In August, 1981, IBM introduced the IBM Personal Computer, and begin shipping it in October. At the time, the market was dominated by Tandy (Radio Shack), Apple, and Commodore. I’ve been rebrowsing 80 microcomputing, and in the November 1981 issue Betty Thayer covered the introduction and Tandy’s reaction to it.

Thus far Tandy’s reaction to their new competition has been blase. “I don’t think we’re going to lose any business because of it,” says Jon Shirley, vice president of the Fort Worth, TX, firm’s computer division.

According to Thayer, “market analysts estimate [Tandy holds] about 25 percent of the personal computer market, with Apple of Cupertino, CA, garnering about 22 percent and Norristown, PA-based Commodore 20 percent.”

What’s amazing is not just how clueless Tandy leadership was, but also that experts in general were all over the map. The article itself tends to focus on the small business market, rather than the personal computer market.

These new machines “will not have an immediate effect,” says market analyst Al Hirsh of Datapro Research Corp., Delran, NJ. Hirsh feels that the new computers will have the swiftest impact on Tandy’s major accounts because their competitors have so many business contacts.

Other marketing people think the new computers—particularly the IBM personal computer—will affect Apple computer’s sales more than Tandy’s. “The IBM personal computer is aimed smack at Apple, “because its price and capabilities are similar,” says Gerald Hallaren of the Yankee Group, a Cambridge, MA, market consulting firm.

The very title of the article shows off the confusion: Xerox, IBM storm market, pull wraps off their micros.

Hirsch predicted of the IBM offering that “One million of them will be sold by 1985”. In fact, they hit a million sometime in 1982, and sold another million in 1983, another two million in 1984. By 1985 they were selling five million per year.

Radio Shack had their own sales outlets; the other computers of the time, including IBM, sold through third-party outlets such as Sears and ComputerLand.

How will Tandy’s distribution match up? With 2,000 dealers, 168 computer centers and 4,800 retail stores, they’ve pretty much got the field covered. They also have some direct accounts sales people, though this is certainly not their strongest point. Shirley of Tandy thinks their retail units are the key to escaping the influx of IBM and Xerox. “They’re selling them in stores where they sell Apples and PETs,” he says, theorizing those two producers will feel the brunt of the competition.

80 microcomputing was a magazine dedicated to Radio Shack’s TRS-80 line of computers, especially the semi-roman numeraled I-III-4. But they seem to have understood Radio Shack’s predicament better than Radio Shack did. Thayer ended the article with:

Everyone but Tandy is taking the entrance of these corporate giants seriously. Speculation was rampant on Wall Street after IBM’s 16-bit personal computer debut. But Tandy remains non-plussed. Shirley of Tandy contends they have the market cornered and “everybody else can go fight it out among themselves.”

This is not the attitude of a company with winning in its future, and sure enough, within a few years Radio Shack, not Apple, had seen its market share, and sales, drop the most. While Apple sales increased, their market share dropped, and Commodore increased both market share and sales, topping the sales charts in 1984. IBM would be at the top by 1985.

Looking at market share seriously confuses the issue, however, and that’s why nobody understood what IBM’s effect would be. Looking at current market share and guessing what effect a new product will have only works if the current market share reflects the new product’s market. IBM didn’t win by taking customers away from Radio Shack. They won by selling to customers that Radio Shack wasn’t selling to. Radio Shack’s customers followed. This is the same lesson Apple taught the portable music player market when they introduced the iPod, and the smartphone market when they introduced the iPhone.¹ In each case, the original market was a subset of the potential market, and by all appearances the original players had no idea. They thought they were a niche product, so they acted like they were a niche product.

The first-mover advantage is mostly a myth. It looks true in retrospect because we forget about all of the products and services that were swamped out of the market by the first company to successfully market to everyone.

But that isn’t the only way to lose. What if Radio Shack had had a government monopoly, like AT&T’s, during the personal computer revolution?

They’d probably look a lot like the United States Postal Service. There’s another article in the same issue of 80 microcomputing about how the USPS is going to be affected by email² and what they might do about it. In Digital Delivery, the magazine’s Desktop Computing staff writer Bert Latamore says about the postal service:

The postal revolution may finally be upon us. A new form of message delivery, electronic mail, is riding on the coattails of computer networking. Futurists believe it may replace the postal system and take part of the load now carried by telephone. According to prognosticators, the question in electronic mail is not whether it will be an important force in the future but how much impact it will have and what form it will take.

I’ll give you a post office prediction: It’s gonna be cold, it’s gonna be grey, and it’s gonna last you for the rest of your monopoly.

By “electronic mail”, Latamore meant pretty much everything text-based, from what we call email to instant chats and text messages³.

One thing they did realize was that there would eventually be some form of inter-networking that would tie these systems together, so that if you send an email through one provider, your recipient can receive it through a different provider. That is, they “expect industry standards similar to those allowing the various common carrier packet networks to interconnect worldwide. A standard would enable the services to communicate freely.”

On the other hand, there were other experts who thought that the main form email would take in the future was basically what we call PDF, something like FAX but electronically sent, whose advantage “is the control the sender has over the information’s form.” What’s really interesting is that this seemed difficult at the time for all the wrong reasons:

Unfortunately, the machinery is more expensive than a dumb terminal and less versatile than a microcomputer. It is unlikely that the average home in the year 2001 will have such equipment. The system would probably be used between central locations; individual documents would be mailed from the receiving stations to their ultimate destinations.

In fact, the average home that had a computer in 2001 probably did have a computer capable of receiving PDFs.⁴ But what these prognosticators missed was the time element. Because email was so successful, few people wanted to spend the time doing page layout on every message they sent out.

Remember their definition of email. Imagine doing page layout on every text message you send.

And of course where they get it completely wrong is in the social aspects. They expected electronic mail to mostly affect paying bills and other financial transactions (“O’Reilly’s model of electronic fund transfer”, below), but that most people would not use email as their primary means of communication.

Electronic mail’s impact on users is hard to assess. Certainly it will not change personal lifestyles as the telephone did in the 1920s.

“It will not,” said Ray Boggs of the Consumer Division of Venture Development Corp., Wellesley, MA, “replace the telephone.”

And it didn’t. But mainly because unlike the Postal Service, telephone service was undergoing deregulation at the time, so that AT&T no longer had a government-sponsored monopoly. So that even though we use our telephones for telephone calls far less often, we still use our telephones for various forms of electronic messaging. People using Facebook and text messaging from their pocket portable computers—their phones—would probably disagree with the statement that it has not changed personal lifestyles, if you asked them to go back to a phone-only phone.

But the really interesting part of this article is how it addresses the monopoly issue:

…the [USPS] moved too late to establish a legal monopoly on [electronic mail]. Too many other companies are already in electronic mail in the United States.

In other countries the formula is different: The national telephone monopoly, often a part of the government, also runs the dominant data network. Foulger says Canada sees electronic mail as a direct threat to its postal system; the government is restricting its development.

…

The USPS and its equivalents in the other industrialized countries are obvious targets for a major impact. Most first-class mail will disappear if O’Reilly’s model of electronic found transfer comes true…

Postal officials have read the writing on the wall. According to O’Reilly, the USPS attempt to enter the facsimile market was a bid to preserve the postal system, even at the expense of post office jobs lost to automation. If it is prevented from entering this market or if the facsimile market does not catch on with the public⁵, the post office runs the danger of becoming the system of last resort.

Which of course they are. Except for very specialized or ritualistic purposes⁶, sending off a letter is either the last resort or not even considered.

The Postal Service’s attempts to join the late twentieth century have been ham-handed at best.

We have no idea what kind of amazing door-to-door mail system we would have today if the USPS were not granted a monopoly on mail delivery. Instead, mail delivery is the equivalent of still using a TRS-80 Model III, or Model IV at best, locked into an outdated mindset of what mail delivery should be because no one can compete with the USPS like IBM, Commodore, and Apple could with Radio Shack.