Until the early 1970s, computers were huge machines - from the largest ones, the supercomputers, to mainframes and minicomputers - and were mainly used for scientific research in universities and in military institutions, and for business calculations in major companies. Surprisingly, when the first microprocessors appeared, none of the established companies such as IBM, DEC or HP had the idea to build small, personal computers. They just did not see any market for them and could not imagine what those machines should be needed for. None of these large companies anticipated the possibilities of PCs, which are today used in almost every office, in the home, in the school, on airplanes, etc. and can act as typewriters, calculators, accounting systems, telecommunications instruments, libraries, tutors, toys and many the like.

So, it was the hobbyists, single electronics wizards who liked tinkering with electronic devices that constructed their own computers as the first PCs. These "computer nuts" ignited the "fire in the valley;"⁾ they launched the personal computer revolution in Silicon Valley "out of their own fascination with the technology. The personal computer arose from a spirit of sharing "hard-won technical information" with other computer freaks who developed their devices for the fun of tinkering around in this fascinating field of electronics. Some of these frequently young hobbyists found themselves almost overnight as millionaires, after they had sold their devices in a newly founded firm.

Before dealing with the story of Apple, which is typical of Silicon Valley and responsible for the breakthrough of the personal computer, some information about the first PC and the emergence of the PC industry shall be given.

Altair - the first PC

Altair is often regarded as the first personal computer, although it was one of those switches and lights computers - programming is done by arranging a set of switches in a special order, and the results appear as different combinations of lights. In other words, such a machine is a genuine computer, but absolutely useless, as Steve Wozniak, one of the PC pioneers, put it.⁾

After the first microprocessors had come onto the market, Ed Roberts, an engineer at MITS, a small calculator company in Texas, decided to build a kit computer, which he intended to sell to hobbyists. He chose Intel's 8080 as the CPU for his computer, since this chip was the most advanced and powerful at the time. As Roberts wanted to sell his computer for less than $500 and the official price for the 8080 was already at $360, he contacted Intel and could finally receive the chip for only $75 apiece.

By the end of 1974, Roberts finished his computer, which was named Altair. When the Altair was introduced on the cover of the January 1975 issue of Popular Electronics as the first personal computer, which would go for $397 only, the market response was in credible. The low price was the actual sensation, because it was largely known that the price for the Intel 8080 CPU powering the Altair was already at $360. So many hobbyists, engineers and programmers who had keenly waited for their own personal computer, which they could experiment on at home, welcomed the new product and ordered "their" Altair on the spot.

Roberts had never expected such a great response and his small firm was flooded by those immediate orders (more than 4000). He boosted up the production, but still could not meet the huge demand. The Altair was a success at first, and Roberts sold many of them.

However, he had increased production at the expense of quality and further refinement of his computer, so the Altair brought along a lot of trouble and was finally supplanted by other computers, which were superior.

Nevertheless, the Altair as the first successful microcomputer, contributed a lot to the PC revolution, since it encouraged other people to build personal computers (e.g. IMSAI, Apple).

The first computer shops

During this time, the mid-1970s, the first computer shops came into existence. Pioneering in this field was Paul Terrell who came to the idea of running such a shop, after the Altair had been put onto the market. His first Byte Shop opened in Mountain View (located in the heart of Silicon Valley) by the end of 1975.

Initially, Terrell sold the Altair and accessory products such as additional memory boards and other devices, which came onto the market. With the arising microcomputer industry, he could offer his customers - mainly hobbyists and engineers - more and more products, and his shop became a success. Other Byte Shops were opened and Terrell's computer shop chain expanded beyond the Silicon Valley. The computer shops provided its customers with a variety of devices around the computer and also with service and help.

The Altair was shipped as a kit computer and was to be assembled first, and then it was still not difficult to work with it. The hobbyists helped each other with advice. It was this spirit of sharing solutions and the common interest in microcomputers that led to the foundation of the first computer club.

Homebrew Computer Club

The legendary Homebrew Computer Club was the first of its kind, and provided an early impetus for the development of the microcomputer industry in Silicon Valley. Its first meeting in March 1975 was held in one of its members' garage in Menlo Park in Santa Clara County. The Homebrew members were engineers and computer enthusiasts who discussed about the Altair and other technical topics. The club attracted many hobbyists and was attended by nearly 750 people one year after its foundation. The Homebrew Computer Club had its own philosophy. People meet, because they were interested in computers and liked tinkering with them, but not for commercial reasons - at least in its early times. Its members "exchanged information about all aspects of micro computing technology"⁾ and talked about devices they had designed. From its ranks came the founders of many microcomputer companies - for example Bob Marsh, Adam Osborne, or Steve Jobs and Steven Wozniak - the famous Apple founders.

The Homebrew Computer Club is the place where the roots of many Silicon Valley microcomputer companies are located. It has "spawned a revolution in micro processing"⁾ and represents an "important step in the development of a multi-billion dollar industry.

The Apple Story

Apple provides one of Silicon Valley's most famous stories. It shows features that are typical for most start-up firms in the valley, however, it is unique and its early success and its contribution to the personal computer are unmatched.

"Woz" and Jobs - the two "Steves"

Apple's history starts with the story of two young and exceptional people who began building a computer in their garage and "launched the microcomputer revolution,"⁾ changing our daily life in many respects.

The Apple story is the story of the two "Steves". Stephen G. Wozniak was a typical Silicon Valley child. Born in 1950, he had grown up with the electronics industry in Silicon Valley, and had been intrigued by electronics from the start, since his father w as an electronics engineer. Wozniak, known to his friends as "Woz", was bright and was an electronics genius. At the age of 13, he won the highest award at a local science fair for his addition-subtraction machine. His electronics teacher at Homestead High School recognized Woz's outstanding talent and arranged a job for him at a local company, where Steve could work with computers once a week. It was there that Wozniak saw the capabilities of a computer (it was the DEC PDP-8 minicomputer) and studying the manual, it became his dream to have a computer of his own one-day. He designed computers on paper. Many other students who grew up in Silicon Valley shared this dream.

In 1971, Wozniak built his first computer with his high-school friend Bill Fernandez. This computer (they called it Cream Soda Computer) was developed in his friend's garage and had "switches and lights just as the Altair would have more than three years later."⁾

Bill introduced Woz to a friend of his named Steven P. Jobs. Jobs was born in 1955, and his foster parents were - unlike most other people in Silicon Valley - blue-collar workers. However, growing up in an environment full of electronics, Steve came in con tact with this fascinating technology and was caught by it.

Jobs was a loner and his character can be described as brash, very ambitious and unshakably self-confident. With his directness and his persistency he persuaded most people. He had the ability to convey his notions and vision to other people quite well. An d he was not afraid to talk to famous people and did never stop talking to them until they gave in and did what he wanted. His traits could already be observed in his adolescence, for instance when he - at the age of thirteen - called famous Bill Hewlett, president of HP, and asked him for spare parts he needed for his frequency counter.

Although Steve Jobs was five years younger than Wozniak, "the two got along at once." Apart from their common fascination with electronics, they "shared a certain intensity." Whereas Woz was intense in digging "deeper into an intellectual problem than anyone else," Jobs's intensity was in ambition. Moreover, both were genuine pranksters, and often they fooled others with their technical knowledge.⁾

When they heard of "phone-phreaking" - making free long-distance telephone calls with a device called "blue box" - the two started their first business venture, building those blue boxes.

In 1972, Steve Jobs went to Reed College in Oregon; however, there he became more interested in Eastern religions, dropped out a year later and returned to Silicon Valley, where he took a job with Atari (a young video game company) until he had saved enough money to go on a trip to India for some months. Then he went back to California and to his work at Atari.

After attending three different colleges, Wozniak had begun work for Hewlett-Packard in summer 1973. When Atari planned to develop a new game called "Breakout," Jobs boasted he could design it in only four days - quicker and better than anyone else. Jobs t old his friend Woz about it, and the two designed the game in record time, working four nights and days, and were paid the promised $700 for it. This experience showed them that they could work together on a tough project and succeed.

The first Apple

When the Homebrew Computer Club came into existence, Wozniak began attending its meetings. As he later would recall, Homebrew was a revelation for him and changed his life. He met people who "shared his love for computers"⁾ and learned from them as well a s he encouraged them with his technical expertise. Others brought along their Altairs, which Wozniak was interested in but could not afford. He realized this computer resembled the Cream Soda Computer he had built some time ago.

Soon after, Chuck Peddle at MOS Tech released his new 6502 microprocessor chip for only $20, which was a sensation compared to the usual price of $400 for those chips then. Suddenly, Woz saw his chance and decided to write the first BASIC for it, which was the most spread programming language. After finishing with the BASIC, he made a computer for it to run on. The other hobbyists at Homebrew were impressed by Wozniak's kit, which actually was a board with chips and interfaces for a keyboard and a video monitor.

Steve Jobs saw the opportunity of this machine, which they named Apple, and finally persuaded Wozniak to start a company in April 1976. The two raised the money for the prototype model with a printed circuit board by selling Jobs' VW microbus and Wozniak's HP calculators. With the Apple I, Steve Wozniak had designed a "technological wonder"⁾ and made his dream of owning a computer come true. His friend Steve Jobs played the role of a salesman and his ambitious promotion made the Apple I "a star in the tight world of computer freaks."⁾

The breakthrough for the two Steves came in July, when Paul Terrell ordered 50 Apples for his Byte Shop, however on condition the computers were fully assembled in a case and equipped with a cassette interface to enable external data storage.

Jobs could "obtain net 30 days credit"⁾ for the parts they needed for their computer. Working hard in Jobs parents' garage, they managed to construct the 50 Apples within those 30 days.

The Apple I was continuously refined by Wozniak, and its sales made the young company known, partly because the company's name appeared on top of computer lists, which were published by electronics magazines in alphabetical order.

Building up the company

While the first Apple was being sold, Steve Wozniak had already begun work on another computer, the Apple II. This machine would have several special features which had not appeared in any microcomputer before and would make it "the milestone product that would usher in the age of the personal computer."⁾

Jobs and Wozniak sensed the market potential their new computer would have, but realized they did not have the necessary capital for constructing the machines. So they tried to sell their computer to several established companies such as Atari, HP and MOS Tech, which, however, rejected. Looking out for some venture capital to produce the new computers by themselves, Steve Jobs met with Mike Markkula, who had been a marketing manager at Fairchild and Intel.

Markkula was at the age of 38, but had already retired, since he had made a fortune of many million dollars by his stock option at Intel. He visited Jobs's garage and became interested in their project. Markkula, the former marketing wizard at Intel, thought it "made sense to provide computing power to individuals in the home and workplace" and offered to help them "draw up a business plan."⁾ Finally, he decided to join the two Steves. He offered $250,000 of his own money and his marketing expertise for on e third of the company, which was incorporated as Apple Computer in January 1977. Markkula's decision marked the turning point in Apple's history; he took care of the business side and arranged all the things necessary to create a successful company. Markkula's know-how was crucial for Apple, since Woz and Jobs did not have any business expertise. This knowledge is very important for new firms. A lot of other start-ups in Silicon Valley failed as their founders were only engineers, who lost control over their enterprises when they could not meet the skyrocketing demand for their products.

In 1977, Markkula hired Mike Scott, who had worked for product marketing at Fairchild, as the company's president, because he felt Apple needed an experienced person to run the company.

Jobs, who wanted only the best for his company, also persuaded Regis McKenna, who ran the biggest and most influential agency in Silicon Valley, to do public relations and advertising for Apple. McKenna, who worked for successful Intel and many other companies, brought Apple legitimacy and, among other things, designed the famous Apple logo. Another important contribution was the fact that he made Apple the first company to advertise personal computers in consumer magazines to "get national attention" and " popularize this idea of low-cost computers."⁾

Steve Jobs's persistency had persuaded Wozniak, the electronics genius who designed the machine, McKenna, and Markkula, the business expert. Jobs himself was the driving force that brought the key components together to build up a successful company.