The Osborne Effect

The Osborne Effect isn’t an episode about Spider-Man that covers turning green or orange and throwing bombs off little hoverboards. Instead it’s about the impact of The Osborne 1 computer on the history of computers. Although many might find discussing the Green Goblin or Hobgoblin much more interesting. The Osborne 1 has an important place in the history of computing because when it was released in 1981, it was the first portable computer that found commercial success. Before the Osborne, there were portable teletype machines for sure, but computers were just starting to get small enough that a fully functional machine could be taken on an airplane. It ran 2.2 of the CP/M operating system and came with a pretty substantial bundle of software. Keep in mind, there weren’t internal hard drives in machines like this yet but instead CP/M was a set of floppies. It came with MBASIC from Microsoft, dBASE II from Ashton-Tate, the WordStar word processor, SuperCalc for spreadsheets, the Grammatik grammar checker, the Adventure game, early ledger tools from PeachTree Software, and tons of other software. By bundling so many titles, they created a climate where other vendors did the same thing, like Kaypro. After all, nothing breeds competitors like the commercial success of a given vendor. The Osborne was before flat panel screens so had a built-in CRT screen. This and the power supply and the heavy case meant it weighed almost 25 pounds and came in at just shy of $1,800. Imagine two disk drives with a 5 inch screen in the middle. The keyboard, complete with a full 10-key pad, was built into a cover that could be pulled off and used to interface with the computer. The whole thing could fit under a seat on an airplane. Airplane seats were quite a bit larger than they are today back then! We think of this as a luggable rather than a portable because of that and because computers didn’t have batteries yet. Instead it pulled up to 37 watts of power. All that in a 20 inch wide case that stood 9 inches tall. The two people most commonly associated with the Osborne are Adam Osborne and Lee Felsenstein. Osborne got his PhD from the University of Delaware in 1968 and went to work in chemicals before he moved to the Bay Area and started writing books about computers and started a company called Osborne and Associates to write computer books. He sold that to McGraw-Hill in 1979. By then he’d been hanging around the Homebrew Computer Club for a few years and there were some pretty wild ideas floating around. He saw Jobs and Wozniak demo the Apple I and watched their rise. Founders and engineers from Cromemco, IMSAI, Tiny BASIC, and Atari were also involved there - mostly before any of those products were built. So with the money from McGraw-Hill and sales of some of his books like An Introduction To Microcomputers, he set about thinking through what he could build. Lee Felsenstein was another guy from that group who’d gotten his degree in Computer Science at Berkeley before co-creating Community Memory, a project to build an early bulletin board system on top of a SDS 940 timesharing mainframe with links to terminals like a Teletype Model 33 sitting at Leopold’s Records in Berkeley. That had started up back in 1973 when Doug Englebart donated his machine from The Mother of All Demos and eventually moved to minicomputers as those became more available. Having seen the world go from a mainframe the size of a few refrigerators to minicomputers and then to early microcomputers like the Altair, when a hardware hacker like Felsenstein paired up with someone with a little seed money like Osborne, magic was bound to happen. The design was similar to the NoteTaker that Alan Kay had built at Xerox in the 70s - but hacked together from parts they could find. Like 5 inch Fujitsu floppy drives. They made 10 prototypes with metal cases and quickly moved to injection molded plastic cases, taking them to the 1981 West Coast Computer Faire and getting a ton of interest immediately. Some thought the screen was a bit too small but at the time the price justified the software alone. By the end of 1981 they’d had months where they did a million dollars in sales and they fired up the assembly line. People bought modems to hook to the RS-232 compatible serial port and printers to hook to the parallel port. Even external displays. Sales were great. They were selling over 10,000 computers a month and Osborne was lining up more software vendors, offering stock in the Osborne Computer Corporation. By 1983 they were preparing to go public and developing a new line of computers, one of which was the Osborne Executive. That machine would come with more memory, a slightly larger screen, an expansion slot and of course more software using sweetheart licensing deals that accompanied stock in the company to keep the per-unit cost down. He also announced the Vixen - same chipset but lighter and cheaper. Only issue is this created a problem, which we now call the Osborne Effect. People didn’t want the Osborne 1 any more. Seeing something new was on the way, people cancelled their orders in order to wait for the Executive. Sales disappeared almost overnight. At the time, computer dealers pushed a lot of hardware and the dealers didn’t want to have all that stock of an outdated model. Revenue disappeared and this came at a terrible time. The market was changing. IBM showed up with a PC, Apple had the Lisa and were starting to talk about the Mac. KayPro had come along as a fierce competitor. Other companies had clued in on the software bundling idea. The Compaq portable wasn’t far away. The company ended up cancelling the IPO and instead filing for bankruptcy. They tried to raise money to build a luggable or portable IBM clone - and if they had done so maybe they’d be what Compaq is today - a part of HP. The Osborne 1 was cannibalized by the Osborne Executive that never actually shipped. Other companies would learn the same lesson as the Osborne Effect throughout history. And yet the Osborne opened our minds to this weird idea of having machines we could take with us on airplanes. Even if they were a bit heavy and had pretty small screens. And while the timing of announcements is only one aspect of the downfall of the company, the Osborne Effect is a good reminder to be deliberate about how we talk about future products. Especially for hardware but we also have to be careful not to sell features that don’t exist yet in software.