A commercial computer is a computer that is built specifically to be sold or leased to paying customers rather than for internal use within the organization that built it.
The history of early commercial computers is ambiguous and confusing when you try to pin down who developed the first commercial computer. The U.S. historical literature claims that the UNIVAC I was the first commercial computer sold to paying clients. Some U.K. literature claims that the LEO I computer was delivered a month prior to the UNIVAC I. Another British machine, the Ferranti Mark I, also claims to have been delivered before UNIVAC I.
Table 4.1 Early Digital Computer Delivery Dates
Regardless of who built the first commercial digital computer, the idea of computing as a business tool was rapidly expanding. There would soon be dozens of commercial digital computers on the market, and a wave of startup computer manufacturers would continue to expand for two more decades.
LEO
The British LEO computer has a background that is historically and sociologically interesting. The J. Lyons Company was not a high-technology company but rather one of Britain’s largest food-catering and food-producing companies. It also ran tea shops throughout the United Kingdom.
Two Lyons executives, Oliver Standingford and Raymond Thomson, visited the United States in 1947 to look at new business methods developed during the war. While there, they met one of the ENIAC computer developers and saw the potential of computers for aiding large business operations. Upon returning to the United Kingdom, Standingford and Thomson visited the British EDSAC computer, then under development. Standingford and Thomson reported favorably on computers to the Lyons board, which voted to provide £3,000 to help speed up the EDSAC development.
Not only was funding provided to EDSAC, but the Lyons board also decided to build a business- oriented computer for the company. This was a bold adventure for a food-processing company that operated tea shops.
The new computer was called the Lyons Electronic Office , or LEO, I. A radar engineer named John Pinkerton was hired to run the project and design the computer. A Lyons engineer named Derek Hemy would be the new computer’s first programmer.
When completed in 1951, the computer’s first production job was bakery valuation. It was also used for payroll calculations, inventory management, and order entry. In other words, the LEO I was immediately useful for handling day-to-day business operations faster and more efficiently than could be done manually.
The LEO I also pioneered outsourcing and service bureau operations, because the computer was soon used under contract to process payrolls for Ford Motors in the United Kingdom. Other clients followed. Outsourcing and service bureaus followed almost immediately in the wake of the first commercial digital computers.
Several upgrades called the LEO II, LEO III, LEO 360, and LEO 326 were built. These were faster and more powerful than LEO I. The later LEO computers featured a multitasking operating system that could run 12 programs simultaneously. Some LEO computers stayed in service as late as 1981, processing telephone bills.
In 1954, Lyons formed a separate company to build the LEO computers, called LEO Computers Limited. The LEO company itself merged with the English Electric Company in 1963 and after
several more mergers became part of the company International Computers Limited (ICL) in 1968. The LEO experience shows that far-sighted business executives from Lyons correctly identified digital computers as the best solution for a wide variety of corporate financial and accounting activities. Their pioneering work helped other companies also move into the computer era.
IBM
1953 marked the introduction of the IBM 701, which is asserted to be the first successful commercial computer, although only 19 were ever made. It was among the first computers used by the Department of Defense. (Currently, the Department of Defense owns more computers than most entire countries do.) The 701 was a vacuum tube computer that used magnetic tape for storage. It was meant for scientific and defense calculations.
The IBM 701 triggered the first computer user group. In 1955, a group of IBM customers in the Los Angeles area founded a user association called SHARE, Inc. This association later moved to Chicago and became a nonprofit corporation.
The idea of computer and software user groups was beneficial to both customers and manufacturers. SHARE members influenced IBM in terms of future features and needs. SHARE members also helped each other with technical advice and even the creation of programs and source code.
SHARE’s idea of customer user groups would soon lead to many other similar groups associated with both IBM and other vendors. For IBM, the GUIDE and COMMON associations would be formed. In the 1960s, the DECUS group was formed to support digital equipment customers. User associations are now common for many hardware and software products. The larger associations such as SHARE have regional subdivisions and chapters in many cities.
There were several upgraded versions of the 701 family, but the biggest technical advance was the IBM 7090, which was IBM’s first computer with transistors instead of tubes. This computer was announced in 1958. Among its interesting features was an early operating system called IBSYS. This would later evolve into much more powerful operating systems that could keep various hardware components operating in concert. One of the first assembly languages was created for the IBM 701 by Nat Rochester.
Another important invention occurred in 1953 when engineers at IBM’s San Jose research facility created the first disk drive, which allowed random access to data instead of sequential access, which was normally provided by tape drives. The first commercial disk drive was the IBM RAMAC 350 in 1956. Without disk drives and random access to data, computers would have very limited functionality and later database technologies would not have occurred.
In 1953, IBM released the 650, which was aimed squarely at business customers (the earlier 701 was designed for science and defense customers). The IBM 650 was a market success and between the initial release and 1963, more than 2,000 were sold.
The IBM 650 featured a rotating magnetic drum for memory. Programmers had to be sensitive to drum rotation speed to optimize performance. If a read instruction missed a piece of data, the next opportunity would not occur until the data rotated under the read head again. There was also a small amount of magnetic core memory, used as a buffer between the drum and the processing unit.
Disks were not used in the IBM 650. After RAMAC was invented, disk drives would be added to the later versions of the IBM 650.
One reason for the market success of the IBM 650 was because it was backward-compatible with IBM’s punch-card calculating machines. For example, an output deck of cards from an IBM 650 computer could be printed on an earlier IBM 402 accounting machine.
The early versions of the IBM 650 were programmed in machine language. But in 1954, Stan Poley of IBM’s T. J. Watson Research Center added the Symbolic Optimal Assembly Program (SOAP). Eventually, more than a dozen programming languages would become available for the IBM 650, including FORTRAN in 1957.
Before the IBM 650, universities had built a number of computers, but they were used only for a limited range of scientific studies and had no connection to day-to-day university tasks. The IBM 650 started a trend of using digital computers for academic business activities as well as research tools. Columbia University, for example, would later have about 200 users of their IBM 650 computers.
Other Computer Business Implementations
The 1950s saw the creation of a number of other companies that would help to expand computers and software. Among these were Nixdorf in 1952, Burroughs in 1956, Digital Equipment Corporation (DEC) in 1957, and Control Data Corporation (CDC), also in 1957. Remington Rand acquired the older Eckert-Mauchly company, and it was renamed Univac in 1951.
Some of these same inventions began to find their way into consumer products. In 1954, Regency marketed the first transistor radio. This was followed in 1955 by the more famous Sony TR-55.
1957 witnessed the appearance of the Sony TR-63, the first pocket radio (the TR-55 was too large to be carried in a pocket). This Sony radio pioneered modern personal entertainment devices and expanded Sony into a major global corporation.
In the late 1950s, jet aircraft were added to commercial airline fleets. This fact, combined with a growing economy, increased air traffic by more than 1,000% between 1958 and 1977. With such heavy air traffic, it was becoming unsafe to fly because air-traffic control systems were primitive in the 1950s.
In 1956, two planes collided over the Grand Canyon and 128 people were killed. This spurred Congress to pass the Federal Aviation Act in 1958, which created the Federal Aviation Administration (FAA) to oversee air-traffic control throughout the United States. Computers were used experimentally for air-traffic control in the late 1950s, but a true national, computerized air- traffic control system would not arrive until the 1970s.
By coincidence in 1953, the president of American Airlines, C. R. Smith, happened to sit next to an IBM salesman named R. Blair Smith. The two discussed airline reservations and IBM was invited to visit American Airlines and suggest cooperative action.
This chance encounter led to the cooperative development of the SABRE airline reservation system. It was started in 1959 but not completed until 1964. When complete, SABRE was the largest software application system yet created. An article in Computer World on May 29, 2004, reported that SABRE had more than 64 applications totaling about 13,000,000 lines of code. That is roughly equivalent to just over 100,000 function points.
Eventually, the SABRE system would come to be used by more than 350,000 travel agents, 400 airlines, 100,000 hotels, 25 car-rental companies, 50 railroads, and 14 cruiseship lines. The growth and success of SABRE illustrate the power of computers and software to make enormous changes in common business practices.
The downside of computerization is that probably more than 100,000 clerical personnel in these various companies lost their jobs. This loss was partially replaced by the addition, usually within those same companies, of perhaps 30,000 software and data center personnel.