Computers were big. They were enormously expensive and physically giant machines. IBM’s nickname from this time was Big Blue on account of the size of the company and their computers.
Olsen developed, by current standards, small transistor-based computers at MIT. He left in ’57 to form a company, the Digital Computer Corporation. It was funded by Doriot’s ARD which renamed it Digital Equipment Corporation (DEC). Doriot was concerned that the word “computer” would confuse people and computer companies of that era suffered a high failure rate. Doriot invested $70,000 for 70 percent of the company.
DEC created a new type of computer, a minicomputer, small and inexpensive enough they could be used by just one person. These minicomputers were “interactive” – people could interact and change programs as they were running. In contrast, traditional IBM computers ran a program, took input (typically in the form of punch card data), and delivered a result. Interactive computing enabled word processing and, the killer app, games.
The company struggled at first because buyers, expecting computers to be large and clunky, did not understand the offering. Eventually, they found a buyer for their first system, the PDP-1. Their next release, the PDP-8, became a popular hit. Eventually, the PDP-11 became one of the highest-selling non-microcomputer computers of all time.
Besides the hardware, DEC also created the VAX memory management software that became a foundation for other computers, including later versions of Windows. DEC computers ran the VMS operating system.
Entrepreneurs would buy the DEC computers, program them, then sell them as single-purpose machines for games, word processors, etc… Additionally, DEC sold dedicated computers and also logic boards.
DEC grew 30-percent a year for 19 consecutive years. By the mid-1980s they were the second-largest computer maker, just behind IBM. Eventually, the trailblazer struggled by refusing to transition into microcomputers. In 1998, microcomputer maker Compaq purchased DEC for $9.6B.
Countless enterprise customers still use DEC equipment and run the VMS operating system, albeit usually on newer non-DEC hardware.