pretty much as described.
But if you look at the market for business PCs back in 1981, it was completely open anarchy surrounding the CP/M-80 "8-bit PC standard". There were hundreds of vendors, including some big names in the computer industry. (IBM certainly didn't care about Commodore and etc. And as the article mentions, this took tons of support time from understaffed DR.)
So I think IBM quite strategically wanted to define the "16-bit PC standard", which they controlled for most of the decade. And Microsoft was the most compliant vendor. (There were antitrust restrictions on IBM too...)
On a larger level, it sounds like DR thought 16-bit was just a repeat of the early 8-bit computer industry and didn't really understand what IBM was up to.
Exchanging a smaller short term reward for control of something exponentially growing is obvious in hindsight but a brilliant insight at the time.
There other insight was to go for the business and not home market like so many, frankly, better products in the 80s. The difference being that businesses replace their equipment once it’s been written off. The cycle times for home and educational users being much longer.
https://hardcoresoftware.learningbyshipping.com/p/019-billg-...
If IBM hadn't done what it did somebody else would have dominated the market with a product to fit the same niche. Perhaps somebody "downmarket" in the more consumer space who managed to punch upwards -- maybe Apple who had some business success with the Apple II + VisiCalc, etc. or maybe Kaypro or somebody in the CP/M space. Or perhaps somebody else "upmarket" like DEC, who came too late the personal computer space with products that nobody really bought (DEC Rainbow, etc) but maybe they'd have had more success if IBM hadn't gotten in there.
The market wanted a relatively open product to innovate in. When the PS/2 came along a few years later with proprietary bus, etc and tried to put the genie back in the bottle, it flopped.