The world’s first commercially successful microcomputer weighed 24 pounds; its hinged plastic case gave it a look similar to a sewing machine. The leather handle gave it a classy touch, though some accounts liken the device to an Army field radio. It boasted modest specs even for the time—a 4 MHz CPU, 64K of RAM, a 5-inch monitor—and carried a $1,795 price tag, which, when adjusted for inflation, amounts to nearly $5,000 per unit today.
It was meant to be “good enough,” the stated philosophy of company founder Adam Osborne, and it was—for about year and a half in the early ‘80s when sales peaked at $1 million per month. Unfortunately for Osborne, it would not last. By the end of 1983, the company had filed for bankruptcy.
The lessons learned from the Osborne 1 saga still resonate in the technology marketplace 34 years later. Let’s take a look at them.
Computers need to go places
Modern tablets make the size of the Osborne 1 look comical. For comparison’s sake, modern business tablets weigh in at around 1.5 pounds. Even in the early ‘80s, computer makers sensed the demand for taking a computer places. The Osborne 1 was advertised as the only computer that could fit under an airline seat. Portable computers would only get smaller from this point forward. Some analysts believe that desktop PCs are dead because portable technology is good enough to make stationary units obsolete. We think the jury is still out on this. Time will tell.
Bundling in software for added value
You will notice if you browse through new desktop PCs that each comes with a fully licensed operating system out of the box—most PCs & Laptops sold on NeweggBusiness include Windows 10 Professional, which adds a $140 dollar value into a PC purchase. This practice dates back to the Osborne 1, which bundled Microsoft products (BASIC) among others—mainly spreadsheet and database programs and a word processor. The software was a key selling point; Osborne marketed the computer as a “$1,795 computer with $1,530 of software” in BYTE magazine.
All computers are for gaming
You might think that a 5-inch monochrome CRT monitor and 64K of RAM might be prohibitive for gaming. Think again. Two of the 12 programs bundled in with the Osborne 1 were games—Deadline and Colossal Cave Adventure, a pair of text-based interactive fiction games, and classics in their genre at that.
Monitor displays—bigger is always beautiful
Just as the Apple iPhone 6 Plus illustrates with its 5.7-inch screen which larger than the Osborne 1’s monitor, screen size matters for portable devices. The microcomputer that unseated the Osborne 1, the Kaypro II, boasted a nine-inch monitor and debuted at the exact same price point of $1,795. Kaypro came to dominate the luggables market until the MS-DOS revolution of 1986.
Kaypro II
Never, ever announce follow-up products before they are ready
What bankrupted Osborne was not so much the Kaypro II as it was an internal gaffe by Osborne himself. By making available the details for the Osborne Executive, the follow-up computer to the Osborne 1, months before the product was set to launch, the company effectively threw a wet blanket on their sales. To this day, this is a huge no-no in the tech industry. The sales cooling that results from customers waiting for the next generation of devices is called the Osborne Effect.
The Osborne effect still happens. In March 2015, Intel blamed revenue shortfalls on a slower than expected Windows XP refresh. But some analysts are blaming this on the Osborne Effect—speculating that customers are anticipating the summer release of the Skylake processor, the follow-up to the Haswell CPU models currently near EOL.
Another example happened a few years ago when Microsoft pre-announced the original Surface tablet, disclosing that it housed Ivy Bridge Intel Core i5 CPUs, the same processors found in OEM Windows Ultrabooks at the time. This essentially flat-lined sales for base-level OEM ultrabooks for the back half of 2012 and into 2013.
Related content:
- Three Failed Computers That Almost Made It
- Five Obscure Computing Devices That Were Way Ahead of Their Time
It is understandably hard for a tech company to keep their latest, greatest products under wraps, but history has shown that it is necessary for survival. The big exception is Microsoft software, which has somewhat of a reverse Osborne effect where users hold onto expired operating systems like Windows XP, or expiring ones like Windows Server 2003—but this is an altogether different story for a different day.
Microsoft deliberately used the Osborne effect to its advantage in a number of situations. They would announce a product to compete with an existing market leader *way* before they had anything to ship. This would kill sales for their competitor, as people held off buying the competitors product to see what the MS product would be like. Since MS didn’t have any existing product to be hurt by this, it cost them nothing. But the competitor would see a drastic drop in sales, often threatening the company’s survival. This tactic was used for the earliest versions of several of the MS Office component programs.