International Business Machines (IBM), one of the world's largest companies, had a 62% share of the mainframe computer market in 1981. In the late 1970s the new personal computer industry was dominated by the Commodore PET, Atari 8-bit family, Apple II, Tandy Corporation's TRS-80, and various CP/M machines. With $150 million in sales by 1979 and projected annual growth of more than 40% in the early 1980s, the microcomputer market was large enough for IBM's attention. Other large technology companies such as Hewlett-Packard (HP), Texas Instruments (TI), and Data General had entered it, and some large IBM customers were buying Apples, so the company saw introducing its own personal computer as both an experiment in a new market and a defense against rivals, large and small.
In 1980 and 1981 rumors spread of an IBM personal computer, perhaps a miniaturized version of the IBM System/370, while Matsushita acknowledged that it had discussed with IBM the possibility of manufacturing a personal computer for the American company. The Japanese project, codenamed "Go", ended before the 1981 release of the American-designed IBM PC codenamed "Chess", but two simultaneous projects further confused rumors about the forthcoming product.
Data General and TI's small computers were not very successful, but observers expected AT&T to soon enter the computer industry, and other large companies such as Exxon, Montgomery Ward, Pentel, and Sony were designing their own microcomputers. Whether IBM had waited too long to enter an industry in which Apple and others were already successful was unclear.
An observer stated that "IBM bringing out a personal computer would be like teaching an elephant to tap dance." Successful microcomputer company Vector Graphic's fiscal 1980 revenue was $12 million. A single IBM computer in the early 1960s cost as much as $9 million, occupied one quarter acre of air-conditioned space, and had a staff of 60 people; in 1980 its least-expensive computer, the 5120, still cost about $13,500. The "Colossus of Armonk" only sold through its internal sales force, had no experience with resellers or retail stores, and did not introduce the first product designed to work with non-IBM equipment until 1980.
Another observer claimed that IBM made decisions so slowly that, when tested, "what they found is that it would take at least nine months to ship an empty box". As with other large computer companies, its new products typically required about four to five years for development. IBM had to learn how to quickly develop, mass-produce, and market new computers. While the company traditionally let others pioneer a new market—IBM released its first commercial computer a year after Remington Rand's UNIVAC in 1951, but within five years had 85% of the market—the personal-computer development and pricing cycles were much faster than for mainframes, with products designed in a few months and obsolete quickly.
Many in the microcomputer industry resented IBM's power and wealth, and disliked the perception that an industry founded by startups needed a latecomer so staid that it had a strict dress code and employee songbook. The potential importance to microcomputers of a company so prestigious, that a popular saying in American companies stated "No one ever got fired for buying IBM", was nonetheless clear. InfoWorld, which described itself as "The Newsweekly for Microcomputer Users", stated that "for my grandmother, and for millions of people like her, IBM and computer are synonymous". Byte ("The Small Systems Journal") stated in an editorial just before the announcement of the IBM PC:
Rumors abound about personal computers to come from giants such as Digital Equipment Corporation and the General Electric Company. But there is no contest. IBM's new personal computer ... is far and away the media star, not because of its features, but because it exists at all. When the number eight company in the Fortune 500 enters the field, that is news ... The influence of a personal computer made by a company whose name has literally come to mean "computer" to most of the world is hard to contemplate.
The editorial acknowledged that "some factions in our industry have looked upon IBM as the 'enemy'", but concluded with optimism: "I want to see personal computing take a giant step."
Desktop sized programmable calculators by HP had evolved into the HP 9830 BASIC language computer by 1972. In 1972–1973 a team led by Dr. Paul Friedl at the IBM Los Gatos Scientific Center developed a portable computer prototype called SCAMP (Special Computer APL Machine Portable) based on the IBM PALM processor with a Philips compact cassette drive, small CRT, and full-function keyboard. SCAMP emulated an IBM 1130 minicomputer to run APL\1130. In 1973 APL was generally available only on mainframe computers, and most desktop sized microcomputers such as the Wang 2200 or HP 9800 offered only BASIC. Because it was the first to emulate APL\1130 performance on a portable, single-user computer, PC Magazine in 1983 designated SCAMP a "revolutionary concept" and "the world's first personal computer". The prototype is in the Smithsonian Institution. A non-working industrial design model was also created in 1973 by industrial designer Tom Hardy illustrating how the SCAMP engineering prototype could be transformed into a usable product design for the marketplace. This design model was requested by IBM executive Bill Lowe to complement the engineering prototype in his early efforts to demonstrate the viability of creating a single-user computer.
Successful demonstrations of the 1973 SCAMP prototype led to the IBM 5100 portable microcomputer in 1975. In the late 1960s such a machine would have been nearly as large as two desks and would have weighed about half a ton. The 5100 was a complete computer system programmable in BASIC or APL, with a small built-in CRT monitor, keyboard, and tape drive for data storage. It was also very expensive, up to US$20,000; the computer was designed for professional and scientific customers, not business users or hobbyists. BYTE in 1975 announced the 5100 with the headline "Welcome, IBM, to personal computing", but PC Magazine in 1984 described 5100s as "little mainframes" and stated that "as personal computers, these machines were dismal failures ... the antithesis of user-friendly", with no IBM support for third-party software. Despite news reports that it was the first IBM product without a model number, when the PC was introduced in 1981 it was designated as the IBM 5150, putting it in the "5100" series though its architecture was not directly descended from the IBM 5100. Later models followed in the trend: For example, the IBM Portable Personal Computer, PC/XT, and PC AT are IBM machine types 5155, 5160, and 5170, respectively.
Following SCAMP, the IBM Boca Raton, Florida Laboratory created several single-user computer design concepts to support Lowe's ongoing effort to convince IBM there was a strategic opportunity in the personal computer business. A selection of these early IBM design concepts created by industrial designer Tom Hardy in the infancy of personal computing is highlighted in the book DELETE: A Design History of Computer Vapourware. One such concept in 1977, code-named Aquarius, was a working prototype utilizing advanced bubble memory cartridges. While this design was more powerful and smaller than Apple II launched the same year, the advanced bubble technology was deemed unstable and not ready for mass production.
Some employees opposed IBM entering the market. One said, "Why on earth would you care about the personal computer? It has nothing at all to do with office automation." "Besides", he added, "all it can do is cause embarrassment for IBM". The company studied personal computer designs—Walden C. Rhines of TI, for example, in 1978 met with a Boca Raton group considering the TMS9900 for a secret 16-bit microprocessor-based project—but had determined from studying the market for years, and building the prototypes during the 1970s, that IBM was unable to internally build a personal computer profitably.
IBM President John Opel was not among those skeptical of personal computers. He and CEO Frank Cary had created more than one dozen semi-autonomous "Independent Business Units" (IBU) to encourage innovation; Fortune called them "How to start your own company without leaving IBM". After Lowe became the first head of the Entry Level Systems IBU in Boca Raton his team researched the market. Computer dealers were very interested in selling an IBM product, but told Lowe that the company could not design, sell, or service it as IBM had previously done. An IBM microcomputer, they said, must be composed of standard parts that store employees could repair. While dealers disliked Apple's business practices, including a shortage of the Apple II while the company focused on the more sophisticated Apple III, they saw no alternative because they doubted that IBM's traditional sales methods and bureaucracy would change.
Atari in 1980 proposed that it act as original equipment manufacturer for an IBM microcomputer. Aware that the company needed to enter the market quickly—even the schools in Broward County, near Boca Raton, purchased Apples—in July 1980 Lowe met with Opel, Cary, and others on the important Corporate Management Committee. Lowe demonstrated the proposal with an industrial design model by Tom Hardy based on the Atari 800 platform, and suggested acquiring Atari "because we can't do this within the culture of IBM".
Cary agreed about the culture, observing that IBM would need "four years and three hundred people" to develop its own personal computer; Lowe, however, promised one in a year if done without traditional IBM methods. Instead of acquiring Atari, the committee allowed him to form an independent group of employees—"the Dirty Dozen", led by engineer Bill Sydnes—which, Lowe promised, could design a prototype in 30 days. The crude prototype barely worked when he demonstrated it in August, but Lowe presented a detailed business plan that proposed that the new computer have an open architecture, use non-proprietary components and software, and be sold through retail stores, all contrary to IBM practice.
The committee agreed that Lowe's approach was the most likely to succeed. With Opel's strong support, in October it approved turning the group into another IBU codenamed "Project Chess" to develop "Acorn", with unusually large funding to help achieve the goal of introducing the product within one year of the August demonstration. After Lowe's promotion Don Estridge became the head of Chess, and by January 1981 the team made its first demonstration of the computer within IBM. Other key members included Sydnes, Lewis Eggebrecht, David Bradley, Mark Dean, and David O'Connor. Many were already hobbyists who owned their own computers including Estridge, who had an Apple II. After the team received permission to expand to 150 by the end of 1980, it received more than 500 calls in one day from IBM employees interested in joining the IBU.
IBM normally was vertically integrated, only purchasing components like transformers and semiconductors. It internally developed all important hardware and software and discouraged customers from purchasing third-party products compatible with IBM products. For the PC the company avoided doing so as much as possible; choosing, for example, to license Microsoft BASIC despite having a BASIC of its own for mainframes. (Estridge said that unlike IBM's own version "Microsoft BASIC had hundreds of thousands of users around the world. How are you going to argue with that?") Although the company denied doing so, many observers concluded that IBM intentionally emulated Apple when designing the PC. The many Apple II owners on the team influenced its decision to design the computer with an open architecture and publish technical information so others could create software and expansion slot peripherals.
Although the company knew that it could not avoid competition from third-party software on proprietary hardware—Digital Research released CP/M-86 for the IBM Displaywriter, for example—it considered using the IBM 801 RISC processor and its operating system, developed at the Thomas J. Watson Research Center in Yorktown Heights, New York. The 801 processor was more than an order of magnitude more powerful than the Intel 8088, and the operating system more advanced than the PC DOS 1.0 operating system from Microsoft. Ruling out an in-house solution made the team’s job much easier and may have avoided a delay in the schedule, but the ultimate consequences of this decision for IBM were far-reaching.
IBM had recently developed the Datamaster business microcomputer, which used a processor and other chips from Intel; familiarity with them and the immediate availability of the 8088 was a reason for choosing it for the PC. The 62-pin expansion bus slots were designed to be similar to the Datamaster slots. Differences from the Datamaster included avoiding an all-in-one design while limiting the computer's size so that it would still fit on a standard desktop with the keyboard (also similar to the Datamaster's), and 5.25" disk drives instead of 8". Delays due to in-house development of the Datamaster software was a reason why IBM chose Microsoft BASIC—already available for the 8088—and published available technical information to encourage third-party developers. IBM chose the 8088 over the similar but superior 8086 because Intel offered a better price on the former and could provide more units, and the 8088's 8-bit bus reduced the cost of the rest of the computer.
The design for the computer was essentially complete by April 1981, when the manufacturing team took over the project. IBM could not only use its own hardware and make a profit with "Acorn". To save time and money, the IBU built the machine with commercial off-the-shelf parts from original equipment manufacturers whenever possible, with assembly occurring in Boca Raton. The IBU would decide whether it would be more economical to "Make or Buy" each manufacturing step. Various IBM divisions for the first time competed with outsiders to build parts of the new computer; a North Carolina IBM factory built the keyboard, the Endicott, New York factory had to lower its bid for printed circuit boards, and a Taiwanese company built the monitor. The IBU chose an existing monitor from IBM Japan and an Epson printer. Because of the off-the-shelf parts only the system unit and keyboard has unique IBM industrial design elements. The IBM copyright appears in only the ROM BIOS and on the company logo, and the company reportedly received no patents on the PC, with outsiders manufacturing 90% of it. Because the product would carry the IBM logo, the only corporate division the IBU could not bypass was the Quality Assurance Unit. A component manufacturer described the process of being selected as a supplier as rigorous and "absolutely amazing", with IBM inspectors even testing solder flux. They stayed after selection, monitoring and helping to improve the manufacturing process. IBM's size overwhelmed other companies; "a hundred IBM engineers" reportedly visited Mitel to meet with two of the latter's employees about a problem, according to The New York Times.
Another aspect of IBM that did not change was its emphasis on secrecy; employees at Yorktown knew nothing of Boca Raton's activities. Those working on the project, within and outside of IBM, were under strict confidentiality agreements. When an individual mentioned in public on a Saturday that his company was working on software for a new IBM computer, IBM security appeared at the company on Monday to investigate the leak. After an IBM official discovered printouts in a supplier's garbage, the former company persuaded the latter to purchase a paper shredder. Management Science America did not know until after agreeing to buy Peachtree Software in 1981 that the latter was working on software for the PC. Developers such as Software Arts received breadboard prototype computers in boxes lined with lead to block X-rays and sealed with solder, and had to keep them in locked, windowless rooms; to develop software, Microsoft emulated the PC on a DEC minicomputer and used the prototype for debugging. After the PC's debut, IBM Boca Raton employees continued to decline to discuss their jobs in public. One writer compared the "silence" after asking one about his role at the company to "hit[ting] the wall at the Boston Marathon: the conversation is over".
IBM is proud to announce a product you may have a personal interest in. It's a tool that could soon be on your desk, in your home or in your child's schoolroom. It can make a surprising difference in the way you work, learn or otherwise approach the complexities (and some of the simple pleasures) of living.
It's the computer we're making for you.
— IBM PC advertisement, 1982
After developing it in 12 months—faster than any other hardware product in company history—IBM announced the Personal Computer on 12 August 1981. Pricing started at US$1,565 (equivalent to $4,213 in 2017) for a configuration with 16K RAM, Color Graphics Adapter, and no disk drives. The company intentionally set prices for it and other configurations that were comparable to those of Apple and other rivals, What Dan Bricklin described as "pretty competitive" pricing surprised him and other Software Arts employees; one analyst stated that IBM "has taken the gloves off", while the company said "we suggest [the PC's price] invites comparison". Microsoft, Personal Software, and Peachtree Software were among the developers of nine launch titles, including EasyWriter and VisiCalc. In addition to the existing corporate sales force IBM opened its own Product Center retail stores. After studying Apple's successful distribution network, the company for the first time sold through others, ComputerLand and Sears Roebuck. Because retail stores receive revenue from repairing computers and providing warranty service, IBM broke a 70-year tradition by permitting and training non-IBM service personnel to fix the PC.
BYTE described IBM as having "the strongest marketing organization in the world", but the PC's marketing also differed from that of previous products. The company was aware of its strong corporate reputation among potential customers; an early advertisement began "Presenting the IBM of Personal Computers". The advertisements emphasized the novelty of an individual owning an IBM computer, describing "a product you may have a personal interest in" and asking readers to think of "'My own IBM computer. Imagine that' ... it's yours. For your business, your project, your department, your class, your family and, indeed, for yourself."
The Little Tramp
After considering Alan Alda, Beverly Sills, Kermit the Frog, and Billy Martin as celebrity endorsers IBM chose Charlie Chaplin's The Little Tramp character—played by Billy Scudder—for a series of advertisements based on Chaplin's films. The very popular and award-winning $36-million marketing campaign made the star of Modern Times—a film that expresses Chaplin's opposition to big business, mechanization, and technological efficiency—the (as Creative Computing described him) "warm cuddly" mascot of one of the world's largest companies.
Chaplin and his character became so widely associated with IBM—Time stated that "The Tramp ... has given [it] a human face"—that others used his bowler hat and cane to represent or satirize the company. Although the Chaplin estate sued those like Otrona who used the trademark without permission, PC Magazine's April 1983 issue had 12 advertisements that referred to the Little Tramp.
"We encourage third-part suppliers [for the PC] ... we are delighted to have them", IBM stated. It did not sell internally developed PC software until April 1984, instead relying on already established software companies. The company contacted Microsoft even before the official approval of Chess, and it and others received cooperation that was, one writer said, "unheard of" for IBM. Such openness surprised observers; BYTE called it "striking" and "startling", and one developer reported that "it's a very different IBM". Another said "They were very open and helpful about giving us all the technical information we needed. The feeling was so radically different—it's like stepping out into a warm breeze." He concluded, "After years of hassling—fighting the Not-Invented-Here attitude—we're the gods."
Most other personal-computer companies did not disclose technical details; TI, for example, intentionally made developing third-party TI 99/4A software difficult, even requiring a lockout chip in cartridges. IBM itself kept its mainframe technology so secret that rivals were indicted for industrial espionage. For the PC, however, IBM immediately released detailed information. The US$36 IBM PC Technical Reference Manual included complete circuit schematics, commented ROM BIOS source code, and other engineering and programming information for all of IBM's PC-related hardware, plus instructions on designing third-party peripherals. It was so comprehensive that one reviewer suggested that the manual could serve as a university textbook, and so clear that a developer claimed that he could design an expansion card without seeing the physical computer.
IBM marketed the technical manual in full-page color print advertisements, stating that "our software story is still being written. Maybe by you". Sydnes stated that "The definition of a personal computer is third-party hardware and software." Estridge said that IBM did not keep software development proprietary because it would have to "out-VisiCalc VisiCorp and out-Peachtree Peachtree—and you just can't do that".
Another advertisement told developers that the company would consider publishing software for "Education. Entertainment. Personal finance. Data management. Self-improvement. Games. Communications. And yes, business." Estridge explicitly invited small, "cottage" amateur and professional developers to create products "with", he said, "our logo and our support". IBM sold the PC at a large discount to employees, encouraged them to write software, and distributed a catalog of inexpensive software written by individuals that might not otherwise appear in public.
BYTE was correct in predicting that an IBM personal computer would receive much public attention. Its rapid development amazed observers, as did the willingness of the Colossus of Armonk to sell as a launch title Microsoft Adventure (a video game that, its press release stated, brought "players into a fantasy world of caves and treasures"); the company even offered an optional joystick port. Future Computing estimated that "IBM's Billion Dollar Baby" would have $2.3 billion in hardware sales by 1986. David Bunnell, an editor at Osborne/McGraw-Hill, recalled that
None of my associates wanted to talk about the Apple II or the Osborne I computer anymore, nor did they want to fantasize about writing the next super-selling program ... All they wanted to talk about was the IBM Personal Computer—what it was, its potential and limitations, and most of all, the impact IBM would have on the business of personal computing.
Within seven weeks Bunnell helped found PC Magazine, the first periodical for the new computer.
Competitors were more skeptical. Adam Osborne said "when you buy a computer from IBM, you buy a la carte. By the time you have a computer that does anything, it will cost more than an Apple. I don't think Apple has anything to worry about." Apple's Mike Markkula agreed that IBM's product was more expensive than the Apple II, and claimed that the Apple III "offers better performance". He denied that the IBM PC offered more memory, stating that his company could offer more than 128K "but frankly we don't know what anyone would do with that memory". At Tandy, John Roach said "I don't think it's that significant"; Jon Shirley admitted that IBM had a "legendary service reputation" but claimed that its thousands of Radio Shack stores "can provide better service", while predicting that the IBM PC's "major market will be IBM addicts"; another executive claimed that Tandy could undersell a $3,000 IBM computer by $1,000. Many criticized the PC's design as not innovative and outdated, and believed that its alleged weaknesses, such as the use of single-sided, single-density disks with less storage than the computer's RAM, existed because the company was uncertain about the market and was experimenting before releasing a better computer. (Estridge later boasted, "Many ... said that there was nothing technologically new in this machine. That was the best news we could have had; we actually had done what we had set out to do.")
Rivals such as Apple, Tandy, and Commodore—together with more than 50% of the personal-computer market—had many advantages. While IBM began with one microcomputer, little available hardware or software, and a couple of hundred dealers, Radio Shack had 14 million customers and 8,000 stores—more than McDonald's—that only sold its broad range of computers and accessories. Apple had five times as many dealers in the US as IBM, an established international distribution network, and an installed base of more than 250,000 customers. Hundreds of independent developers produced software and peripherals for both companies' computers; at least ten Apple databases and ten word processors were available, while the PC had no databases and one word processor. The computer had very limited graphics capability, and customers who wanted both color and high-quality text had to purchase two graphics cards and two monitors.
Steve Jobs at Apple ordered a team to examine an IBM PC. After finding it unimpressive—Chris Espinosa called the computer "a half-assed, hackneyed attempt"—the company confidently purchased a full-page advertisement in The Wall Street Journal with the headline "Welcome, IBM. Seriously". Microsoft head Bill Gates was at Apple headquarters the day of IBM's announcement and later said "They didn't seem to care. It took them a full year to realize what had happened".
The IBM PC was immediately successful. The PC was small, light weight, and easy to use. Because it was advertised as a personal computer for anyone and not just large corporations, and because it was small and could fit easily into people's home, it became a device of popular choice for many people. It couldn't be helped that IBM also advertised it with the lovable Charlie Chaplin's tramp character, who after seeing the computer, falls in love with it and purchases the PC. Chaplin's character becomes the face of the company's PC 
BYTE reported a rumor that more than 40,000 were ordered on the day of the announcement; John Dvorak recalled that one dealer that day praised the computer as an "incredible winner, and IBM knows how to treat us — none of the Apple arrogance". One dealer received 22 $1,000 deposits from customers although he could not promise a delivery date. The company could have sold its entire projected first-year production to employees, and IBM customers that were reluctant to purchase Apples were glad to buy microcomputers from its traditional supplier. The computer began shipping in October, ahead of schedule; by then some referred to it simply as the "PC".
BYTE estimated that 90% of the 40,000 first-day orders were from software developers. By COMDEX in November Tecmar developed 20 products including memory expansion and expansion chassis, surprising even IBM. Jerry Pournelle reported after attending the West Coast Computer Faire in early 1982 that because IBM "encourages amateurs" with "documents that tell all", "an explosion of [third-party] hardware and software" was visible at the convention. Many manufacturers of professional business application software, who had been planning/developing versions for the Apple II, promptly switched their efforts over to the IBM PC when it was announced. Often, these products needed the capacity and speed of a hard-disk. Although IBM did not offer a hard-disk option for almost two years following introduction of its PC, business sales were nonetheless catalyzed by the simultaneous availability of hard-disk subsystems, like those of Tallgrass Technologies which sold in Computerland stores alongside the IBM 5150 at the introduction in 1981.
One year after the PC's release, although IBM had sold fewer than 100,000 computers, PC World counted 753 software packages for the PC—more than four times the number available for the Apple Macintosh one year after its 1984 release—including 422 applications and almost 200 utilities and languages. InfoWorld reported that "most of the major software houses have been frantically adapting their programs to run on the PC", with new PC-specific developers composing "an entire subindustry that has formed around the PC's open system", which Dvorak described as a "de facto standard microcomputer". The magazine estimated that "hundreds of tiny garage-shop operations" were in "bloodthirsty" competition to sell peripherals, with 30 to 40 companies in a price war for memory-expansion cards, for example. PC Magazine renamed its planned "1001 Products to Use with Your IBM PC" special issue after the number of product listings it received exceeded the figure. Tecmar and other companies that benefited from IBM's openness rapidly grew in size and importance, as did PC Magazine; within two years it expanded from 96 bimonthly to 800 monthly pages, including almost 500 pages of advertisements.
Gates estimated that IBM would sell "not far from 200,000" PCs in 1982. By the end of that year the company was selling one every minute of the business day. It estimated that 50 to 70% of PCs sold in retail stores went to the home, and the publicity from selling a popular product to consumers caused IBM to, a spokesman said, "enter the world" by familiarizing them with the Colossus of Armonk. Although the PC only provided two to three percent of sales the company found that it had underestimated demand by as much as 800%. Because its prices were based on forecasts of much lower volume—250,000 over five years, which would have made the PC a very successful IBM product—the PC became very profitable; at times the company sold almost that many computers per month. Estridge claimed in 1983 that from October 1982 to March 1983 customer demand quadrupled. He stated that the company had increased production three times in one year, and warned of a component shortage if demand continued to increase. Many small suppliers' sales to IBM grew rapidly, both pleasing their executives and causing them to worry about being overdependent on it. Miniscribe, for example, in 1983 received 61% of its hard drive orders from IBM; the company's stock price fell by more than one third in one day after IBM reduced orders in January 1984. Suppliers often found, however, that the prestige of having IBM as a customer led to additional sales elsewhere.
By mid-1983, Yankee Group estimated that ten new IBM PC-related products appeared every day. In August 1983, the Chess IBU, with 4,000 employees, became the Entry Systems Division, which observers believed indicated that the PC was significantly important to IBM overall, and no longer an experiment. The PC surpassed the Apple II as the best-selling personal computer with more than 750,000 sold by the end of the year, while DEC only sold 69,000 microcomputers in the first nine months of the year despite offering three models for different markets. Retailers also benefited, with 65% of
BusinessLand's revenue coming from the PC. Demand still so exceeded supply two years after its debut that, despite IBM shipping 40,000 PCs a month, dealers reportedly received 60% or less of their desired quantity. Pournelle received the PC he paid for in early July 1983 on 1 November, and IBM Boca Raton employees and neighbors had to wait five weeks to buy the computers assembled there.
Yankee Group also stated that the PC had by 1983 "destroyed the market for some older machines" from companies like Vector Graphic, North Star, and Cromemco. inCider wrote "This may be an Apple magazine, but let's not kid ourselves, IBM has devoured competitors like a cloud of locusts". By February 1984 BYTE reported on "the phenomenal market acceptance of the IBM PC", and by fall concluded that the company "has given the field its third major standard, after the Apple II and CP/M". Some rivals speculated that the government might again prosecute IBM for antitrust, and Ben Rosen claimed that the company's dominance "is having a chilling effect on new ventures, a fear factor".
By that time, Apple was less welcoming of the rival that inCider stated had a "godlike" reputation. Its focus on the III had delayed improvements to the II, and the sophisticated Lisa was unsuccessful in part because, unlike the II and the PC, Apple discouraged third-party developers. The head of a retail chain said "It appears that IBM had a better understanding of why the Apple II was successful than had Apple." Jobs, after trying to recruit Estridge to become Apple's president, admitted that in two years IBM had joined Apple as "the industry's two strongest competitors". He warned in a speech before previewing the forthcoming "1984" Super Bowl commercial: "It appears IBM wants it all ... Will Big Blue dominate the entire computer industry? The entire information age? Was George Orwell right about 1984?"
IBM had $4 billion in annual PC revenue by 1984, more than twice that of Apple and as much as the sales of Apple, Commodore, HP, and Sperry combined, and 6% of total revenue. A Fortune survey found that 56% of American companies with personal computers used IBM PCs, compared to Apple's 16%. A 1983 study of corporate customers similarly found that two thirds of large customers standardizing on one computer chose the PC, compared to 9% for Apple. IBM's own documentation described the PC as inferior to competitors' less-expensive products, but the company generally did not compete on price; rather, the study found that they preferred "IBM's hegemony" because of its support. Most companies with mainframes used their PCs with the larger computers, which likely benefited IBM's mainframe sales and discouraged their purchasing non-IBM hardware.
In 1984, IBM introduced the PC/AT, unlike its predecessor the most sophisticated personal computer from any major company. By 1985, the PC family had more than doubled Future Computing's 1986 revenue estimate, with more than 12,000 applications and 4,500 dealers and distributors worldwide. In his obituary that year, The New York Times wrote that Estridge had led the "extraordinarily successful entry of the International Business Machines Corporation into the personal computer field". The Entry Systems Division had 10,000 employees and by itself would have been the world's third-largest computer company behind IBM and DEC, with more revenue than IBM's minicomputer business despite its much later start. IBM was the only major company with significant minicomputer and microcomputer businesses, in part because rivals like DEC and Wang did not adjust to the retail market.
Rumors of "lookalike", compatible computers, created without IBM's approval, began almost immediately after the IBM PC's release. Other manufacturers soon reverse engineered the BIOS to produce their own non-infringing functional copies. Columbia Data Products introduced the first IBM-PC compatible computer in June 1982. In November 1982, Compaq Computer Corporation announced the Compaq Portable, the first portable IBM PC compatible. The first models were shipped in January 1983.