Let’s see how to put all the pieces together and create a complete system.

 

During the 1950’s, 1960’s, and most of the 1970’s, all of IBM’s computers were big. IBM ignored the whole concept of microcomputers for many years.

Eventually, IBM created microcomputers. But IBM’s first microcomputers, the IBM 5100 and IBM System 23, weren’t taken seriously — not even by IBM.

The IBM PC

When many IBM customers began switching to Apple 2 microcomputers to handle spreadsheets, IBM got alarmed, so IBM decided to develop an improved microcomputer, called the IBM Personal Computer (IBM PC), which would be more powerful than Apple 2 computers.

To invent the IBM PC, IBM created 3 secret research teams who competed against each other. The winner was the research team headed by Philip “Don” Estridge in Boca Raton, Florida. His team examined everything created by the other microcomputer companies (Apple, Radio Shack, Commodore, etc.) and combined their best ideas, to produce a relatively low-cost computer better than all competitors.

Don’s team developed the IBM PC secretly. IBM didn’t announce it to the public until August 12, 1981.

The IBM PC was a smashing success: IBM quickly became the #1 microcomputer company — and Apple dropped to #2.

Improved versions

After inventing the IBM PC, IBM invented improved versions:

After 1987, IBM invented many other improved versions.

While IBM was inventing improvements, IBM’s competitors invented imitations called clones, which were often better than IBM’s originals. Here’s how they all compared.…

Hard drive

The PC didn’t have a hard drive. Here’s what happened afterwards:

RAM

RAM has grown:

CPU

The PC and XT each contained an Intel 8088 CPU chip at 4.77MHz. Most XT clones ran twice as fast (and thus called turbo XT clones) because they contained an 8088-1 chip at 10MHz.

The AT contained an Intel 286 chip (which works more efficiently than an 8088) at 6MHz. In 1986, IBM switched to 8MHz. AT clones ran at 12MHz.

The PS/2 came in many models: depending on how wealthy you were, you could choose an 8086 chip at 8MHz, a 286 chip at 10MHz, a 386SX chip at 16MHz, a 386DX chip at 16, 20, or 25 MHz, or several 486 models.

Modern computers contain an Intel Pentium chip or AMD Athlon chip. They run at about 2800MHz (which is 2.8GHz).

Keyboard

The PC’s keyboard contained 83 keys:

The keyboard was designed by Don Estridge personally. To fit all those keys on the small keyboard, he had to make the Enter and Shift keys smaller than typists liked.

Above the top row of keys, he put a shelf to hold pencils. To make room for that shelf, he put the 10 function keys at the left side of the keyboard, even though it would have been more natural to put the F1 key near the 1 key, the F2 key near the 2 key, etc.

The XT’s keyboard was the same, but XT clones rearranged the keys to make the Enter and Shift keys be bigger.

The AT’s keyboard made the Enter and Shift keys be bigger and included 1 extra key (making a total of 84 keys). In January 1986, IBM began selling a bigger AT keyboard that included 101 keys and put the function keys in the top row (near the pencil ledge) instead of at the left.

Modern computers include 3 extra keys to handle modern Windows (making a total of 104 keys) and often include even more keys, to handle the Internet!

Removable disks

For the PC, IBM used 5¼-inch floppy disks holding just 160K. Then IBM switched to 180K, then 360K. The XT used 360K disks also. The AT used 1.2M disks. All those disks were 5¼-inch.

The PS/2 used 3½-inch disks instead, because they were sturdier, more reliable, easier to carry, and permitted the drive & computer to be smaller. Those 3½-inch disks typically held 1.44M. (Exceptions: the cheapest PS/2 models handled just 720K; some experimental models could handle 2.88M.)

Modern computers use CD and DVD disks instead of floppy disks.

Video

The PC’s base price didn’t include a monitor — or even a video card to attach the monitor to.

Color versus monochrome When IBM announced the PC, it announced two kinds of video cards. One kind attached to a color monitor and was called the Color Graphics Adapter (CGA). The other kind attached to a monochrome monitor and was called the Monochrome Display Adapter (MDA).

Which was better: CGA or MDA? CGA had two advantages: it could handle colors, and it could handle graphics. MDA had two advantages: it could produce prettier characters (though no graphics), and it could underline.

CGA could handle these display modes:

MDA could handle this display mode:

Hercules A company called Hercules invented the Hercules graphics card, which resembled the MDA but could also display black-and-white graphics on the monochrome monitor. Several companies made video cards imitating the Hercules card; those imitations were called Hercules-compatible graphics cards.

Hercules could handle these display modes:

EGA In September 1984, IBM invented the Enhanced Graphics Adapter (EGA) and an EGA monitor to go with it. That combination was better than CGA: it produced more colors and higher resolution. It could handle these display modes:

Unfortunately, it was too expensive for most folks.

VGA The PS/2 came with an even better color monitor, called a Video Graphics Array color monitor (VGA color monitor), and a VGA chip on the motherboard to go with it. That combination produced even more colors and even higher resolution. It could produce many thousands of colors (262,144 colors!), though you could display just 256 of them simultaneously. IBM figured out a way to make the VGA chip cheaply, so it became popular. It could handle these display modes:

VGA downgrades For folks who were so impoverished that they couldn’t afford the VGA chip, IBM invented an cheaper good chip, called the Multi-Color Graphics Array chip (MCGA chip), which produced fewer simultaneous high-resolution colors. It could handle these display modes:

For folks who couldn’t afford a VGA color monitor, IBM invented a cheaper VGA monitor, which displayed shades of gray instead of colors.

VGA upgrades Modern computers come with better VGA monitors and chips, producing a resolution of 1024´768 or even higher.

Power supply

Inside the system unit, the PC contained a power supply, which transformed AC current to DC and could produce 63½ watts of power. It also contained a fan that acted as a farting ass: it sucked hot air from inside the computer and blew it out the computer’s backside.

The XT contained a stronger power supply that could produce 135 watts, to help it handle the hard drive.

The AT contained an even stronger power supply: 192 watts. AT clones contained an even stronger power supply: 200 watts.

Modern computers use modern circuitry, which is more energy-efficient and doesn’t require so much power. Some modern computers get by with just 135 watts. Tall towers containing extra circuitry sometimes contain bigger power supplies: 200 or 300 watts.

In modern computers, the power supply does not act as a farting ass. Instead, it pushes the air in the opposite direction. It sucks in air from outside the computer, so it acts as a nose: it breathes in fresh air.

Don’t put your new computer back-to-back with an old computer. If you do, the new computer will breathe in the old computer’s hot farts!

Bus

A computer’s motherboard contains slots, to hold printed-circuit cards.

8-bit PC bus The PC’s motherboard contained 5 slots, to hold printed-circuit cards. The motherboard’s 62 wires running to and through the slots were called the bus. Since it was in the PC, it was called the PC bus.

Of the 62 wires, just 8 carried data. The other 54 wires were “bureaucratic overhead” that helped control the flow.

Since just 8 wires carried data, the bus was called an 8-bit data bus, its slots were called 8-bit slots, and the printed-circuit cards you put into the slots were called 8-bit cards.

The XT’s motherboard used the same PC bus but included 8 slots instead of 5.

16-bit AT bus The AT’s motherboard used a wider bus: 98 wires instead of 62. Of the 98 wires, just 16 carried data, so the bus was called a 16-bit data bus. It was called the AT bus. That 98-wire technique was called the Industry Standard Architecture (ISA, pronounced “eye suh”). The bus was therefore also called the ISA bus, its slots were called ISA slots, and the printed-circuit cards you put into the slots were called ISA cards.

32-bit bus Later computers used an even wider bus: a 32-bit data bus!

If you had a PS/2 computer based on a 386 or 486 chip, it used a 32-bit bus called the Micro Channel. That technique was called Micro Channel Architecture (MCA). Into its slots, you put MCA cards.

If you had a clone containing a 386 or 486, and the clone was fancy, it used a 32-bit bus technique called Extended ISA (EISA, pronounced “ee suh”). Its bus was called the EISA bus; into its slots, you put EISA cards.

If your computer is modern (containing a Pentium or Athlon or Sempron or Duron or K6), it uses a 32-bit bus technique called Peripheral Component Interconnect (PCI). Its bus is called the PCI bus; into its slots, you put PCI cards. The nice thing about PCI cards is that the computer can automatically figure out what each card’s purpose is, so you can just plug the card into the slot and start using the card immediately: that feature is called plug and play, though sometimes it works imperfectly (which is why cynics call it plug and pray).

1-bit USB bus If your computer is very modern, it contains a 32-bit PCI bus but also contains a second bus, called the Universal Serial Bus (USB), which is a 1-bit bus that’s slow but has three nice properties: all USB devices are
plug-and-play, external (so you can install them without opening the system unit’s case), and hot-swappable (so you can insert, remove, or swap the devices safely even while the power is still on). The typical modern computer has 1, 2, 3, or 4 USB slots, which are on the system unit’s back wall and called USB ports.

Multimedia

The PC’s price included no mouse, no microphone, no modem, no speakers (except for a tiny internal speaker that just beeped), and no CD or DVD drive, because all those devices were too expensive then. The XT, AT, and PS/2 had the same disappointments.

Modern computers come with a mouse, a microphone, a modem, stereo speakers (2 of them or 3 or 5!), and a DVD drive.

 

Here’s how most computers are priced. (I’ll show you the prices that were in effect when this book went to press in February 2011. Prices drop about 3% per month, 30% per year.)

$500 is the standard price for a “standard” computer. That’s the cheapest kind of modern computer.

If you pay more than $500, you get a computer that’s fancier — a powerful “muscle machine” that will impress your friends. They’ll be impressed by how much money you spent. (If you pay much more than $500, they might also be impressed by how stupid you were to overspend.)

If you pay less than $500, you get a computer that’s old-fashioned. If you pay slightly less than $500, the clone will still run most programs fine, though your friends might laugh at you for buying such a puny, quaint computer. If you pay much less than $500, that’s either because your computer will have significant difficulty running modern programs or you bought the computer at a special “sale” that restricts your benefits and options. But hey, if you can’t afford $500, a substandard computer is better than no computer at all! If you buy a substandard computer, your next task is to figure out which software it can handle well; then buy just that kind of software.

Here are the details.…

 

 

 

I’d like to tell you about a company that makes reliable, powerful computers, charges you very little, and is a pleasure to call if you ever need technical help.

Hero companies rise but then fall because they suffer through this business cycle:

What’s in store for you

This chapter portrays the players.

To get the lowest prices for decent computers, buy from Best Buy or Staples or Walmart.

When this book went to press in June 2011, here’s what those chains charged for notebook computers:

Here are examples of that pricing:

Here’s what they charged for desktop computers:

Here are examples of that pricing:

 

Acer, Gateway, and eMachines used to be 3 separate companies.

In 2004, Gateway bought eMachines. In 2007, Acer bought Gateway. So now Acer, Gateway, and eMachines are all under the same ownership, though the brand names and marketing strategies remain separate.

Here are the details.…

eMachines

eMachines was the first major company that advertised modern computers for under $400 and let you buy them in many stores.

History Here’s how the eMachines company began…

Tandy Corporation owned Radio Shack and also owned a chain of discount computer superstores called Computer City. Tandy eventually gave up trying to run Computer City and sold that chain to CompUSA. Computer City’s president (Stephen Dukker) was dismayed at becoming a CompUSA vice-president, so he quit and started his own company, eMachines, which invented cheap computer systems (under $500) and sold them to retail stores such as CompUSA.

He started eMachines in September 1998, using money invested by two Korean companies: Trigem (which makes eMachines’ computers) and Korea Data Systems (KDS) (which makes eMachines’ monitors).

He was wildly successful. Nine months later, in June 1999, his company become the third-biggest seller of desktop&tower computers in retail stores: just Compaq and Hewlett-Packard sold more desktop&tower computers than he. In the next month, July 1999, he shipped his 1 millionth computer. In March 2000, eMachines went public, with stock selling for $8 per share. In September 2000, he shipped his 3 millionth computer.

But after that, eMachines fell on hard times. For example, in January 2001, eMachines’ revenues (sales figures) were just half of the previous January’s. That was because the prices of fancy computer decreased, so consumers decided to buy them instead of the crummy computers that eMachines sold.

Its board of directors got worried. In February 2001, the board fired Stephen Dukker and hired, as the new head, Wayne Inouye, who was Best Buy’s senior vice president in charge of computer merchandising. In May 2001, the company was delisted from Nasdaq, because the shares were selling for less than $1 each. In November 2001, the board agreed to sell the whole company to KDS’s owner, Lap Shun “John” Hui, and his private company, called EM Holdings, for $1.06 per share, 161 million dollars total.

By April 2002, eMachines had sold a total of 4 million computers since the company began. That’s not much more than the 3 million sold by September 2000.

eMachines became number 2 in retail U.S. sales, far behind Hewlett-Packard (which sells the Hewlett-Packard and Compaq brands). Analysts worried that eMachines might go bankrupt; but in 2001, eMachines improved its computers (which had been miserable) and its tech support (which had been atrocious before Wayne Inouye spent 20 million dollars extra on tech support and customer service in 2001). Now eMachine computers are finally worth getting: they’re good computers at rock-bottom prices. Consumer surveys show that computers from eMachines are more reliable and better serviced than computers from most other computer brands.

To guard eMachines from going bankrupt, the company accepted no returns from computer stores and kept few computers in stock: it kept waiting for small shipments to arrive by boat from its suppliers in Asia, so it occasionally ran out of computers.

When I went to buy a computer in 2001, I found myself buying an eMachines computer, because eMachines offered much lower prices than any other computer manufacturer. eMachines lived up to its new slogan, which was “the best computer and service little money can buy”.

The computer I bought came with one “defect”: whenever I moved the mouse, the computer made a buzzing sound. I finally figured it out: the eMachines company was too cheap to include a microphone and too stupid to remember to turn off the microphone jack, which picked up interference from mouse & monitor motions. The solution was to give the computer a command to disable the microphone jack.

eMachines work better now.

In 2003, the eMachines company’s revenue was 1.1 billion dollars (a huge number!), even though eMachines had just 138 employees.

Prices eMachines computers are available at Walmart, Best Buy, and many other stores. The eMachines contribution to the world of cheap computers is: distribution!

Here’s what eMachines charged when this book went to press in February 2011:

The hard drive is fast (7200 rpm). Each computer also includes a 16X DVD±RW drive, keyboard, mouse (with 2 buttons and wheel), Ethernet connector (for connecting to the Internet or other high-speed network), Windows 7 Home Premium, Microsoft Office (Starter edition), and 1-year warranty.

Those prices do not include a monitor or speakers. eMachines advertises 2 monitors, which have built-in stereo speakers:

So eMachines’ cheapest computer with cheapest monitor costs a total of $298+$140=$438.

But wait! You can pay even less! Best Buy and Walmart often have their own extra discounts. Look in your local Sunday paper for the flyers from Best Buy and Walmart to find out what eMachine deals are available this week.

For example, when this book went to press, Best Buy was having a sale where you can get an EL 1850-01E computer (Celeron, 2G DDR2, 500G) and cheap monitor (E 182 H Dmbd) for a total price of just $400! That’s how much you pay at the cash register; you don’t have to wait for rebates. If you pay $50 more, Best Buy will give you the EL 1352-07E computer (Athlon II X2, 4G DDR3, 500G) instead of the EL 1850-01E.

Where to research For more info about eMachines, look at the eMachines Internet Web site, which is www.e4me.com. But don’t buy computers directly from that Web site: buy from Walmart and Best Buy instead, to get the rebates.

“Free” computer Back in 1999, eMachines offered an extra $400 rebate if you’d sign a 3-year contract to make Compuserve your Internet service provider. The cheapest eMachines computer would cost you “$474 minus a $75 rebate minus a $400 Compuserve rebate”, making the final price be about $0. Stores advertised it as being a “free computer”. That kind of ad was popular in November 1999 and sold many eMachine computers.

Such ads neglected to mention that the price did not include a monitor and that you had to sign a 3-year Compuserve contract, at a cost of $21.95 per month, so the contract would cost you a total of “36 months times $21.95”, which is $790.20. Those ads were declared “misleading” by many state governments in the year 2000 — and banned.

How Gateway arose

Gateway was the first company to sell lots of computers by mail. Gateway became the mail-order king — until Gateway stumbled and Dell zoomed ahead. Gateway’s stumbling is what motivated Gateway to buy eMachines. Here are the details.…

Gateway began because of cows. In the 1800’s, George Waitt began a cattle company. According to legend, he got his first herd by grabbing cattle that jumped off barges into the Missouri River on the way to the stockyards. His cattle business passed to his descendants and eventually into the hands of his great-grandson, Norm, who built the Waitt Cattle Company into one of the biggest cattle firms in the Midwest. The company is on the Missouri River, in Iowa’s Sioux City (where Iowa meets South Dakota and Nebraska).

Norm’s sons — Norm Junior and Ted — preferred computers to cows, so on September 5^th, 1985, they started the “Gateway 2000” company in their dad’s office. They told him computers are easier to ship than cows, since computers can take a long journey without needing to be fed and without making a mess in their boxes.

22-year-old Ted was the engineer and called himself “president”; Norm Junior was the businessman and called himself “vice president”. Their main investor was their grandma, who secured a $10,000 loan. They hired just one employee: Mike Hammond.

At first, they sold just parts for the Texas Instruments Professional Computer. Soon they began building their own computers. By the end of 1985, they’d sold 50 systems, for which customers paid a total of $100,000.

Gateway grew fast:

For each year, that chart shows how many computers were sold during the year, the total numbers of dollars that customers paid for them and for add-ons, and how many employees Gateway had at the year’s end.

Here are highlights from the history of Ted Waitt and his employees during those years:

Now Ted own about 30% of Gateway’s stock; Norm Junior owns very little.

Though Gateway became huge, with offices worldwide in France, Germany, Ireland, Australia, and Japan, it was still headquartered in North Sioux City, a small behind-the-times town that got its first 4-way stop sign in 1992, first McDonald’s hamburger joint in 1994, and doesn’t have any traffic lights yet.

Gateway gets along well with its neighbors: in fact, two former mayors of Sioux City became Gateway employees!

Gateway became a rapidly growing cash cow: moo-lah, moo-lah! But Gateway didn’t lose its sense of humor. When you buy a Gateway computer, it comes in a box painted to look like a dairy cow: white with black spots.

Ben & Jerry’s Ice Cream sued Gateway for copying the idea of putting cow spots on packages. Meanwhile, Gateway sued a shareware distributor called Tucows for using spotted cows to sell computer products. Those suits have been settled.

Gateway’s ads

Gateway became famous because of the amazing photography in its ads.

Gateway was the first big mail-order manufacturer to give honest pricing: the advertised price includes everything except shipping. The price even included a color monitor. And since all components were high-quality, a Gateway system was a dream system. With dreamy ads and a low price, how could you not buy?

Gateway also came up with a friendly slogan: “You’ve got a friend in the business.”

How Gateway fell

On Millennium Day — January 1, 2000 — Ted Waitt decided to semi-retire: he turned the day-to-day operation of Gateway over to Jeff Weitzen, who had joined Gateway 2 years earlier after working at AT&T for 18 years. So Jeff became Gateway’s President and Chief Executive Officer (CEO), though Ted remained Chairman of Gateway’s Board of Directors.

Jeff was proud to be chosen as the man to take Gateway past the millennium. He had many inspired ideas — most of which turned out to be wrong.

He decided to move Gateway’s executive offices to downtown San Diego, to attract executive talent who wouldn’t put up with South Dakota’s remoteness and harsh winters. Then Ted decided to move Gateway’s executive offices again, to a San Diego residential suburb called Poway, so employees living in San Diego’s suburbs wouldn’t have to commute into the city. Meanwhile, manufacturing was still back in South Dakota, along with the cow-spotted boxes. The company was schizophrenic.

Another example of corporate schizophrenia was Jeff’s decision to “think outside the box”: sell not just a box full of hardware but also sell service.

Gateway’s revenues plummeted, Gateway’s profits suddenly started turning into huge losses, shares of Gateway stock became nearly worthless, and Ted Waitt became non-rich.

To be fair, you can’t blame all of Gateway’s problems on Jeff: the whole computer industry had a tough year in 2000, when consumers decided that the new computers weren’t different enough from old computers to be worth upgrading to. But Jeff’s moves were in the wrong direction.

In January 2001, a year after Jeff took over, he gave up — resigned — and Ted Waitt became the CEO again.

But it was too late. Gateway had lost its luster. The prince and king of mail-order had become a pauper. Upon becoming CEO again, Ted’s first act was to run an ad bragging that Gateway would match the prices of 6 big competitors: IBM, HP, Compaq, Sony, Toshiba, and Dell. That ad was stupid. Gateway was supposed to be a mail-order discounter: all it can brag about is that’s not more expensive than retail? The ad bombed. So did the company. In 2001, Gateway made no profit. In fact, it lost a billion dollars. That’s a lotta moolah muck!

It’s strange that the average mom-and-pop tiny business, which makes hardly any profit, nevertheless makes more profit than a huge company such as Gateway.

Here are Gateway’s statistics:

Afterwards, Ted started laying off employees, closing international sales offices, closing the Gateway Country Stores, making Gateway a tiny company, and reducing Gateway’s reliance on mail-order computer sales: he tried to diversify into selling big-screen TV sets, digital cameras, and DVD players.

Here’s my message to Ted:

I feel sad about Gateway. I was one of the first journalists to recommend Gateway. I’m sorry to see Gateway go downhill.

The seeds of Gateway’s downfall were already planted back in December 1993, when Gateway went public. That’s when Gateway first lost sight of its roots, raised prices (to make the stockholders happy), and I stopped recommending Gateway: I switched to other, hungrier companies instead.

When Gateway bought eMachines in March 2004 (for 30 million dollars plus 50 million shares of Gateway common stock), the eMachines CEO (51-year-old Wayne Inouye) became the Gateway’s CEO, replacing 41-year-old Ted Waitt (though Ted is still the chairman of Gateway’s board of directors). That move was easy for Wayne, since Gateway’s headquarters (in Poway, California) was just 50 miles from the eMachines headquarters (in Irvine, California).

Contacts

Here’s how to reach Gateway — what’s left of it.

Acer

Acer is a huge consortium of Taiwanese computer companies.

It makes “Acer computers” and “Acros computers”. They’re particularly popular in Southeast Asia and Latin America. They’ve also been sold in the U.S., through computer stores and department stores.

In 2001, Acer split into 3 companies:

After that split, Acer bought Gateway.

 

Hewlett-Packard (HP) and Compaq were two separate companies, but in 2002 HP bought Compaq. Here are the details.

How HP arose

Hewlett-Packard (HP) was started by two young Stanford University graduates — Bill Hewlett and Dave Packard — back in 1938, in a garage in Palo Alto, California, where they built their first product: an audio oscillator (electronic test instrument used by sound engineers), which they sold to several customers, including Walt Disney, who eventually used 8 of them to test the sound in movie theaters showing the movie Fantasia.

Those boys weren’t sure whether to call the company “Hewlett-Packard” or “Packard-Hewlett”, so they flipped a coin. Hewlett won. They formalized the partnership on January 1, 1939.

The company began to grow:

During World War 2, HP sold the U.S. Navy devices that generated microwaves and jammed radar. Later, HP started making other lab equipment, medical equipment, plotters, printers, minicomputers, and pocket calculators but was scared to enter the field of personal computers. HP developed a reputation for making equipment that was high-quality — and somewhat pricey.

How Compaq arose

The first company that made high-quality IBM clones was Compaq. Compaq began selling them back in 1983. (Before Compaq, the only IBM clones available were crummy.)

Compaq began in a restaurant. While eating at a House of Pies restaurant, two engineers drew on the paper placemat their picture of how the ideal IBM clone would look. Instead of being a desktop computer, it would be a luggable having a 9-inch built-in screen and a handle, the whole computer system being small enough so you could pick it up with one hand. Then they built it! Since it was compact, they called it the Compaq Portable Computer and called the company Compaq Computer Corporation.

They began selling it in 1983, helped by venture-capital funding from Ben Rosen. They charged about the same for it as IBM charged for the IBM PC.

They sold it just to dealers approved by IBM to sell the IBM PC. That way, they dealt just with dealers IBM said were reliable — and they competed directly against IBM in the same stores.

They succeeded fantastically. That first year, sales totaled 100 million dollars.

In 1984, they inserted a hard drive into the computer and called that souped-up luggable the Compaq Plus. They also built a desktop computer called the Deskpro. Like Compaq’s portable computers, the Deskpro was priced about the same as IBM’s computers, was sold just through IBM dealers, and was built well — a marvel of engineering, better than IBM’s.

Later, Compaq expanded: it built IBM clones in all sizes, from gigantic towers down to tiny handheld computers. Compaq computers got the highest praise — and ridiculously high prices.

On many technological issues, Compaq was the first company to innovate: for example, when Intel invented the 386 chip, the first company to use it was Compaq, not IBM.

How Compaq cheapened

Compaq was founded by Rod Canion. Under his leadership, Compaq developed a reputation for high quality and high prices. Engineers said that Compaq’s computers were overdesigned: they were built more sturdily than necessary for average use and were therefore too expensive.

Worried about Compaq’s high prices, some Compaq employees went on a secret mission, without telling Rod: they sneaked into a computer show, pretended they weren’t from Compaq, pretended they were starting a new computer company, and tried to buy computer parts from Compaq’s suppliers. Compaq’s suppliers offered them lower prices than the suppliers were offering Compaq — because Compaq had developed a reputation as an overly fussy company to do business with.

The secret missionaries went back to Compaq and reported their findings to the board of directors, who were becoming upset at Compaq’s astronomically high prices; so in 1991 the board fired Rod and replaced him with a cost cutter, Eckhard Pfeiffer (from Germany). So Pfeiffer became the new Chief Executive Officer (CEO).

He lowered Compaq’s prices, so Compaq became affordable, and he gave up the idea that Compaq should have super-high quality. He began selling through a greater variety of dealers and through mail-order.

The low-price wide-distribution strategy worked well. More people bought Compaq computers. Sales zoomed, though Compaq’s “quality reputation” declined. To compete against a company called “Packard Bell” (which sold junky computers cheaply through department stores), Compaq imitated Packard Bell: Compaq lowered its prices and its service.

In February 1995, Compaq started this nasty new service policy:

Eventually, Compaq dropped that nasty policy: tech-support calls are now free during the “initial period” (1 year on hardware questions, 3 months on software questions, longer if your Compaq was expensive): call 800-ok-Compaq, day or night (24 hours).

Compaq is based in Houston, Texas. You can still reach Compaq by phoning 800-at-Compaq or viewing Compaq’s Internet Web site, www.compaq.com.

HP Pavilion

In 1995, HP began manufacturing an IBM clone called the Pavilion, sold through local computer stores, electronics stores, office-supply stores, and department stores. Here’s why the Pavilion became popular:

Compaq’s reaction

Compaq started having financial difficulties, for 2 reasons:

So in 1998, Compaq’s board of directors fired Pfeiffer.

In 1999, the board finally decided to make Compaq’s next CEO be Michael Capellas, a low-key friendly computer technician that everybody likes. Most important, he’s liked by Ben Rosen (the venture capitalist who funded the Compaq’s founder and was still chairman of the board).

Michael created computers that were low-cost but exciting. By the year 2000, Compaq was selling more computers than any other manufacturer. Yes, it was selling more computers than IBM, Gateway, HP, Dell, and the rest of the gang.

In July 2000, I had to buy a notebook computer for my stepdaughter. Since I’m supposed to be a “computer expert”, I dutifully looked at all the ads in computer magazines and talked to my friends in the computer industry, trying to find the best deal. I thought the best deal would be some sort of mail-order company; but the best deal on a notebook computer turned out to be from Compaq! That notebook was the Compaq Presario 1200-XL118. It included lots of features but cost just $999 after rebates from Compaq and Circuit City — and I paid even less than that by using price-matching and further rebates from Staples. Compaq notebooks are even cheaper now!

Merger

The Compaq-versus-HP debate ended in 2002, when HP bought Compaq, with approval from Michael Capellas and Ben Rosen. The combo is called a “merger”. The combined company is called “Hewlett-Packard”, though Compaq lovers prefer to call it “Hewlett-paq” or “Hewpaq”. So now you can get two kinds of computers from a single company, whose leader (chairperson and CEO) is a pleasant HP woman named Carleton Fiorina. (Her nickname is “Carly”.)

Michael Capellas became Carly’s assistant and got the title “President”, but a few months after the merger he quit HP and took on a new challenge: becoming the new head of scandal-ridden WorldCom. WorldCom picked him because it wanted to be led by somebody who’s really reputable!

Prices

Staples, Best Buy, and Walmart give rebates on HP and Compaq computers, so the final price you pay is just slightly higher than for eMachines — and the specs are slightly fancier.

 

Though Compaq was the first company to make good IBM clones, its clones were expensive. The first company that sold fast IBM clones cheaply was PC’s Limited, founded in 1984 by a 19-year-old kid, Michael Dell. He operated out of the bedroom of his condo apartment, near the University of Texas in Austin.

At first, his prices were low — and so were his quality and service. Many of the computers he shipped didn’t work: they were dead on arrival (DOA). When his customers tried to return the defective computer equipment to him for repair or a refund, his company ignored the customer altogether. By 1986, many upset customers considered him a con artist and wrote bitter letters about him to computer magazines. He responded by saying that his multi-million-dollar company was growing faster than expected and couldn’t keep up with the demand for after-sale service.

In 1987, Dell raised his quality and service — and his prices. In 1988, he changed the company’s name to Dell Computer Corporation.

Now he charges almost as much as IBM and Compaq.

His quality and service have become top-notch. They’ve set the standard for the rest of the computer industry. In speed and quality contests, his computers often beat IBM and Compaq.

In 1997 Dell officially became the top dog in the computer-quality wars: according to PC World magazine’s surveys of its readers, Dell’s computers were more reliable than any other brand, and Dell’s tech-support staff did the best job of fixing any problems promptly.

Dell’s ads bashed Compaq for having higher prices than Dell and worse policies about getting repairs — since Dell offered on-site service and Compaq doesn’t.

Dell tried selling through discount-store chains but gave up and decided to return to selling just by mail. Though HP/Compaq is king of retail sales, Dell’s become king of mail-order sales.

Dell computers used to come with this guarantee: if Dell doesn’t answer your tech-support call within 5 minutes, Dell will give you $25! Dell doesn’t make that guarantee anymore.

Dell gives lifetime toll-free technical support for hardware questions and usually answers its phones promptly. Unfortunately, Dell has reduced Windows technical support from “lifetime” to “30 days”.

Dell’s downfall

Though Dell’s tech support used to be good, now it’s terrible — because Dell’s decided to save money by sending most tech-support calls to Bangalore, India, where your call is answered by a person whose English is hard to understand and who doesn’t understand American slang and whose computer knowledge is minimal. After receiving many complaints from business customers, Dell’s adopted this new policy: if you buy an expensive “business” computer from Dell, Dell will have your call answered in the USA; but if you buy a cheap “consumer” computer from Dell, Dell’s gonna still treat you like dirt and have your call answered in India. All recent surveys show that consumers who buy Emachines or ABS computers are happier than consumers who buy from Dell. Stay away from Dell.

HP’s CEO, Carly Fiorina, laughed at Dell and asks “Is Dell really a computer company?” since Dell doesn’t really research, invent, manufacture, or service computers anymore: it just rebrands and markets computers manufactured by others and gives hardly any support. What a disappointment!

Alienware

Alienware is a company that makes high-speed computers, for use in playing high-speed action games and doing high-speed video editing. In 2006, Dell bought Alienware, so now Alienware is wholly owned by Dell.

How to get Dell

If you want a free Dell catalog or want to chat with a Dell sales rep, phone 800-BUY-DELL.

If you want to buy a Dell computer, don’t react to the first ad you see: Dell sells the same computer at many different prices. For example, prices in Dell’s catalogs, magazine ads, and Web sites are all different from each other. Consumers have discovered that the cheapest way to buy a Dell computer is often at Costco warehouse clubs. Another way to buy a Dell computer cheaply is at Walmart.

Here are other choices to consider.…

Micro Express

Walmart, Best Buy, and Staples sell normal computers. If you want a fancier computer, consider Micro Express, which is a mail-order company that sells high-speed computers less expensively than Alienware. For example, Micro Express can sell you a computer that has a super-fast CPU chip (Intel Core i7 980X Extreme Edition), gigantic RAM (24G), and gigantic hard drive (2T). Micro Express sells cheaper computers also. Micro Express has a good reputation.

To configure your own favorite combination, phone Micro Express at 800-989-9900 or 949-460-9911 or write to Micro Express (at 8 Hammond Drive #105, Irvine CA 92618) or better yet, visit its Website at www.MicroExpress.net.

Micro Center

Though eMachines sells computers for under $500, the first major company to sell good computers for under $500 was Micro Electronics Incorporated (MEI), which runs a chain of stores called Micro Center. It manufactures a computer called the PowerSpec and sells the system unit for $499.99. It also sells fancier versions at higher prices.

You can buy PowerSpec computers at a Micro Center superstore (a pleasant place to shop!) or mail-order (800-382-2390).

Industrial nuts

To get the lowest computer prices, many people have been phoning a secret group of amazing companies advertising in Computer Shopper. The group is called the industrial nuts because the employees are industrious, the prices are nutty, and the location is these two Los Angeles suburbs: “City of Industry” and “Walnut”. The owners and employees seem mostly Chinese.

Recently, most of those companies shut down, but the following are still in business:

They sell mainly notebook computers.

These 22 industrial nuts have gone out of business:

Cleveland commandos

In 1997, Computer Shopper was deluged with ads from a horde of companies in Cleveland and its suburbs. Those companies offered low prices, nearly as low as the industrial nuts. Recently, most of those companies shut down, but the following are still in business:

Those companies have advertised under alternative names:

Those alternative names are no longer used.

These 15 commandos have dived to their death and gone out of business:

ABS

Earlier editions of this book praised ABS for selling high-quality computers.

Because of recent low-price competition from HP and Acer, ABS has given up trying to sell computers. Now ABS sells just high-quality computer parts (keyboards, headsets, cases, power supplies, and cameras), to make your own computer fancier.

Alternatives

In many towns, entrepreneurs sell computers for ridiculously low prices in computer shows and tiny stores. Before buying, check the computer’s technical specifications and the dealer’s reputation. If the dealer offers you software, make sure the dealer also gives you an official manual from the software’s publisher, with a warranty/registration card; otherwise, the software might be an illegal hot copy.

For further advice, phone me anytime at 603-666-6644.

What’s the most important computer company? IBM? Microsoft?

No! The most important computer company is actually Apple. That’s the company that’s had the greatest influence on how we deal with computers today.

Apple was the first computer manufacturer to popularize these ideas successfully:

Apple didn’t invent any of those ideas, but Apple was the first company to popularize them, make people want them, and thereby change our idea of what a computer should do.

Though just 4% of the computers sold today are made by Apple, we all owe a big debt to Apple for how that company improved our world.

Here’s how Apple arose and changed our lives.…

Original Apple

The original Apple computer was invented by Steve Wozniak, who was an engineer at Hewlett-Packard. In 1975, he offered the plans to his boss at Hewlett-Packard, but his boss said Steve’s computer didn’t fit into Hewlett-Packard’s marketing plan. His boss suggested that Steve start his own company. Steve did.

He worked with his friend, Steve Jobs. Steve Wozniak was the engineer; Steve Jobs was the businessman. Both were young: Steve Wozniak was 22; Steve Jobs was 19. Both were college drop-outs. They’d worked together before: when high-school students, they’d built and sold blue boxes (boxes that people attached to telephones to illegally make long-distance calls free). Steve & Steve had sold 200 blue boxes at $80 each, giving them a total of $16,000 in illegal money.

To begin Apple Computer Company, Steve & Steve invested just $1300, which they got by selling a used Volkswagen Micro Bus and a used calculator.

They built the first Apple computer in their garage. They sold it by word of mouth, then later by ads. The advertised price was just $666.60.

Like all computers of that era, the first Apple computer was primitive: it had none of the features for which Apple is now famous. (No color, no 3½-inch floppy disks, no CD-ROM disks, no mouse, no icons, no pull-down menus, no laser printers, no desktop publishing, no pretty fonts, no paint & draw programs.)

Apple 2

The original Apple computer looked pathetic. But in 1977, Steve & Steve invented a slicker version, called the Apple 2. Unlike the original Apple, the Apple 2 included a keyboard and displayed graphics in color. It cost $970.

The Apple 2 became a smashing success, because it was the first computer for under $1000 that could display colors on a TV. It was the only such computer for many years, until Commodore finally invented the Vic, which was even cheaper (under $300).

At first, folks used the Apple 2 just to play games and didn’t take it seriously. But two surprise events changed the world’s feelings about Apple.

MECC The first surprise was that the Minnesota state government decided to buy lots of Apple 2 computers, put them in Minnesota schools, and write programs for them. That state agency, called the Minnesota Educational Computing Consortium (MECC), then distributed the programs free to other schools across America.

Soon, schools across America discovered that personal computers could be useful in education. Since the only good educational programs came from Minnesota and required Apples, schools across America bought Apples — and then wrote more programs for the Apples they’d bought. Apple became the “standard” computer for education — just because of the chain reaction that started with a chance event in Minnesota. The chain reaction spread fast, as teachers fell in love with the Apple’s color graphics.

VisiCalc The next surprise was that a graduate student at the Harvard Business School and his friend at M.I.T. got together and wrote the first spreadsheet program, called VisiCalc. They wrote it for the Apple 2 computer, because it was the only low-cost computer that had a reliable disk operating system.

(Commodore’s computers didn’t have disks yet, and Radio Shack’s disk operating system was buggy until the following year. Apple’s success was due to Steve Wozniak’s brilliance: he invented a disk-controller card that was amazingly cheap and reliable.)

The VisiCalc spreadsheet program was so wonderful that accountants and business managers all over the country bought it — and therefore had to buy Apple computers to run it on.

Apple 2+ In 1979, Apple Computer Corporation began shipping an improved Apple 2, called the Apple 2+.

Its main improvement was that its ROM chips contained a better version of Basic, called Applesoft Basic, which could handle decimals. (The version of Basic in the old Apple 2’s ROM chips handled just integers.)

Another improvement was how the Reset key acted.

Slots In the Apple 2+ and its predecessors, the motherboard contained eight slots, numbered from 0 to 7. Each slot could hold a printed-circuit card.

Apple 2e In 1983, Apple began shipping a further improvement, called the Apple 2 extended, expanded, enhanced (Apple 2e). Most programs written for the Apple 1, 2, and 2+ also ran on the Apple 2e.

To improve on the Apple 2+ keyboard (which contained just 52 keys), the Apple 2e keyboard contained 11 extra keys, making a total of 63.

Unlike its predecessors, the Apple 2e omitted slot 0, because the Apple 2e didn’t need a RAM card: the Apple 2e’s motherboard already contained lots of RAM (64K).

The Apple 2e contained an extra slot, called slot 3A. It resembled slot 3 but held a more modern kind of video card that came in two versions: the plain version let your Apple display 80 characters per line; the fancy version did the same but also included a row of 64K RAM chips, so that your Apple contains 128K of RAM altogether.

The Apple 2e was invented in 1983 — the same year as the IBM XT. Which was better?

Apple 2c In 1984, Apple created a shrunken Apple 2e called the Apple 2 compact (Apple 2c). Besides being smaller and lighter than the Apple 2e, it cost less. It also consumed less electricity.

But advanced hobbyists spurned the 2c — and stayed with the 2e instead — because the 2c didn’t have slots for adding cards; it wasn’t expandable.

When the 2c first came out, its ROM was fancier than the 2e’s, so that the 2c could handle Basic and a mouse better than the 2e. But in February 1985, Apple began putting the fancy ROM chips in the 2e also, so every new 2e handled Basic and a mouse as well as the 2c.

Apple invented an improved Apple 2c, called the Apple 2c+, whose disk drive was 3½-inch instead of 5¼-inch. Apple’s 3½-inch drive was technically superior to Apple’s 5¼-inch drive but angered users, since most educational software still came on 5¼-inch disks and wasn’t available on 3½-inch disks yet.

Apple 2GS In 1986, Apple created an improved version of the Apple 2e and called it the Apple 2 with amazing graphics & sound (Apple 2GS).

Apple 2 family All those computers resembled each other, so most programs written for the Apple 2 also worked on the Apple 2+, 2e, 2c, 2c+, and 2GS.

Apple has stopped marketing all those computers, but you can still buy them as “used computers” from your neighbors.

Clones Instead of buying computers built by Apple, some folks bought imitations, such as the Pineapple, the Orange, the Pear, and the Franklin. Such imitations were popular in the United States, Hong Kong, and especially the Soviet Union. Apple sued most of those companies (because they illegally copied Apple’s ROM) and made them stop building clones.

Apple permitted one clone to remain: the Laser 128, because that clone’s designer imitated the functions of Apple’s ROM without exactly copying it.

Apple 3

Back in 1980, shortly after the Apple 2+ was invented, Apple began selling the Apple 3. It was much fancier than the Apple 2+. Unfortunately, it was ridiculously expensive (it listed for $4995, plus a monitor and hard drive), it couldn’t run some of the Apple 2+ software, and the first ones off the assembly line were defective. Few people bought it.

When the IBM PC came out and consumers realized the PC was better and cheaper than the Apple 3, interest in the Apple 3 vanished. Apple gave up trying to sell the Apple 3 but incorporated the Apple 3’s best features into later, cheaper Apples: the Apple 2e and the Apple 2GS.

Lisa

Back in 1963, when Steve & Steve were just kids in elementary school, Doug Engelbart invented the world’s first computer mouse. He was at the Stanford Research Institute. During the 1970’s, researchers at Xerox’s Palo Alto Research Center (Xerox PARC) used his mouse as the basis of a fancy computer system, called the Alto. Xerox considered the Alto too big and expensive to sell well but invited the world to see it.

In 1979, Apple employees nudged Steve Jobs to go to Xerox and see the Alto. Steve was impressed by the Alto and decided to invent a smaller, cheaper version, which he called the Lisa, because that was his daughter’s name.

The Lisa changed the computer world forever. Before the Lisa, personal computers were awkward to use. The Lisa was the first affordable personal computer that made good use of a mouse, icons, horizontal menus, and pull-down menus.

Though the Lisa was “affordable”, it was affordable by just the rich: it cost nearly $10,000. For the Lisa, Apple invented some special business programs that were fun and easy to use; but the Lisa could not run Apple 2 programs, since the Lisa had a completely different CPU.

Apple gradually lowered the Lisa’s price.

Early Macs

In January 1984, Apple introduced the Macintosh (Mac), which was a stripped-down Lisa. Like the original Lisa, the Mac uses a mouse, icons, horizontal menus, and pull-down menus. The Mac’s price is low enough to make it popular.

The Mac is even more fun and easy than the Lisa! It appeals to beginners scared of computers. Advanced computerists like it also, because it feels ultra-modern, handles graphics quickly, and passes data from one program to another simply.

The original version of the Mac ran too slowly, but the newest versions run faster. They’re priced nearly as low as IBM clones.

Since the Mac’s so easy to use and priced nearly as low as IBM clones, many people have bought it. Lots of software’s been developed for it — much more than for the Lisa.

To run Mac software well, you must buy a Mac. Since popular Mac software does not run well on the Lisa, Apple has stopped selling the Lisa and stopped selling a compromise called the Mac XL.

Let’s take a closer look at the various early Macs.…

Original Mac Apple began selling the Mac for $2495. The Mac’s original version consisted of three parts: the mouse, the keyboard, and the system unit.

That Mac was called the original 128K Mac because it includes 128K of RAM (plus 64K of ROM).

Then Apple invented an improvement called the 512K Mac because it included 512K of RAM. (It used two rows of 256K chips instead of two rows of 64K chips.) Apple wanted to call it the “Big Mac” but feared that customers would think it was a hamburger.

Mac Plus In January 1986, Apple began selling a new, improved Mac, called the Mac Plus. It surpassed the 512K Mac in several ways:

Like the 128K and 512K Macs, the Mac Plus included one floppy drive.

Mac SE In 1987, Apple introduced an even fancier Mac, called the Mac SE. It ran software 15% faster than the Mac Plus because it contains a cleverer ROM (256K instead of 128K) and fancier support chips. It was also more expandable: it let you insert extra circuitry more easily. The keyboard cost extra: you could buy the standard keyboard (which had 81 keys) or the extended keyboard (which had 105 keys and cost more).

Mac 2 When Apple introduced the Mac SE, Apple also introduced a luxury model, called the Mac 2. It contains a faster CPU (a 16-megahertz 68020) and 6 slots for inserting printed-circuit cards.

Instead of sticking you with a 9-inch black-and-white monitor, it let you use any kind of monitor you wish: you could choose big or small; you could choose black-and-white or gray-scale or color. The monitor cost extra; so did the keyboard (standard or extended) and video card (which you put into a slot and attached the monitor to).

Since the Mac 2 let you choose your own monitor, the Mac 2 was called a modular Mac. When buying a modular Mac, remember that the monitor costs extra!

Performas versus Quadras In 1990, Apple stopped selling all the Macs that I’ve mentioned so far — the 128K Mac, 512K Mac, Mac Plus, Mac SE, and Mac 2. Apple switched to Macs that are more modern.

Then customers could choose between the Performa (for beginners) and the Quadra (which was still available, for experts).

Though Performas were idiotic, they were the best values: you got more hardware and software per dollar when you bought a Performa than when you bought a Quadra. The Quadras were just for annoyingly fussy nerds who insisted on customizing the computers, making their own decisions about which keyboard, monitor, and fax/modem to use.

At first, the rule was simple: Quadras were sold just at computer stores; Performas were sold just at general stores. At the end of 1994, Apple began letting computer stores sell both kinds of computers (Quadras and Performas), to handle both kinds of customers (experts and idiots). Non-computer stores (such as Staples) were still restricted to selling to idiots: they sold just Performas.

Performas came in several varieties: you could choose a normal CPU (a 68030), a faster CPU (a 68040), or an even faster CPU (a Power PC chip).

Power Macs After watching the Performa-versus-Quadra war, Apple decided on a compromise: all new Macs would include a keyboard (like a Performa), but you can typically choose your own monitor (like buying a Quadra).

In 1994, Apple began selling powerful Macs, called Power Macs. Each contained a fast CPU chip (called the Power PC), but the advertised price did not include a monitor.

Mac clones In 1995, Apple’s executives began letting other companies make clones of Macs. Those companies paid Apple a licensing fee. The most successful of those companies was Power Computing, whose clones ran much faster than Apple’s originals! Clones were also made by Radius, Motorola, and Umax.

But in 1997, Apple had a change of heart and withdrew the licenses of all the clone makers except Umax. Apple restricted Umax to making just clones that are “junk” (priced under $1000).

Umax no longer bothers to make Mac clones.

iMacs

In 1998, Apple began selling simplified Macs, to help beginners use the Internet. Each simplified Mac is called an Internet Mac (iMac).

Apple has sold it in 4 styles. Here are the details.…

Classic iMac The classic iMac looks out-of-this-world!

It looks like an airplane’s nose cone — or an ostrich egg from outer space. It’s translucent — which means you can almost see through it, like trying to look through a frosted shower-stall door to see the sexy woman inside. Intriguing! Every reviewer who saw the classic iMac loved it, and so did Apple’s customers. I bought one myself. It’s great!

It includes a 15-inch CRT, pair of stereo speakers, and fax/modem. The price also includes a keyboard, mouse, and software.

The translucent case is tinted in a wild color. The first iMac was in a color called Bondi Blue (named after Australia’s Bondi beach); later iMacs were in colors called Blueberry, Strawberry, Grape, Lime, Tangerine, Blue Dalmatian (white spots on a blue background), Flower Power (a floral print inspired by the 1960’s), Indigo (blue), Graphite (black) and Snow (white). Apple got lots of praise for creatively avoiding beige, and many hardware manufacturers imitated Apple’s wild color schemes.

Though that classic iMac is wonderful, Apple has stopped selling it, because the eMacs and new iMacs are even more powerful.

The eMac The eMac is white. It resembles a classic iMac but has a bigger screen: a 17-inch CRT instead of 15-inch. It was designed for schools (“eMac” means “educational Mac”) and was originally sold just to schools, but Apple later let everybody buy it.

New iMac The new iMac looks totally different: even more out-of-this-world!

It’s a white hemisphere (so it looks like a mound of mashed potatoes), with an arm coming out of its top. At the arm’s end, instead of a hand, you get an LCD thin-screen monitor. (The original version’s screen was 15-inch; Apple later offered 17-inch and 20-inch versions also.) The monitor hovers in front of the arm and hides the arm from your view, so the monitor seems to hover by itself mysteriously in the air, like a UFO propelled by aliens.

People who use the new iMac are said to “do the mashed potato”, “play with their hovercraft”, and “kiss aliens”.

Since the new iMac looks so mysteriously intriguing, many IBM-clone manufacturers have copied Apple’s idea of using a flat-screen LCD monitor. Those companies bought so many 15-inch LCD screens from suppliers that Apple could no longer get enough supplies for itself, and suppliers raised their prices, forcing Apple to raise its prices by $100. But eventually prices came back down.

Newest iMac Apple has stopped selling the classic iMac, the eMac, and the new iMac. Now Apple sells instead the newest iMac. It resembles the new iMac but has no white hemisphere; instead, all the system-unit circuitry hides inside the LCD monitor. The first version of the newest iMac was white plastic; the current version (introduced in August 2007) is aluminum instead.

Notebook Macs

Back in 1991, Apple began selling powerful notebook computers, called PowerBooks. Later, Apple began selling cheaper notebook computers also, called iBooks.

Apple has stopped selling all those notebook computers. Instead, Apple sells newer notebook computers, called MacBooks.

Modern Mac prices

Now Apple sells just 4 kinds of normal computers.

MacBook Apple sells a notebook computer called the MacBook. Here’s how it was priced when this book went to press in June 2011:

Built into each MacBook you’ll find a touchpad, a pair of stereo speakers, a microphone, a SuperDrive (DVD±RW drive) and the iSight video camera. The price also includes OS X (the operating system) and iLife (a suite of programs letting you edit photos, music, movies, DVDs, and Websites).

A variant, called the MacBook Air, has a flash drive instead of a hard drive (so it’s thinner, weighs less, is easier to carry, and runs faster). Unfortunately, the flash drive doesn’t hold as many gigabytes as a hard drive.

The iMac Apple sells a desktop computer called the iMac. It’s an all-in-one computer (the system unit hides inside the screen). Here’s how it’s priced:

Each iMac’s hard drive is fast (7200 rpm). The system unit hides inside the LCD screen; there’s no separate tower case.

Built into each iMac you’ll find a pair of stereo speakers, a microphone, and the iSight video camera. The price also includes the Apple Keyboard, the Magic Mouse, the SuperDrive, OS X, and iLife.

Mac mini The Mac mini is a system unit that’s cheap because its price doesn’t include a keyboard, mouse, screen, speakers, microphone, or video camera. If you already own a keyboard, mouse, and screen from an older Mac computer (or even from an IBM-compatible computer), you can attach them to the Mac mini to create a computer system.

Here’s how the Mac mini is priced:

The Mac mini’s price includes OS X and iLife. For $98 extra, you can buy a kit that contains an Apple keyboard and mouse, but that kit still doesn’t include a screen, speakers, microphone, or video camera.

Mac Pro The Mac Pro is a big system unit that’s expensive because it includes one or two CPU chips that are extra-fast. Its base price does not include a screen, speakers, microphone, or video camera; attach your own. The price includes everything else (SuperDrive, Apple Keyboard, Magic Mouse, OS X, and iLife).

Here’s how the Mac Pro is priced:

Monitor

The MacBook and iMac include a screen, but the Mac mini and Mac Pro don’t. If you buy a Mac mini or Mac Pro but don’t have a screen yet, you can get Apple’s Cinema Display, which is an LCD monitor that’s huge (27" widescreen, 2560´1440). It costs $999. Even if you have a screen already, you can add the Cinema Display so you have two screens!

Discounts

You can buy directly from Apple by phoning 800-MY-APPLE or using the Internet to go to store.apple.com or visiting Apple’s stores (which are in just a few cities). You can also buy Apple’s computers from chain stores (such as CompUSA), local Apple dealers, and these mail-order dealers:

Mac Mall usually has more exciting ads, but Mac Connection usually charges less for shipping and installation.

I’ve been showing you Apple’s list prices. Unlike IBM clones, whose prices drop each month, Apple’s list prices stay constant for many months, then drop suddenly. But while Apple’s list prices stay “constant”, Apple secretly gives bigger discounts to dealers, who in turn give “deals” to customers. Here’s what the “deals” usually involve:

Service

When you buy a Mac, you get 3 months of phone support (so you can phone Apple for free help answering questions about how to use your Mac) and a 1-year limited warranty (which says Apple will fix the hardware if it breaks during the first year and you carry your Mac to an Apple-authorized repair center).

If you wish, you can buy the AppleCare Protection Plan, which gives you phone support and warranty for 3 years. That plan costs $149 for the Mac mini, $169 for the iMac, $249 for the Mac Pro, $249 for the 13.3" MacBook, $349 for the MacBook Pro. That plan covers the computer and also covers any Apple-brand screen, keyboard, or mouse that was bought at the same time. It covers OS X and iLife but not most other software.

Another option is to pay $49 per question. (That price is for questions about normal software. Questions about hardware or advanced software cost $199. Questions about networking cost $695.)

I recommend you do not pay for AppleCare, since most of your questions and difficulties will be during the first 3 months, when AppleCare is free. After the first 3 months, pay consultants and repair shops when necessary.

Should you buy a Mac?

When the Mac first came out, computer experts loved it and praised it for being easier than an IBM PC.

Then Microsoft invented Windows, which made the IBM PC resemble a Mac.

Apple faces a new problem: since practically everybody has switched to buying IBM clones (with Windows XP or Vista or 7) instead of Macs, most programmers aren’t bothering to write Mac programs anymore. So if you have a Mac, you’re stuck running old programs written long ago, in versions less pleasant than new IBM versions. As a result, the Mac has actually become harder to use than an IBM clone!

The big exception to Mac’s downfall is the graphics-art community. Years ago, before Windows became good, the Mac became the standard for folks in the graphics-arts community (such as ad agencies, newspapers, magazines, artists, and companies running printing presses). They still use Macs.

Some universities standardized on Macs because Apple Computer Inc. gave those universities a discount. When the discounts expired, many of those universities shifted to buying IBM clones instead.

iPad

Apple’s iPad is a tablet computer. The current version is the iPad 2. It includes a 9.7-inch screen (whose resolution is 1024-by-768), a 1 GHz dual-core CPU (invented by Apple and called the A5), 2 tiny video cameras, and the iOS operating system.

Its price depends on how much flash RAM is included. It costs $499 with 16G, $599 with 32G, $699 with 64G. There’s no hard drive; since part of the flash RAM imitates a hard drive.

There’s no mouse or touchpad. Instead of manipulating such a device, you swipe your finger across the touch-sensitive screen.

There’s no physical keyboard. Instead, the touch-sensitive screen shows a virtual keyboard (a keyboard’s picture you can type on).

Before using the iPad, you must install more software by attaching the iPad to a normal computer (using the iPad’s USB cable). So before using an iPad, you must have another computer. The iPad can be your second computer but not your first.

Who runs Apple?

After being founded by Steve Wozniak and Steve Jobs, Apple’s leadership changed.

Steve Wozniak got in an airplane crash that hurt his head and gave him amnesia, so he left the company and enrolled in college under a fake name (“Rocky Clark”). After he graduated, he returned to Apple Computer Company quietly. Steve Jobs managed the company.

Though Apple was successful, Steve Jobs’ strategies upset some computerists.

For example, Apple’s ads claimed that the Apple was the first personal computer (it was not the first!); Apple launched a big campaign to make businessmen buy Apple Pascal (though Apple Pascal didn’t help the average businessman at all); Apple prohibited its dealers from displaying games (though Apple later relented); and Apple prohibited authorized dealers from selling Apples by mail order.

Apple Computer Inc. donated computers to schools for three reasons: to be nice, get a tax write-off, and lure schools into buying Apples (to be compatible with the Apples that the schools received free). But if Apple were really nice, it would have lowered prices to let low-income consumers afford them. Apple sold just to the “chic”, not the poor.

Steve & Steve both left Apple and went separate ways.

Apple’s next head was John Sculley, a marketer who used to be a vice-president of Pepsi. He made Pepsi the #2 soft drink (just behind Coke) and kept Apple the #2 microcomputer company (just behind IBM).

In 1993, he had Apple invent and sell a handheld computer called the Newton. Instead of including a keyboard, it included a tablet you could write on with a pen. The computer tried to read handwritten words but couldn’t read handwriting accurately enough. Apple’s board of directors ousted him for spending too much effort on the Newton and not enough on the Mac.

Apple’s next head was Michael Spindler, an efficient German who dropped Apple’s costs and prices. But in 1995, Apple’s profits plunged for three reasons:

In 1996, Apple’s board of directors fired Michael and replaced him with Gil Amelio. To cut costs, Gil fired lots of employees. In 1997, the board fired him and put Steve Jobs back in charge. Steve is still there — and popular — though his pancreatic cancer and liver transplant have forced him to reduce his duties and take occasional leaves of absence.