Almost from the moment IBM signed its first contract to use MS-DOS with the original IBM PC, the company began planning to replace the Microsoft OS with something else. Even by the standards of the time, DOS was regarded by many as a “toy” OS. It was a given that IBM would replace it with a more serious system as the PC market grew and developed. The question everyone was asking was “With what?”
After several fits and starts, it turned out that “what” was something eventually christened “OS/2,” the real OS that Big Blue intended to follow in the footsteps of other classic IBM OSs such as VM and MVS. Once IBM had made up its mind about what it wanted to do, no one doubted that OS/2 was destined to be the next article in IBM’s unmatched record of sales triumphs. Sure, the company made occasional missteps such as its Stretch computer of the 1950s and more recently its bungled development of the PC Junior, but to many these were mere sideshows. IBM had designated its next-generation OS for its PCs as “strategic,” and when IBM made a proclamation like that the die was cast. OS/2 was destined for greatness.
It didn’t turn out that way. Instead of being a new chapter in “success,” OS/2 turned out to be a tragicomedy that played out for over a decade and ended in disaster for IBM. Before OS/2, IBM was a company apart from all others that people viewed with a sense of awe that bordered on reverence. The company was famous for its no-layoff policy, feared for its power, and worshipped for its profitability. To be an IBM employee meant one was automatically a member of America’s working elite. IBM CEOs were always promoted from within, their ascension to the Big Blue Throne treated by the American business press as mini-coronations.
After OS/2’s collapse, IBM’s iconic status in the eyes of America was lost. Upstarts such as Compaq, Dell, and Gateway decimated IBM’s PC business. Microsoft and a handful of others carted away the desktop software riches IBM had assumed it would one day inherit. As its mainframe and minicomputer businesses shrank, IBM lost billions in the 1990s, almost $5 billion alone in 1992, which proved to be a mere warm-up for 1993’s $8 billion shortfall.[1] The no-layoff policy was scrapped and 200,000 people eventually lost their jobs. IBM CEO John Akers was summarily tossed off the Big Blue Throne and cigarette salesman Lou Gerstner was installed in his place. And while Gerstner stopped the flow of red ink and made the company mildly profitable again, IBM’s growth during the 1990s was lackluster: a 3 percent compound annual rate. Not very impressive when compared with the company’s 10.6 percent annual rate in the 1980s. To the world at large, IBM had become just another company: still big and powerful, but also often sluggish and stupid.
The fallout from OS/2’s failure also had a serious and, in some cases, fatal impact on many of the companies that had followed IBM’s lead. Before OS/2, IBM had played the role of Pied Piper to the industry’s software publishers. Whenever Big Blue’s dulcet tones sounded, companies dutifully lined up to follow. After OS/2, IBM’s flute was broken. In the words of the founder of a small utilities company that bet big on OS/2 and lost, “OS/2 took a lot of us over the cliff. The product was IBM’s Idiot Piper.”
But in 1985, the Piper’s tones were still clear and seductive. That year, as a member of MicroPro International’s far-flung sales force (I’d been flung to Secaucus, New Jersey, microwave antenna capital of the United States, in the role of support engineer attached to the local office), I was summoned to Marin County, California, to attend the company’s national sales meeting. This event consisted of 3 days of sales briefings, gossip, and some serious wining and dining, and it was normally the highlight of the company’s year. I, however, showed up in a cranky mood and nothing about the next few days of frivolity changed it.
I maintained my despondent demeanor throughout the meeting’s gala finale, a dinner at which special achievement awards were handed out. By the end of the meal my bad humor should have disappeared. I’d won an award for field sales engineer of the year and had been told informally by the powers that were that I had a shot at moving into product management, something I badly wanted.
Unfortunately for my peace of mind, a couple of weeks before the national sales meeting I had attended a regional IBM trade show in New York City,[2] where I’d spent an excruciating day demonstrating MicroPro’s latest word processor, Easy. Easy was the brainchild of then MicroPro President Glen Haney, a nice but fairly clueless fellow. For some reason, Haney had gotten it into his head that the most important thing MicroPro could do was compete with PFS Write from Software Publishing Corporation (SPC). Founded by Fred Gibbons, SPC had made its mark in the industry with PFS File, an easy-to-use database program for the Apple II, then the PC. The company had subsequently spun off several new PFS brand products, including Write, and had done fairly well with them. Haney was sure MicroPro was losing future market share to Fred Gibbons and was determined to do something about it. Hence Easy.
When it was introduced, Easy had two main claims to fame. One was that it was, er, easy to use, at least by the standards of the time. As with all such products, much of this ease of use was achieved by stripping out a good portion of WordStar’s feature set. The product thus had no appeal to WordStar or WordStar 2000 users, who were used to paying more for a WordStar upgrade than the full retail price of Easy. Like all the other “lite” word processors, Easy never amounted to much and eventually faded away.