Missed this by a couple of months….November 15, 2011, was the 40th anniversary of the Intel 4004, the world’s first microprocessor. The history of this extremely influential device provides an interesting case study in innovation.
Early computers were constructed out of discrete components, first vacuum tubes and later transistors. Early work on transistors was done at Bell Labs…one of the inventors, William Shockley, became dissatisfied with Bell’s management and left to start his own company, which he located in Palo Alto to be near his mother’s house. (If Shockley’s mom had lived in Roanoke, would the term “Silicon Valley” now refer to the Shenandoah valley!?)
Eight of the new company’s employees (“the traitorous eight”) in turn became unhappy with the way Shockley was running things, and left in 1957 to form Fairchild Semiconductor as a division of Fairchild Camera and Instrument. The integrated circuit, which allowed several transistors to be placed on a single chip, was independently invented at Fairchild and at Texas Instruments. Large numbers of these chips still had to be interconnected to form the central processing unit of a computer.
By 1968, several of the “fairchildren” were less than thrilled with the way things were going at Fairchild, and left to start their own companies. Two of these, Gorden Moore and Robert Noyce, founded Intel with an intital capital of $2.5 million, which was provided by pioneering venture capitalist Arthur Rock. Intel’s original focus was memory components–their initial product could store 64 whole bits on a single chip!
In that year, a Japanese company called Busicom approached Intel to make some custom chips for a new calculator they were developing. Intel employee Ted Hoff was not impressed with Busicom’s design and suggested an alternative: make the device internally programmable and reduce its complexity by implementing the calculator functionality as computer code rather than as electronic hardware. Fredrico Faggin, who joined Intel in 1970, was able to achieve the difficult task of designing a very rudimentary CPU so that it would fit on a single chip. Masatoshi Shima, a Busicom engineer, also contributed to this work.
Intel astutely decided to buy back the general design and marketing rights to the 4004 from Busicom, and the latter company, which had been interested in the project only as a source of components for its calculator, sold the rights in exchange for a fee of $60,000 and a lower price for the chips.
The initial applications of the 4004 were not computers in any recognizable sense, but rather things like arcade games, voting machines, and a rudimentary word processor. Later versions of Intel microprocessors were also heavily used for embedded-control applications, including controllers for traffic lights. The first microprocessor-based personal computer was the Altair 8800, a $400 kit from a company called MITS which was introduced in 1975. With the introduction of the VisiCalc spreadsheet program for the Apple II in 1979, and the launch of the IBM personal computer in 1981, the PC rapidly moved into the position of an essential business tool.
The introduction of the microprocessor had a huge impact on the structure of the computer industry. The CPU itself was now highly isolatable from the rest of the computer system, and moreover its production was subject to huge economies of scale. Traditional minicomputer companies such as Digital Equipment were crippled, while new companies such as Dell and Apple which made computers based on off-the-shelf microprocessors could now be started at relatively low cost. With multiple companies producing computers using the same CPU family, the outlook for independent software companies became much more rosy: Microsoft was the preeminent exploiter of this opportunity. And beyond the computer industry per se, microprocessors have provided the intelligence for a considerable realm of devices, ranging from home appliances to machine tools to children’s toys
It’s interesting to note that both Intel AND Microsoft developed/acquired their key products (the 4004 and PC DOS) as for-hire projects from other companies, but neither Busicom nor IBM was astute enough to avoid signing away the rights to these products in exchange for, at best, quite small amounts of money.