IBM is a pretty big company.

–Bill Gates

Hewlett-Packard and Xerox had made less-than-impressive entries into the personal-computer market, and there was intense curiosity within that industry about how IBM would fare. The megafirm was considered successful in almost everything it had tried. Its reputation had held up at least since the mid-1960s, when IBM owned two-thirds of the computer market. And when IBM chief Thomas J. Watson, Jr., bet the company on a new semiconductor-based computer line that instantly made IBM’s most profitable machines obsolete—and the bet paid off—IBM only appeared all the more infallible.

In 1980 a new CEO, Frank Cary, proved willing to risk if not the company, at least some of its pristine reputation on ...

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