The Evolution of Business Models in the PC Market, 1980-2010

In this, the 60th anniversary year of the computer, it may be interesting to look back at a couple of key events in the evolution of this very important market. This is a market now amounting to extraordinary numbers of machines. In 2010, the last year for which we have numbers, there were no less than 10 million machines shipped! This growth and penetration is unparalled in the history of industrial products in the last 100 years, and is an amazing success. However, to get to this stage, the industry had to make its way through some issues and decision points. There are generally agreed to have been key turning points. What would have happened if they had gone differently?

Note: This week, we feature a guest column by alcibiades, as Thom is attending a concert by The Streets in Paradiso, Amsterdam. Next week he will be writing the column again.

This excerpt from Computer World for March 2011 is reproduced by permission of the publisher.

Let’s recapitulate the present state of the market. IBM, as was always expected, has retained its dominance of the corporate sector. The last minute decision to use its own software on its new line of machines, and the court decision against Compaq and Phoenix, led to the dominance of the end to end model. This model now has a 97% share of shipments. As is well known to corporate buyers, this allowed IBM to deliver seamless integrated solutions to the desktop, using a mix of mainframe servers and intelligent terminals. There has been extraordinary progress in the speed and functionality of these terminals. In 2010, some have a few megabytes of memory, and there are rumours of hard drives with several hundred megabytes appearing shortly. Local computing, which was previously unheard of, is possible. Color screens and sophisticated graphics are beginning to find their way from the art departments of advertising agencies into some executive offices, but it will be a long time before these are anything more than expensive toys for most people.

There is a small market for standalone educational and home machines. The Amiga, the Macintosh, and a host of other familiar names fill this segment. It probably accounts for about 10% of the total market. Apple leads at the expensive end of this market, but the Amiga is still strong.

The first time buyer of a computer today faces an interesting and challenging decision. Whatever choice he makes will have strong implications for the rest of his life. Whichever supplier he goes with, he will get a full range of applications, but he will not be able to move these applications from one platform to another, and the vendors have also adopted incompatible file formats, so that he will not even be able to move his documents very easily. Nor will any of his peripherals work with any other supplier’s. Move computer platforms, and you will have to jettison keyboard, mouse, screen, server. Few companies ever do it.

Service levels in the market are usually thought to be very high and fully satisfactory. As one corporate buyer we spoke to for this article said, “Why do I need to choose between thirteen different suppliers of something? What I want is one supplier who delivers. I have that.”

When we look back, we can see now that so many of the ideas trumpeted in the early 80’s about the future were no better than the fantasies then current about wrist communicators. The idea that there could ever be a global information network turned out to require huge quantities of standard platforms, which simply do not exist. The idea that out of copyright books could be digitised and made generally freely available would of course require open formats. There are none. The idea that one day we would all have computers in our homes was perhaps the most absurd. What on earth would we do with them? How would we ever afford them? Apart from the mains socket, what would we ever connect them to?

Still, if the development of this market and technology has not realised the wilder dreams of the visionaries of the last century, it has contributed greatly to progress, and some applications that have seemed unlikely are now being realised. We are just now acquiring machines powerful enough to do graphical manipulation of photographic images, and researchers at IBM, while remaining very tight lipped about how exactly this is to be accompished, do hint that their computers may have abilities of this sort within the next five years. There is talk of universal messaging services. IBM’s service arm is considering building a massive email switch; a sort of electronic clearing house, to enable companies to send messages to each other, even if they do not run on the same computer systems. What a remarkable innovation this would be, and testimony to the creative powers of the industry.

Looking back, we can now see how little merit there was to some early proposals that it would be best if the industry standardized on compatible hardware, which could be made by anyone. It would have been a disaster. Companies would have competed solely on price, quality and reliability would have plummeted, huge numbers of cheap and marginally functional machines would have flooded the market, there would have been no way to deliver the seamless end to end controlled user experience which is such a wonderful feature of our present environment. It is, we now see, only in a world in which hardware and software are developed, manufactured, marketed and supported by the same organisation, that customers can really get the quality and stability they most deeply desire and need. It was the far sighted courts in the IBM Phoenix case that we can thank for this. Thanks to them, the industry has been able to adopt a sustainable business model, and put creativity and innovation ahead of the pressures for short term profits.

And so, we look forward to ever growing sales, and the prospect that by the year 2050, the market may as much as double. Just think, 20 million machines a year. What a remarkable growth record that will be, if it happens!



  1. 2006-05-28 4:02 pm
  2. 2006-05-28 4:14 pm
    • 2006-05-29 12:26 am
  3. 2006-05-28 4:25 pm
  4. 2006-05-28 4:36 pm
    • 2006-05-28 11:53 pm
  5. 2006-05-28 4:39 pm
    • 2006-05-28 4:57 pm
    • 2006-05-28 7:43 pm
      • 2006-05-29 10:47 am
  6. 2006-05-28 5:09 pm
  7. 2006-05-28 5:26 pm
  8. 2006-05-28 5:54 pm
  9. 2006-05-28 6:27 pm
    • 2006-05-29 7:04 pm
  10. 2006-05-28 7:00 pm
  11. 2006-05-28 7:07 pm
  12. 2006-05-28 7:10 pm
  13. 2006-05-28 7:25 pm
  14. 2006-05-28 7:56 pm
    • 2006-05-28 8:19 pm
  15. 2006-05-28 10:05 pm
    • 2006-05-28 10:55 pm
      • 2006-05-29 12:19 am
        • 2006-05-29 1:07 am
          • 2006-05-29 12:39 pm
  16. 2006-05-28 10:59 pm
  17. 2006-05-28 11:09 pm
  18. 2006-05-29 3:13 am
  19. 2006-05-29 6:08 am
    • 2006-05-29 8:13 am
      • 2006-05-29 10:32 am
        • 2006-05-29 3:00 pm
          • 2006-05-29 5:54 pm
  20. 2006-05-29 11:17 am
  21. 2006-05-29 1:25 pm
  22. 2006-05-29 4:30 pm
  23. 2006-05-29 5:25 pm