Classic Systems Emulated: Windows 3.1 And The PC Price War Of 1992-1995
The PC Marketplace Equivalent Of World War 2 Begins
Soon, the PC price
equivalent of World War 2 began. The PC price war of the early/middle
90's had a profound effect on the industry and users alike. This was the
event that turned PC's into the appliance that they are today.
Unsurprisingly though, this wasn't the first time that the industry
encountered a intense price war,
Context
Back in 1983, Commodore started a price war in the home market. The competitors that were big in the home market soon faced intense competition from Jack Trameil. This included Atari with there Atari 800 microcomputer and Texas Instruments with there TI-99 Home Computer. By the end of 1983, both Atari and TI exited from the home computer market. This price war didn't really effect Apple as they had a small presence in the home market. Apple presence was much bigger in the educational market, which was unaffected by this price war. IBM wasn't really affected as they weren't really a thing in the home market either. There presence was much stronger in the corporate market.
As time went by, the 8-bit micros went bye-bye as the 16-bit IBM compatibles eventually became common with the home setting with Tandy taking a early lead with there 1000 series of PC's. By the end of the 80's, one could buy a very feature-complete XT-compatible PC for less than a thousand dollars. The AT-class computers became more affordable, even though they were still quite expensive computers that weren't a fixture in the home setting. Apple and IBM became markets leaders and dominated the marketplace. That would be soon to change though.
At this point, most processors used in PC's were made by Intel. However, more companies started to make Intel-compatible processors that were just as fast (if not faster) than Intel's offerings, but also cheaper in price. As such, many manufacturers started to sell cheaper PC's by substituting Intel processors for those made by AMD and Cyrix.
AMD has made processor before, usually licensed from Intel. However, AMD started to make there own variations. Intel tried to copyright the "86" naming scheme (286,386,486). However, there request was rejected by the US Copyright Office as numbers cannot be copyrighted. This is why the Intel 586 is called the Pentium instead of the 586.
Context
Back in 1983, Commodore started a price war in the home market. The competitors that were big in the home market soon faced intense competition from Jack Trameil. This included Atari with there Atari 800 microcomputer and Texas Instruments with there TI-99 Home Computer. By the end of 1983, both Atari and TI exited from the home computer market. This price war didn't really effect Apple as they had a small presence in the home market. Apple presence was much bigger in the educational market, which was unaffected by this price war. IBM wasn't really affected as they weren't really a thing in the home market either. There presence was much stronger in the corporate market.
As time went by, the 8-bit micros went bye-bye as the 16-bit IBM compatibles eventually became common with the home setting with Tandy taking a early lead with there 1000 series of PC's. By the end of the 80's, one could buy a very feature-complete XT-compatible PC for less than a thousand dollars. The AT-class computers became more affordable, even though they were still quite expensive computers that weren't a fixture in the home setting. Apple and IBM became markets leaders and dominated the marketplace. That would be soon to change though.
At this point, most processors used in PC's were made by Intel. However, more companies started to make Intel-compatible processors that were just as fast (if not faster) than Intel's offerings, but also cheaper in price. As such, many manufacturers started to sell cheaper PC's by substituting Intel processors for those made by AMD and Cyrix.
AMD has made processor before, usually licensed from Intel. However, AMD started to make there own variations. Intel tried to copyright the "86" naming scheme (286,386,486). However, there request was rejected by the US Copyright Office as numbers cannot be copyrighted. This is why the Intel 586 is called the Pentium instead of the 586.
Compaq ProLinera 4/25s. Image from computinghistory.org.uk
In 1992, IBM and
Apple were neck to neck in sales. This was the year that the PC price
war started. However, it wasn't with these two companies though. With
the price of processors and computer components in general falling,
Compaq slashed the price of there machines to undercut there
competitors. Compaq did this with the ProLinea system. This system went
for half of what a typical desktop system went for. One could buy a PC
with a 25MHz Intel 386, 2MB's of RAM, and 40MB hard disk for $899 (less
than $1,200 including monitor). The 486 versions went for less than
$2,000. That was only the start. IBM slashed the price of there systems
to remain competitive. Soon companies like Gateway 2000, Dell, NEC, HP,
AST, Acer, Tandy, and Packard Bell were slashing the price of there
machines to even lower prices.
The price war would continue into 1993. IBM created the Ambra computer company to sell there own line of home PC's through mail order. IBM also launched the Aptiva line of PC's in 1994 and phased out there PS/Valuepoint and PS/1 line. Companies that largely ignored the home market, like IBM and Apple, would face fierce competition. These companies, often reluctant to slash the price of there computers, were now forced to in order to remain competitive and out of shear necessity. Whenever Compaq slashed the price of there PC's, everybody in the industry would follow. Starting in 1994 and continuing for the rest of the decade, Compaq would take the lead. IBM would be second through most of the 90's. Apple fell off the radar for a huge chunk of that decade.
The price war would continue into 1993. IBM created the Ambra computer company to sell there own line of home PC's through mail order. IBM also launched the Aptiva line of PC's in 1994 and phased out there PS/Valuepoint and PS/1 line. Companies that largely ignored the home market, like IBM and Apple, would face fierce competition. These companies, often reluctant to slash the price of there computers, were now forced to in order to remain competitive and out of shear necessity. Whenever Compaq slashed the price of there PC's, everybody in the industry would follow. Starting in 1994 and continuing for the rest of the decade, Compaq would take the lead. IBM would be second through most of the 90's. Apple fell off the radar for a huge chunk of that decade.
There would be many
victims in this price war. IBM was one of the biggest casualties in
this price war. In 1993, Big Blue lost $8-billion. In 2005, IBM exited
from the PC market and sold it's PC Division to Lenovo. While Compaq did
very well for the rest of the decade, there offerings from the middle
to late 90's were regard as poor quality. Due to poor sales at the start
of the 2000's, Compaq merged with HP. Tandy sold there PC division to
AST. AST themselves were later acquired by Acer which merged with
Gateway 2000. Acer eventually killed both AST and Gateway. Packard Bell
became a runaway success through the 90's. However, there machines had
the worst reputation as being of especially poor quality. Packard Bell
merged with NEC in 1998. Due to its poor reputation, Packard Bell exited
from the North American market by the end of 90's. HP, Acer, and Dell
were the winners of the price war simply because they survived it.
Surprisingly though, as bad as IBM did, it didn't suffer the worst in
the price war. IBM had a mainframe computers to fall back on. IBM held
the number two spot in the PC market through most of the 90's as well.
Big Blue also had there highly acclaimed Thinkpad line of notebook PC's.
There was a company that suffered worse than IBM. This company survived
and is actually doing very great today and has many awesome products in
there category. However, the Apple of 2019/2020 isn't the same company
of 1993/1994. Apple Pre-Jobs would go through its corporate equivalent
of a "baptism of fire".
Apple
The price war wasn't that kind to Apple. Even though many (myself included) gawk at the high price of Apple offerings, there products are truly much more affordable and accessible today. This hasn't always been the case though. One wonders why Apple is even included in this section as the history of the PC master race had been very "PC" and "DOS/Windows" centric up to this point. The reason was that despite there different architecture at the time, Apple was a very active participants in the PC marketplace. They have affected the industry as much as Microsoft or IBM did. In fact, many of the corporate decision that Big Blue and the Redmond Giant made were affected by Apple's decision. Also, Apple was greatly affected in this price war.
When the Macintosh was first introduced in 1984, the new computer had a price tag of $2,400. Steve Jobs was livid about this. He and many of the Macintosh developers felt betrayed by the high price of the machine, which was envisioned as being the computer for the every-man. Andy Hertzfeld, one of the main Macintosh developers, details this on his site Apple Folklore. However, there was nothing that Jobs could do. The main justification for the high price was to recoup development and advertising cost. In time it was thought that the price of the Mac would fall and there would be affordable models introduced.
Declining sells of the Macintosh and a turf war with John Sculley results in Jobs being ousted from Apple in 1985, Jean-Louis Gassee took Job's position. He did not share Job's idea of an appliance for all. To highlight this, Jean had a slogan: "Fifty Five or Die". Basically, Apple had to charge at least a 55% profit margin on there products in order to maintain profitability. Also, Apple wouldn't release low-end products for the masses. When there was a project to create a $1,000 Mac code-named "Drama", he killed it.
Jean-Louis Gassee was eventually forced out of Apple in 1990 for a variety of reasons (a lot of them driven by his insistence of high-profit margins, which resulted in low sales and a very mediocre quarter in 1988). After that, Apple started to cater to the low-end of the market with there LC series. Even though the computer was "cheap" by Apple's standards, it's $3,000 price tag was beyond what many home users were willing to pay. They were criticized for there high prices. Even IBM's home offerings were much more affordable than what Apple was charging.
To put it into perspective, the original Mac LC had a Motorola 68020 CPU in it. This processor would have been comparable to a Intel 286. By 1991, one could buy a AT-286 PC for around $1,500. That's still a lot of money, but far cheaper than what Apple was charging for there similarly configured PC.
For a ling time, Apple could justify the expensive prices of there computers as often, it was perceived that there were things that you could only do on a Mac, which was largely true up to a point. However, by the time the PC price war occurred, this wasn't the case. The processing power of 486 and Pentium systems made the PC into a multimedia powerhouse. One could play music and videos on them. PhotoShop was ported to Windows, so photo-editing wasn't restricted to the Mac either. Neither was desktop publishing for that matter, which was the Mac's forte. Windows 3.1 had True-type font support. Video editing could be accomplished on PC's now.
In 1994, one would question why they needed to spend $2,000/$2,500 for a Mac when they can spend $900 for a Packard Bell, Compaq or Dell that could do everything that a Mac could do. Despite this, Apple could still count on there committed users as long as Windows 3.1 was around. Windows didn't have the best or reputations when it came to stability. However, Microsoft's release of Windows 95 was like D-Day for Apple (from the German's perspective). Apple would eventually bounce back in time. However, it would be a baptism of fire through a harsh ordeal. Apple would have to find a way to survive with what they had. They didn't have a mainframe computer division or highly praised Thinkpads to fall back on like IBM did.
The price war wasn't that kind to Apple. Even though many (myself included) gawk at the high price of Apple offerings, there products are truly much more affordable and accessible today. This hasn't always been the case though. One wonders why Apple is even included in this section as the history of the PC master race had been very "PC" and "DOS/Windows" centric up to this point. The reason was that despite there different architecture at the time, Apple was a very active participants in the PC marketplace. They have affected the industry as much as Microsoft or IBM did. In fact, many of the corporate decision that Big Blue and the Redmond Giant made were affected by Apple's decision. Also, Apple was greatly affected in this price war.
When the Macintosh was first introduced in 1984, the new computer had a price tag of $2,400. Steve Jobs was livid about this. He and many of the Macintosh developers felt betrayed by the high price of the machine, which was envisioned as being the computer for the every-man. Andy Hertzfeld, one of the main Macintosh developers, details this on his site Apple Folklore. However, there was nothing that Jobs could do. The main justification for the high price was to recoup development and advertising cost. In time it was thought that the price of the Mac would fall and there would be affordable models introduced.
Declining sells of the Macintosh and a turf war with John Sculley results in Jobs being ousted from Apple in 1985, Jean-Louis Gassee took Job's position. He did not share Job's idea of an appliance for all. To highlight this, Jean had a slogan: "Fifty Five or Die". Basically, Apple had to charge at least a 55% profit margin on there products in order to maintain profitability. Also, Apple wouldn't release low-end products for the masses. When there was a project to create a $1,000 Mac code-named "Drama", he killed it.
Jean-Louis Gassee was eventually forced out of Apple in 1990 for a variety of reasons (a lot of them driven by his insistence of high-profit margins, which resulted in low sales and a very mediocre quarter in 1988). After that, Apple started to cater to the low-end of the market with there LC series. Even though the computer was "cheap" by Apple's standards, it's $3,000 price tag was beyond what many home users were willing to pay. They were criticized for there high prices. Even IBM's home offerings were much more affordable than what Apple was charging.
To put it into perspective, the original Mac LC had a Motorola 68020 CPU in it. This processor would have been comparable to a Intel 286. By 1991, one could buy a AT-286 PC for around $1,500. That's still a lot of money, but far cheaper than what Apple was charging for there similarly configured PC.
For a ling time, Apple could justify the expensive prices of there computers as often, it was perceived that there were things that you could only do on a Mac, which was largely true up to a point. However, by the time the PC price war occurred, this wasn't the case. The processing power of 486 and Pentium systems made the PC into a multimedia powerhouse. One could play music and videos on them. PhotoShop was ported to Windows, so photo-editing wasn't restricted to the Mac either. Neither was desktop publishing for that matter, which was the Mac's forte. Windows 3.1 had True-type font support. Video editing could be accomplished on PC's now.
In 1994, one would question why they needed to spend $2,000/$2,500 for a Mac when they can spend $900 for a Packard Bell, Compaq or Dell that could do everything that a Mac could do. Despite this, Apple could still count on there committed users as long as Windows 3.1 was around. Windows didn't have the best or reputations when it came to stability. However, Microsoft's release of Windows 95 was like D-Day for Apple (from the German's perspective). Apple would eventually bounce back in time. However, it would be a baptism of fire through a harsh ordeal. Apple would have to find a way to survive with what they had. They didn't have a mainframe computer division or highly praised Thinkpads to fall back on like IBM did.
Articles Of Interest
Wikipedia : IBM - https://en.wikipedia.org/wiki/IBM
NYTImes : PERSONAL COMPUTERS; The Computer Price War and Microprocessors - https://www.nytimes.com/1992/07/14/science/personal-computers-the-computer-price-war-and-microproces...
AP : IBM-Apple Neck and Neck in 1992 Computer Sales - https://apnews.com/b6c5e2fe52d0ab22cbd8edccb37b6d6c
Chicago Tribune : NO SLOWDOWN IN PC PRICE WAR - https://www.chicagotribune.com/news/ct-xpm-1993-03-14-9303191808-story.html
Washington Post : COMPUTER GIANTS DRAWN INTO PRICE WARS - https://www.washingtonpost.com/archive/business/1993/09/04/computer-giants-drawn-into-price-wars/0f4...
Washington Post : COMPAQ TAKES LEAD IN WORLD PC MARKET - https://www.washingtonpost.com/archive/business/1995/01/25/compaq-takes-lead-in-world-pc-market/ed96...
Los Angeles Times : $8-Billion Loss Posted by IBM; More Layoffs Set - https://www.latimes.com/archives/la-xpm-1993-07-28-mn-17823-story.html
Wikipedia : Compaq :Market Ascension - https://en.wikipedia.org/wiki/Compaq#Market_ascension
Wikipedia : Ambra Computer Corporation - https://en.wikipedia.org/wiki/AMBRA_Computer_Corporation
Wikipedia : IBM Aptiva - https://en.wikipedia.org/wiki/IBM_Aptiva
Tech Insider :Worldwide PC Market Grew 24 Percent in 1995 - https://tech-insider.org/statistics/research/1996/0126.html
Wikipedia : Market share of personal computer vendors - https://en.wikipedia.org/wiki/Market_share_of_personal_computer_vendors
Apple
Wikipedia : Jean-Louis Gassée - https://en.wikipedia.org/wiki/Jean-Louis_Gass%C3%A9e
Wikipedia : Macintosh LC family - https://en.wikipedia.org/wiki/Macintosh_LC_family
The Mercury News : 1988: John Sculley has survived 5 years at Apple — so what’s next? - https://www.mercurynews.com/2014/08/29/1988-john-sculley-has-survived-5-years-at-apple-so-whats-next...
Fortune : Apple Computer’s Risky Revolution (Fortune, 1989) - https://fortune.com/1989/05/08/apple-computers-risky-revolution/
Landsnail : Part 1 - Jean-Louis Gassée - https://www.landsnail.com/apple/local/design/corporate.html
NYTImes : PERSONAL COMPUTERS; The Computer Price War and Microprocessors - https://www.nytimes.com/1992/07/14/science/personal-computers-the-computer-price-war-and-microproces...
AP : IBM-Apple Neck and Neck in 1992 Computer Sales - https://apnews.com/b6c5e2fe52d0ab22cbd8edccb37b6d6c
Chicago Tribune : NO SLOWDOWN IN PC PRICE WAR - https://www.chicagotribune.com/news/ct-xpm-1993-03-14-9303191808-story.html
Washington Post : COMPUTER GIANTS DRAWN INTO PRICE WARS - https://www.washingtonpost.com/archive/business/1993/09/04/computer-giants-drawn-into-price-wars/0f4...
Washington Post : COMPAQ TAKES LEAD IN WORLD PC MARKET - https://www.washingtonpost.com/archive/business/1995/01/25/compaq-takes-lead-in-world-pc-market/ed96...
Los Angeles Times : $8-Billion Loss Posted by IBM; More Layoffs Set - https://www.latimes.com/archives/la-xpm-1993-07-28-mn-17823-story.html
Wikipedia : Compaq :Market Ascension - https://en.wikipedia.org/wiki/Compaq#Market_ascension
Wikipedia : Ambra Computer Corporation - https://en.wikipedia.org/wiki/AMBRA_Computer_Corporation
Wikipedia : IBM Aptiva - https://en.wikipedia.org/wiki/IBM_Aptiva
Tech Insider :Worldwide PC Market Grew 24 Percent in 1995 - https://tech-insider.org/statistics/research/1996/0126.html
Wikipedia : Market share of personal computer vendors - https://en.wikipedia.org/wiki/Market_share_of_personal_computer_vendors
Apple
Wikipedia : Jean-Louis Gassée - https://en.wikipedia.org/wiki/Jean-Louis_Gass%C3%A9e
Wikipedia : Macintosh LC family - https://en.wikipedia.org/wiki/Macintosh_LC_family
The Mercury News : 1988: John Sculley has survived 5 years at Apple — so what’s next? - https://www.mercurynews.com/2014/08/29/1988-john-sculley-has-survived-5-years-at-apple-so-whats-next...
Fortune : Apple Computer’s Risky Revolution (Fortune, 1989) - https://fortune.com/1989/05/08/apple-computers-risky-revolution/
Landsnail : Part 1 - Jean-Louis Gassée - https://www.landsnail.com/apple/local/design/corporate.html
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