Every computer, however, had to have an operating system.
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Programming languages were sold mainly to software developers. That was a decent business, but nothing like the one for operating systems. Microsoft had started out making the Basic programming language for personal computers. And without an operating system, the microchip just sits there, paralyzed. While the microchip is the brain of the computer, allowing it to think, the operating system is the rest of the body, moving into action. Just like Intel, Microsoft had been handed the keys to a kingdom when IBM had granted it rights to supply IBM and all the IBM-compatibles with the operating system software that controls every other program. His equal in paranoia was Bill Gates, who controlled the other most important part of the personal computer: the operating system. No one was going to overtake Intel, at least not as long as a pulse beat in Grove's body. Whenever there was the slightest hint that someone might catch up, the Intel engineers would find a whip lashed across their backs by a wiry, bug-eyed Hungarian immigrant named Andy Grove, who was CEO and commander of the ship.
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With so much money pouring in from the hundreds of PC makers buying its chips, Intel could funnel the profits right back into the labs to come up with even faster chips. The competitors, which included chip makers such as Advanced Micro Devices and Cyrix Corporation, were never able to catch up, though, because Intel controlled the standard. Intel eventually began churning out a line of microprocessors based on the 8086 design, or x86, which competitors hoping to carve a slice out of the widening PC pie worked to imitate. By doing so, Intel created what is known in the industry as a "standard." Since every company but Apple was using Intel chips, technical specifications for all new computers would have to be designed around the Intel standard. Not only did it supply chips to IBM, it supplied them to all the manufacturers of IBM-compatibles. Intel didn't have just one customer, it had hundreds. who had invented the microchip in 1971, making the PC revolution possible. In fact, it had been a young Intel engineer named Marcian E. Intel's whole life, on the other hand, revolved around microchips. But Apple, which soon after that first design by Woz began using Motorola chips exclusively, became Motorola's only sizable customer for personal computer microprocessors. Motorola was a big company in its own right, a giant in cellular phones and pagers.
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The decision to go with the Motorola technology was fateful, because Intel would gain the license from IBM to make the microchips that went into almost every IBM-compatible computer. Without one, the PC would sit useless on the desk. Containing thousands of microscopic circuits etched onto tiny silicon wafers, the microchip is the very brain of the personal computer, controlling everything from the machine's processing speed to its ability to display images on a screen. But it is critically important to a personal computer. Also called a microchip, it is a tiny little piece of equipment no larger than a silver dollar. The microprocessor itself looks insignificant. The MOS Technology chip, made by a Costa Mesa, California, company, cost only $25. Intel's 8080 chip was selling for $179 at the time, and Motorola's 6800 fetched $175. When "Woz," a prank-loving 26-year-old who loved to tinker with machines, designed the very first Apple computer, he decided to use a microprocessor called the MOS Technology 6502, based on the design of Motorola Inc.'s 6800, essentially because it was cheaper than anything else he could find. Steve Wozniak made a decision very early on at Apple that would prove one of the company's most fateful ever. That mistake sealed Apple's fate, dooming the company to a downward spiral that it is still trying to overcome today.
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Not surprisingly, the engineers, led by the enigmatic Jean-Louis Gassée, proved far more interested in hoarding a technology they created than in establishing a standard the rest of the industry could follow. Apple's lack of leadership, however, left the decision on whether to license, ultimately, up to the engineers. Ironically, Bill Gates himself tried to help, going so far as to pen a secret memo to Sculley and line up initial licensing prospects. But, Apple squandered not one opportunity to license the Mac, but a succession of them. Had Apple opened the Mac to all comers back in the '80s, when the software was still light years ahead of Microsoft in terms of ease of use and visual appeal, the hip pioneer undoubtedly would have gone on to dominate the industry instead of Microsoft. The biggest of those mistakes was Apple's refusal to license its Macintosh software to the rest of the industry, as the following excerpt from my book reveals.