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1980s – Introduction of Macintosh in 1984:
The graphical user interface or GUI (which is sometimes called WIMP for Windows, Icons, Mouse and Pull-down menus), had been in the process of developing since 1960s by various groups and by 1981, Xerox had used it for its Xerox Star computer. But, Xerox priced it too high and failed to provide critical hardware and support. Xerox never took the personal computer seriously and made very little marketing effort. As a result, Xerox perhaps missed one great opportunity (Smith and Alexander, 1988).
In December 1979, Steve Jobs was invited to visit Xerox Palo Alto Research Center (PARC) in Silicon Valley where Xerox was developing the technology for “the office of the future” where applications to graphical user interface was displayed. Since then, Jobs had in mind that the company’s next computer had to look like the machine he had seen at Xerox PARC. At first, he started Lisa project with this concept in mind. But, Lisa project was a failure; and Apple put all its effort into the Macintosh project that had started in 1979 (Lammers, 1986). In January 1984, Apple introduced the Macintosh with huge promotional efforts that included a legendary Super Bowl commercial. Priced at $ 2,500, it received high praise for its design, aesthetic quality and user-friendliness. Its elegant operating system so far was a great achievement. It displayed a combination of aesthetic beauty and practical engineering that was extremely rare to find (Guterl, 1984). But, after the initial enthusiasm, the sales were disappointing. The problem was the lack of sufficient number of software and other add-ons. This is because of Apple’s policy to keep Macintosh’s architecture closed. This closed architecture meant that hardware and software developers would find it difficult to create their own Macintosh add-ons and software without the close cooperation with Apple. A lack of third-party support created a problem for Macintosh, and sales never peaked up (Wallace and Erickson, 1992).
In order to reposition itself, Apple invited several of the leading software firms to develop software. But, a lack of sufficient level of demand for Mac software (which had then 10 percent market share of the personal computer market) caused this software developers to be discouraged. The only major firm which did accept to write software for Mac at least for a while was Microsoft. Microsoft, since 1981, had been somewhat involved in the Macintosh project, developing some minor parts of the operating system. By taking the offer from Apple to write programs for them, Microsoft found an environment much insulated from the highly competitive IBM-compatible market where it was facing intense competition for its application software against such strong competitors as Lotus in spreadsheet applications and Micro Pro in word processing. Later, it would be able to convert the same applications, so that they would run on the IBM-compatible PC. By 1987, Microsoft, in fact, was deriving half of its revenue from its Macintosh software (Veit, 1993). More importantly, working on the Macintosh gave Microsoft firsthand knowledge of the technology of graphical user interface on which it based its new Windows operating system for the IBM PC, to which we turn next.
1980s – Launching of Microsoft’s Windows:
Microsoft started its own graphical user interface (GUI) project in September 1981, shortly after Bill Gates had visited Steve Jobs at Apple and seen the prototype of Macintosh computer under development. Initially, it was estimated that it would take six programmer years to develop the system. But, when version 1.0 of Windows was released in October 1985 – it was estimated that the program containing 10,000 instructions had taken eighty programmer years to complete (Wallace and Erickson, 1992).
The Microsoft Windows was heavily based on the Macintosh user interface. On 22 November 1985, shortly after Windows was launched, Microsoft signed a licensing agreement to copy the visual characteristics of the Macintosh, thereby avoiding legal trouble for version 1.
However, although competitively priced at $ 99, sales of Windows 1.0 were sluggish at first because it was unbearably slow. Although a million copies were sold, most users found the system to be little more than a gimmick and the vast majority of users stayed with MS-DOS. Part of the reason was that the microprocessor at that time – Intel 80286 – was not fast enough to support GUI technology. Only in the late 1980s, when the next generation of microprocessors – the Intel 386 and 486 became available; that the GUI became much more supportable. At that time, Microsoft introduced its Windows 2.0. Windows 2.0 popularity also provided Microsoft with the opportunity to bundle its Excel spreadsheet software and its world processing software, Word. With it allowed their market share to increase considerably and eventually become the market leader in their respective applications.
In April 1987, IBM and Microsoft announced their joint intention to develop a new operating system called OS/2. On 17 March 1988, Apple filed a lawsuit alleging that Microsoft’s Windows 2.0 infringed Apple’s registered audio visual copyrights protecting the Macintosh interface. Apple argued that Microsoft’s original 1985 agreement with Apple had covered only version 1 of Windows but not version 2 (Ichbiah and Kneeper, 1991).
The lawsuit was eventually dismissed after three years. Meanwhile, Microsoft was achieving one of the most dramatic growths of any business in the 20 century. Most of the growth was achieved in the applications software. However, significant revenues were also derived from its Windows 2.0 operating system (Ichbiah and Kneeper, 1991).
Success of Windows 2.0 made Microsoft to lose interest in OS/2. When OS/2 was finally launched in early 1988, Microsoft failed to provide adequate software support for it. Because of this, the first version of OS/2 never took off. To the annoyance of IBM, Microsoft continued its Windows project intensely while ignoring OS/2 project. In fact, in 1990, Microsoft introduced a new Windows version – version 3.0.