Who Invented the Computer? Thomas Watson Jr. and IBM

Who Invented the Computer? This is the seventeenth installment in our ongoing series.

By 1956, the U.S. industrial sector had fully converted back to peace-time production. Business boomed, with factories churning out every conceivable consumer good imaginable. Demand for goods shot up as workers were making more money and more babies — since 1946, the population had added more than 4.25 million individuals annually.

As the economy sped along, it also became more complex. Governments and businesses were generating ever increasing amounts of data and finding it difficult to process. For more than 70 years, companies had used electromechanical accounting machines and punch cards to track inventories, process bills, maintain their books and calculate payrolls.

The machines did the job, but the process was laborious and slow, as punch cards were created manually and then carefully collated and tracked through a time-consuming multi-step process. Further slowing down data processing efforts was the need to hand-program plug boards inside the machines to perform specific tasks.

Computers were available, and able to process and store data much faster than accounting machines, but were also too expensive for all but the largest organizations. A powerful computer could cost millions of dollars. Even renting a midrange stored program computer was prohibitively expensive, approximately $10,000 a month.

"Solid State in '58" (Ointment, Meet Flies)

IBM at this time was the leader in business accounting machines. They held 80 percent of the global market, but competition was starting to cut into their profit margins. In an effort to fend off competitors, IBM designed a worldwide accounting machine. It was deemed too expensive, however, and never built.

Thomas J. Watson Jr., the son of IBM founder Thomas Watson Sr., had been president of the company since 1952. During Watson Jr.'s tenure, to the surprise of everyone, the company had hired a whole bunch of engineers. Though few might have predicted it at the time, this recruiting strategy was about to pay off in a big way.

Although existing accounting machines operated with vacuum tubes, Watson was convinced that transistors were the future. In 1956, he wrote a letter to IBM engineers ordering that "henceforth, all core memory for computer systems under development must employ transistors."

Watson wanted a stored-program computer to replace existing punch cards and accounting machines. Marketing cautioned that such a change would be a huge risk since IBM currently earned enormous profits from their accounting machine customers.

Because computers were a new business technology, customers would have to be trained on their use. Undeterred, Watson encouraged his engineers with the slogan, "Solid State in '58." The design team quickly got to work. They dubbed their design the "1401" and set four important goals for the machine:

1) As a stored program computer, it would have three components: a CPU, a high-quality printer, and a card reader for easy input and output.

2) It would enable an easy transition for customers from card readers to computers.

3) It would have a $2,500 sale price — the same as existing punch card equipment, but previously unheard of for a computer.

4) A working model would be revealed in a closed-circuit TV broadcast on Oct. 5, 1959.

Pay No Attention to The Man Behind the Curtain

A working prototype was, in fact, completed on schedule. It consisted of 500,000 parts and weighed in excess of three tons. An audience of 50,000 viewers tuned in to watch the 1401 Model Number 1 in operation, and all were impressed with its speed and ease of operation.

Unbeknownst to the viewers, however, what they saw that day was not the 1401. IBM had decided the risk of disassembling, transporting, and reassembling their only working prototype at a TV studio was too great.

To hit the broadcast target, they built a nonfunctional mock-up consisting of an empty metal box with battery operated lights. To complete the illusion, engineers were positioned out of sight, rapidly spinning the tape drives round and round by hand. In an almost literal sense, those fellows were like Oz the Great and Terrible, running a smoke-and-lights show from behind a curtain.

Shortly thereafter, IBM unveiled Model No. 2 of the 1401 at a computer fair in Hanover, Germany. As the fair ended, the company loaded Model 2 onto a truck setting off on a cross country exhibition tour of Europe. The tour was a huge success; within a month, IBM had 3,000 orders for the 1401 — more than all the computers in the world at that time.

Olympic Star and Workplace Workhorse

IBM's large customers were quick to grasp the benefit of the 1401 and eagerly began modernizing their data systems, replacing punch cards with magnetic tape. To get smaller customers on board IBM created newsreels to explain the 1401 and its benefits. The shockingly low price tag was also a great selling point at $2,500 — as intended, the same price as existing punch card systems.

The 1401 really took off in 1964 as the world watched an updated model compute scores at the Winter Olympics in Austria. This added exposure resulted in a flood of sales and lease agreements, making the 1401 the first computer to sell more than 10,000 units. By 1965, half of all the computers on earth were 1401 models.

The impact of the 1401 on computing and business is immeasurable. It positively affected every industry on the planet, making data recording and reporting easier and less expensive and, in the process, brought computers into the mainstream.

Although IBM officially discontinued the 1401 in 1971, it continued to live on as individuals and companies made in-house modifications to meet their needs. A fully restored 1401 is on display at the Computer History Museum (appropriately located at 1401 North Shoreline Blvd., Mountain View, Cal.) The last known privately owned and operating 1401 was pinpointed in 1995, located at a Connecticut-based home business, where it was running a billing application.