My column in today's San Antonio "Express-News" sets out to correct the fact that the origins of what we know as the personal computer has its roots in San Antonio, and not in what became Silicon Valley.
Here's a bit of expanded history that the article does not get into. This information was provided to me by my key source on the column, a friend and local freelance writer, Lamont Wood, who I have known for 20 years.
Gus Roche and Phil Ray were engineers in the space program in the late 1960s and decided as the Apollo Program was winding down that their career prospects were limited there, so they decided to apply what they knew about the latest advances in semiconductors and set up a business. The business plan they wrote suggests that they were aiming to eventually develop a desktop system with internal intelligence based on large-scale integration (other words, the latest microchips.)
But at the time, computers were monstrously expensive things sold by IBM and a few struggling competitors, and so they had to be coy about using the word "computer" to avoid scaring off potential backers. As their starter product, friends suggested they produce a "glass teletype," meaning an electronic version of the electromechanical Model 33 Teletype.
Through mutual friends they were introduced to Gerald Mazur, who raised the startup funds locally, but imposed a stipulation that the company had to be set up in San Antonio. They did so in the summer of 1968, under the name Computer Terminal Corp. (CTC) setting up in rented offices on West Rhapsody.
They contracted with Raymond Loewy and William Snaith, one of the leading design firms of the era, who sent out Jack Frassanito. He reports having long conversations with Roche and discovering that Roche was making the glass Teletype – named the Datapoint 3300 – basically as a ruse to get the company established, but what he really wanted to do was make a personal desktop computer. Anyway, the replacement market for teletypes was not huge so they had to move on to a follow-up product with wide appeal. They came up with the idea of an electronic replacement for an IBM cardpunch machine with intelligence for local data verification. This required that the machine have basic intelligence – general purpose a computer – inside it.
They started shipping the 3300 in late 1969, and it was very popular but the standard procedure in the computer industry was to lease products, and that meant it would be a couple of years before they actually made a profit. In the meantime they struggled to develop the follow-on product. To lead the effort they hired Vic Poor, who had recently sold out as owner of Frederick Electronics in Maryland. He brought with him a number of associates, including Jonathan Schmidt, Stan Kline, and Harry Pyle.
They designed a very basic computer based on their experience-building controllers for Teletype networks. They implemented it in transistor-to-transistor logic (TTL), meaning chips with a few dozen functions at most in them. But it was a tight fit getting everything in a box that would sit on a desktop – they wanted the same footprint as an IBM Selectric typewriter. They knew that it should be possible, albeit just barely, to get all the functions of their processor on the one chip and in late 1969 they approached fellow startup Intel about this. Intel was already involved in making a one-chip calculator processor, but resisted the idea of helping CTC because they (rightfully) didn't thank the market would be very big initially. Also, they feared that the computer vendors that they sold memory chips to would see them as a competitor if they sold computer processor chips. Roche, Frassanito, and Ray talked them into it. The terms of the business arrangement are disputed, and it may actually have ended up being a bet between Ray and an Intel executive.
As they got into 1970 Roche and Ray apparently discovered that they could build their processor with a cheaper new generation of TTL parts and lost interest in the chip. They did encourage Texas Instruments to build a version of the chip, but it did not work reliably, they rejected it and TI dropped the project.
They unveiled their first desktop computer, the Datapoint 2200 in late 1970. The first end-user sale was to Pillsbury in the spring of 1971. The buyers wrote programs to print paychecks at chicken farms throughout the South where they had found that employees would not come back on Monday if their paycheck did not arrive Friday, and mail delivery to those places had proven erratic. This was apparently the first real-world use of a desktop personal computer.
Intel resumed developing the Datapoint 2200 chip in early 1971 when they discovered other possible customers for it. They came out with the resulting chip, called the 8008, in April 1972. This was the first microprocessor chip that could be used as a computer. Intel had a previous chip called the 4004 that was only usable in calculators.
After a heated internal debate Gus Roach lost the argument to retain the intellectual property of the 8008 as the engineers had done fine without it and had already developed a second version of the 2200 with advanced features. So both sides dropped the agreement and neither paid the other a cent. This decision to not retain the intellectual property the chip represented probably cost CTC/Datapoint billions of dollars.
In 1974 Intel came out with an improved version called the 8080 that proved wildly popular and was the basis for the second generation of microprocessors. Intel continued to come out with improved versions and a derivative was used in 1981 for the IBM PC. As a result, all PC-compatible computers in use today run a processor whose ancestry can be traced directly back to the Datapoint 2200.
CTC changed its name to Datapoint in 1972. Roche and Ray left Datapoint in July 1974 and set up Mnemonics Corporation, a new venture to make solid-state memory. It fell apart after Roche was killed in a car accident in February 1975. It was then announced that he had had terminal stomach cancer for some time. (Ray died of cancer in 1987.)
Datapoint went on to develop the first commercial local area network and by 1979 its customers could use networked office automation with built-in electronic mail. But an accounting scandal paired with a recession in 1982 drove the stock price so low that the company was worth more dead than alive. It was taken over by a corporate raider whose dilettante management style doomed the company, and it was not able to respond to the new world created by the wild popularity of the PC. So, ironically, it was not able to compete with its own progeny. On the other hand, essentially every other computer company then in business also succumbed to the PC tidal wave.
Datapoint finally liquidated in 2000 but a spin-off continues in business under that name in Europe, selling call center systems.