1987 saw major developments in the personal computing industry with new products from Apple, IBM, and other companies. Apple released the Macintosh SE and Macintosh II, while IBM introduced their new PS/2 line of computers powered by Intel chips. Meanwhile, Microsoft expanded its influence by developing the OS/2 operating system for IBM and retaining dominance in software with products like Word and Excel. The year also saw growth in the workstation and supercomputer markets with new products and reduced prices.

1. 1987: Computers
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1987: Computers
William Gates, the founder of the software giant Microsoft Corporation, had long
predicted that 1987 would be a 'year of great confusion' in U.S. personal computing. In
some ways he was correct: the year saw a dizzying array of new entries by major
computer manufacturers. At the same time, 1987 saw the further consolidation of the
world of personal computers into two camps: IBM and Apple. Both companies
strengthened their hold over the personal computing world with new products.
Apple.
Apple Computer, Inc. made a strong showing with two new machines: the Macintosh SE
and the Macintosh II. The SE was an improvement on the company's Macintosh Plus, a
compact, graphics-oriented computer based on the Motorola Corporation's 16-bit 68000
microprocessor (capable of processing 16 bits of data at a time) and popular in desktop
publishing and other business applications. The Macintosh II had a new 32-bit Motorola
68020 chip, giving it power and speed to match its ease of use. Both machines introduced
the first expansion slots for the Macintosh line, meaning that they could be added to in a
relatively inexpensive fashion. One of the first add-in 'cards' to be announced allowed
either machine to use programs written for the IBM PC. Also, each machine could
support large monitors; in the past the restriction to a 9-inch screen had put off potential
Macintosh users.
IBM.
The International Business Machines Corporation introduced a new line of computers
under the rubric of Personal Systems/2, or PS/2. Powered by microprocessors ranging
from the Intel Corporation's original 8086 chip to the more recent — and powerful —
Intel 80386 (a 32-bit chip), the line provided integrated computing options with a
stronger graphics capability than ever before. The broad array of options presented by the
handful of new computers from IBM caused some confusion among institutional
hardware purchasers, many of whom took an initial wait-and-see attitude about buying
into the new line. Many were waiting to see the new operating system that was to be used
with some of the machines (the models 50, 60, and 80 — the models 25 and 30 at the low
end of the line cannot run the new system). This operating system, called OS/2, would
unlock the power of the advanced 80286 and 80386 microprocessor chips. Introduction
of the new operating system was scheduled for 1988, which meant that the machines
would in the meantime be limited to running the five-year-old MS-DOS operating system

2. first developed for the original IBM PC, but the expected date of release was moved up to
December 1987. The PS/2 machines were standardized on the 3.5-inch diskette, instead
of the traditional 5.25-inch.
Upon the introduction of the PS/2 line and the renewed support for a graphics-oriented
software 'interface' between user and computer, industry wags began to joke that IBM
now stood for 'I Built a Macintosh.' Indeed much of the power behind the Intel 80286 and
80386 chips was being harnessed to produce a graphics interface similar to that of the
user-friendly Macintosh. While the Macintosh's Motorola 68000 chip was designed with
graphics in mind, the Intel series was not, and so previous attempts to give the original
8086-based PC line a graphics interface were hampered by the slow performance of those
machines under the heavy software burden that the interface required. The power of the
new chips made graphics more attainable, though at a price.
Clone Market.
IBM had been losing ground with the computing standard it had developed: outside
makers of look-alike 'clone' machines had come to dominate the PC industry and were far
outselling the original. IBM threw clone makers into a panic with the introduction of its
PC/2 line of powerful personal computers, which would be more difficult to copy than
the 'open-architecture' IBM PC. Some clone makers, like the Compaq Computer
Corporation, continued to make improvements on their lines of computers — Compaq
had introduced the first PC based on Intel's 80386 chip — and declared, at least for the
present, that they would not follow IBM into the new PS/2 world. Compaq, however, said
that it would make the OS/2 operating system available for its computers based on the
80286 and 80386 chips beginning in 1988.
SoftwareMogul.
Rather than the year of great confusion, one might best call 1987 the year of William
Gates. The young (born in 1955) millionaire software developer, who had produced the
original operating system for the IBM PC and compatibles, expanded his influence in the
world of personal computing. Gates retained his hold on the IBM camp by being retained
by IBM to develop the massive OS/2 operating system for the new PS/2 line. In addition,
Gates's company, Microsoft, had the leading word-processing (Word) and spreadsheet
(Excel) programs for Apple's Macintosh, and Gates played a role in IBM's decision to
follow the Macintosh's easy-to-use graphics interface in its new operating system. In
October, Microsoft cemented the links between the competing machines when it
introduced an IBM version of its Excel spreadsheet. The product was meant to challenge
the near-total dominance of the IBM spreadsheet market by the Lotus Development
Corporation's 1-2-3; unlike 1-2-3, Excel took advantage of the graphics abilities and
potential computing power inherent in the new generation of PS/2 computers.
Meanwhile, Lotus announced plans to develop a mainframe version of 1-2-3 that would
allow compatible computing along microcomputer-to-mainframe networks. Lotus also
unveiled a new type of software, called Agenda, which can be used by business
executives to organize their many notes and memos into useful categories. Agenda was
not scheduled to be available to consumers until the spring of 1988.

3. Larger Computers.
It was also a year of expansion in the previously narrow market of workstations. Until
recently used by few outside the field of engineering, these powerful, large-screen
computing tools began to come within reach of more engineers and designers, along with
other buyers, as new products were introduced and some prices were cut. This
traditionally expensive market — machines could cost as much as $30,000 or more —
has long been dominated by Sun Microsystems Inc. and Apollo Computer Inc. An
example of this year's developments was Sun's reduction in April of the price of its entry-
level workstation from $7,000 to less than $5,000. IBM's RT Personal Computer
workstation saw improvements, including the first use of a one-megabit memory chip
(capable of storing 1 million pieces of data) in a desktop machine. Industry analysts
suggested that Apple's new Macintosh II was powerful enough to function as a
workstation.
Meanwhile, at the apex of computing, there was a falling-out at supercomputer maker
Cray Research, Inc. In September, Steve S. Chen, one of the Minneapolis-based
company's chief computer designers, walked out after Cray canceled its expensive
development of a planned line of parallel-processing supercomputers. (Parallel-
processing computers use many microprocessors instead of just one.) The field of parallel
processing got a boost from other new commercial applications, as more than a dozen
companies had machines on the market. Among other supercomputer developments, a
new U.S. company, ETA Systems Inc. of St. Paul, Minnesota, introduced its first entry
into the supercomputer market: the ETA-10, theoretically capable of doing 10 billion
calculations a second. The company, formed in 1984, is largely owned by Control Data
Corporation. A new Japanese supercomputer also entered the U.S. market, as the NEC
Corporation brought three models into the United States through a joint venture with
Minneapolis-based Honeywell, Inc.
IBM-Fujitsu Fight Settled.
In mid-September an American Arbitration Association panel settled a bitter dispute
between IBM and Fujitsu Ltd. of Japan that had originated in the early 1980's. IBM had
accused Fujitsu of having 'systematically and pervasively' copied IBM operating systems
for use in its IBM-compatible mainframe computers. The arbitration panel, whose
intervention in the dispute had been requested by both companies, declined to bar Fujitsu
from using the IBM software. Fujitsu was required to pay IBM fees (to be determined
later but expected to run into hundreds of millions of dollars) for the programs and was
allowed to establish a 'secure facility' where for five to ten years it could review, under
strict supervision, IBM technical data. A similar dispute involving IBM and Hitachi Ltd.
of Japan had been settled in 1986 with a secret agreement between the two companies.
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