The Rise of the Wintel Empire

— -- For better or for worse, odds are that you are reading this Web article on a computer that runs Microsoft Windows and has Intel inside. But did you ever wonder how this “Wintel” standard came to dominate PCs? Surprisingly, the answer has much to with following Apple’s lead.

IBM introduced the first PC as we know it today—running a Microsoft operating system on Intel’s chip architecture—in 1981. But IBM’s machine was not the first PC per se; in fact, Apple Computer had carved out a strong niche business since 1976.

“IBM saw that Apple had started to get a pretty good franchise with these little tiny boxes,” said Roger Kay, a senior analyst who follows the desktop PC market for International Data Corp. “They thought, ‘Oh gee, maybe it isn’t all in mainframes, and we better get into it.’”

Because Big Blue had been practically synonymous with computing for decades, the company had ready-made brand awareness with consumers, giving it an enviable advantage over the competition, says Paul Fouts, associate dean of the Geno School of Business at Golden Gate University in San Francisco.

However, at the time IBM was working on the PC in the 1970s, the company was also under investigation by the Department of Justice for possible violations of antitrust law. Moreover, an earlier antitrust decree dating back to a 1956 investigation meant IBM could not exclude competitors’ software from its mainframe platform.

“They wanted their new system to meet the same rule structure that was in place in their big mainframe system,” Fouts said.

To avoid further federal scrutiny, IBM enlisted Intel to help build the infrastructure for its new PC; a little-known company called Microsoft was called upon to provide the operating system.

“In the early days, Microsoft couldn’t have done it without IBM, and IBM could have picked anybody. They were king makers,” said Fred Davis, a computer historian and CEO of Lumeria.

The PC that debuted in 1981 ran on a 4.77 MHz Intel 8088 microprocessor and used Microsoft’s MS-DOS operating system—a precursor to the “Wintel” relationship.

“The Wintel ‘duopoly’ actually began with the original PC, you just didn’t know it,” said technology columnist and Silicon Valley insider John Dvorak.

“No one expected it to become as powerful as it did,” said Dvorak, who also hosts TechTV’s “Silicon Spin.” “The idiosyncratic aspects of it, like Microsoft owning the operating system and Intel pretty much owning the processor business, were not necessarily obvious.”

The combination of IBM, Microsoft, and Intel was a big success, perhaps too successful for IBM’s own good. By 1983, IBM’s platform was so popular that Compaq decided to clone it—and managed to do so without infringing on Big Blue’s patents. The rise of the clones loosened IBM’s grip on the PC market. By the time Microsoft released the first version of Windows in 1985, hardware had become less important than software to PC buyers.

“There was IBM and there was Apple, and then the clones came along,” IDC’s Kay recalled. “Compaq and then others began to steal market share from IBM.”

In 1982, the Reagan administration’s antitrust division dropped its investigation of IBM, declaring it was “without merit.” Shortly thereafter, IBM began work on an entirely new PC platform with hardware and software designed exclusively by Big Blue.

But by the time OS/2, as IBM’s new operating system was dubbed, made its debut in 1987, it was too late.

“It was different than anything else in the market, and it was crushed,” Fouts said. “By getting out there in 1981, the [Microsoft-Intel] standard had developed enough market share that even IBM couldn’t overthrow it later.”

Ironically, Kay points out, IBM’s fate as a secondary player in the PC market was sealed when it decided to abandon the open standards that had allowed the original IBM PC to overtake Apple in the first place.

“The fact that IBM shared the technical aspects surrounding the PC with Microsoft and Intel actually contributed greatly to its success and helped it dominate in its fight with Apple, which is entirely proprietary.”