Here's part of the "Secret Guide to Computers & Tricky Living," copyright by Russ Walter, 32nd edition. For newer info, read the 33rd edition at

Complete systems

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


IBM’s early computers

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.


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:

Month        Computer’s long name Short name Nickname Main new feature

1981 August    IBM Personal Computer         IBM PC           PC                many!

1983 March IBM PC eXTended              IBM PC XT     XT                hard drive (instead of just floppy)

1984 August    IBM PC AdvancedTechnology   IBM PC AT      AT                faster CPU (286 instead of 8088)

1987 April   IBM Personal System 2          IBM PS/2        PS/2            better color video

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:

The XT  included a 10M hard drive.

The AT  included a 20M hard drive. AT clones typically included a 40M hard drive.

Modern computers include hard drives that hold 12,500 times as much: 500G or even more!


RAM has grown:

The PC    typically came with 64K, 128K, or 256K of RAM.

The XT    typically came with 256K, 512K, or 640K of RAM.

The AT    typically came with 512K, 1M, or 2M of RAM.

The PS/2 typically came with 1M, 2M, or 4M of RAM.

Modern computers come with 1,000 times as much RAM: 4G or even more!


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).


The PC’s keyboard contained 83 keys:

26 keys contained the letters of the alphabet.

10 keys (in the top row) contained the digits.

10 keys (on the keyboard’s right side) contained the digits rearranged to imitate a calculator.

13 keys contained symbols for punctuation & math.

14 keys gave you control. They let you edit your mistakes, create blank spaces and capitals, etc.

10 function keys (labeled F1 through F10) could be programmed to mean whatever you wished!

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 bigger.

The AT’s keyboard made the Enter and Shift keys 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.


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:

a graphic showing 4 colors,    at a resolution of 320´200

a graphic in black-and-white,  at a resolution of 640´200

characters (each an 8´8 matrix, 80 characters per line, 25 lines per screen, one of 16 colors per character)

MDA could handle this display mode:

characters (each a 9´14 matrix, 80 characters per line, 25 lines per screen, one of 4 styles per character)

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:

a graphic in black-and-white,  at a resolution of 720´350

characters (each a 9´14 matrix, 80 characters per line, 25 lines per screen, one of 4 styles per character)

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:

a graphic showing 16 colors,  at a resolution of 640´350

characters (each an 8´14 matrix, 80 characters per line, 25 lines per screen, one of 16 colors per character)

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:

a graphic showing   16 colors,   at a resolution of 640´480

a graphic showing 256 colors,   at a resolution of 320´200

characters (each a   9´16 matrix, 80 characters per line, 25 lines per screen, one of 16 colors per character)

characters (each an 8´16 matrix, 80 characters per line, 30 lines per screen, one of 16 colors per character)

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:

a graphic in black-and-white,  at a resolution of 640´480

a graphic showing 256 colors,   at a resolution of 320´200

characters (each an 8´16 matrix, 80 characters per line, 25 lines per screen, one of 16 colors per character)

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!


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.


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.


Search for perfection

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.

That’s what I’d like to tell you, but I haven’t found such a company yet! If you find one, let me know!

Each month, I falsely think I’ve finally found my hero company. I give its name to folks like you who call me for advice. But my hoped-for hero eventually gets accused by my customers of degenerating into despicable behavior. How depressing! I’ve been writing this book for over 30 years and have yet to find a company I still feel proud about. I’m disgusted.

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

When the company begins, it’s new and unknown, so it tries hard to get attention by offering low prices. It also tries to help its customers by offering good service.

When news spreads about how the company offers low prices and good service, the company gets deluged with more customers than it can handle — and it’s also stuck answering phone calls from old customers who still need help but aren’t buying anything new.

To eliminate the overload, the company must either accept fewer customers (by raising prices — or lowering them slower than the rest of the industry), or offer less service per customer (by refusing to hire enough good staff to handle all the questions). In either case, the company becomes less pleasant. Its heroism is relegated to history, and the company becomes just one more inconsequential player in the vast scheme of computer life.

What’s in store for you

This chapter portrays the players.

Warning: these portraits are anatomically correct — they show some companies are pricks.

The computer industry’s a soap opera in which consumers face new personal horrors daily. I wrote this in February 2014, but you can get the newest breathtaking episode of the computer industry’s drama, How the Screw-You Turns, by phoning me anytime. I’ll tell you the newest dirt about wannabe and were-to-be hero companies. So before buying a computer, phone me at 603-666-6644 to get my new advice free. Tell me your needs, and I’ll try to recommend the best vendor for you. Before phoning me, become a knowledgeable consumer by reading this chapter.


Best Buy, Staples, Walmart, Target

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

Here’s what those chains charged when this book went to press in February 2014. Every Sunday, prices change and usually drop, so you’ll probably pay less!

Laptop computers

Here’s what those chains charged for laptop computers with Windows 8 or 8.1:

Type               Screen           RAM    Hard drive CPU                Price after rebate

Untouchable    15.6"                 4G       500G               Intel Celeron     $230

Standard          15.6" touch       4G       750G               Intel Core i3      $450

Upscale           15.6" touch       6G       1T                   Intel Core i5      $550

Fancy              17.3" touch       8G      1T                   Intel Core i7    $1000

Here are examples of that pricing:

Maker            Screen           RAM    Hard drive CPU                Price after rebate

Toshiba           15.6"                 4G       500G               Intel Celeron     $230 at Best Buy

HP                   15.6"                 6G       750G               AMD A6           $330 at Staples

HP                   15.6" touch       4G       500G               AMD A4           $370 at Staples

Toshiba           15.6"                 6G       750G               Intel Core i3      $380 at Staples

Toshiba           15.6" touch       4G       750G               AMD A6            $400 at Best Buy

HP                   17.3"                 6G       750G               Intel Core i3      $400 at Staples

Lenovo           15.6"                 8G       1T                   AMD A10      $450 at Staples

Toshiba           15.6" touch       4G       750G               Intel Core i3      $450 at Best Buy

Dell                 15.6" touch       6G       500G               Intel Core i5      $500 at Staples

HP                   15.6" touch       8G       750G               AMD A8            $550 at Walmart

Asus               15.6" touch       8G       1T                   Intel Core i7      $650 at Staples

Toshiba           15.6" touch     12G      1T                   Intel Core i7      $800 at Staples

HP                   17.3" touch       8G       1T                   Intel Core i7    $1000 at Best Buy

All-in-one computers

Here’s what those chains charged for all-in-one computers with Windows 8 or 8.1:

Type              Screen           RAM    Hard drive CPU                Price after rebate

Untouchable    20"                    4G       500G               AMD E1           $380

Standard          20" touch          6G       1T                   Intel Core i3      $530

Fancy              23" touch          8G       2T                   Intel Core i5    $1002

Here are examples of that pricing:

Maker           Screen           RAM    Hard drive CPU                Price after rebate

Gateway          20"                    4G       500G               AMD E1           $380 at Staples

Dell                 20"                    4G       1T                   Intel Pentium     $430 at Best Buy

HP                   20" touch          6G       1T                   Intel Core i3      $530 at Best Buy

HP                   23" touch          8G       1T                   AMD A6          $720 at Best Buy

Acer                23" touch          8G       1T                   Intel Core i5      $880 at Best Buy

Dell                 23" touch          8G       2T                   Intel Core i5    $1002 at Best Buy

Tablet computers

Here’s what those chains charged for tablet computers (having touch screens):

Maker     Model name           System         Screen                 Storage     Price after rebate

E-Fun          Nextbook 7               Android                7"      800×480      8G               $59 at Walmart

E-Fun          Nextbook 8               Android                8"    1024×768      8G               $99 at Walmart

Lenovo     IdeaTab                     Android                7"    1024×600    16G             $120 at Staples

Asus         Google Nexus 2013  Android                7"    1920×1200  16G             $174 at Staples

Samsung   Galaxy Tab 3 10        Android              10.1" 1280×800    16G             $350 at Target

Apple       iPad mini                   iOS                    7.9" 1024×768    16G             $274 at Staples

Apple       iPad 2                           iOS                    9.7" 1024×768    16G             $299 at Walmart

Apple       iPad mini Retina        iOS                    7.9" 2048×1536  16G             $349 at Target

Apple       iPad Air                     iOS                    9.7" 2048×1536  16G             $449 at Target

Dell          Venue 8 Pro              Windows 8.1     8"    1280×800    32G             $290 at Staples

Asus         Transformer T100    Windows 8.1   10.1" 1366×768    64G             $330 at Staples

Microsoft Surface 2                   Windows RT   10.6" 1920×1080  32G             $450 at Best Buy

Microsoft Surface Pro 2            Windows 8.1   10.6" 1920×1080  64G             $900 at Best Buy

Microsoft tablets are often used with a detachable keyboard (which can make the system resemble a laptop), but that keyboard is priced separately. The Asus Transformer T100’s price includes a detachable keyboard and is advertised as a 2-in-one system. The chart’s other tablets are without keyboards.


Here’s what those chains charged for smartphones (having touch screens):

Maker     Model        System          Screen    Store   Rear camera  CPU                Prices

Samsung   Precedent     Android              3.2"               2G         2 megapixels    0.8 gigahertz      $50,     $0

Samsung   Proclaim      Android              3.5"               2G         3 megapixels    1 gigahertz      $100,     $0

Samsung   Galaxy S2    Android              4.3"             12G         8 megapixels    1.2 gigahertz    $200,     $0

Samsung   Galaxy S3    Android              4.8"             16G         8 megapixels    1.5 gigahertz    $350,     $0

Samsung   Galaxy S4    Android              5"             16G      13 megapixels    1.9 gigahertz    $650,   $50

Samsung   Note 3          Android              5.7"             32G       13 megapixels    2.3 gigahertz    $700, $200

Nokia       Lumia 521   Windows Phone 4"               8G         5 megapixels    1 gigahertz        $85,     $0

Apple       iPhone 4s     iOS                  3.5"               8G         8 megapixels    Apple A5         $449,     $0

Apple       iPhone 5c     iOS                  4"             16G         8 megapixels    Apple A6        $599,   $20

Apple       iPhone 5s     iOS                  4"             16G         8 megapixels    Apple A7        $699, $129

For each phone, you can choose two prices:

The first price, which is high, is called the full prepaid no-contract price. That’s what the phone is actually worth. Pay it if you refuse to sign a contract. Then you pay about $45 per month (which includes taxes and fees) to a carrier (such as Verizon Wireless) or a reseller (such as Straight Talk). You get medium-quality wireless service. You can cancel the service anytime.

The second price, which is low or even free, is called the postpaid contract price. Pay it if you sign a 2-year contract with a carrier (such as Verizon Wireless). The price is low because the carrier is bribing you to sign a 2-year contract, which requires you to pay a high monthly fee. You get high-quality wireless service. You pay a penalty if you cancel before the 2-year contract ends (unless you cancel during the 15-day trial period and return the phone).

If you choose the postpaid contract price, you must also choose a contract. Here’s how much you pay for a contract that includes unlimited US phone calls, unlimited US texting, and some gigabytes of data; the exact price depends on how many gigabytes of data you’re allowed to transfer during the month:

Wireless carrier    Monthly service fee

AT&T                       $60 for .3G,                       $85 for 1G,     $95 for 2G,                      $110 for 4G

Verizon Wireless       $55 for ¼G, $70 for ½G,    $80 for 1G,     $90 for 2G, $100 for 3G,    $110 for 4G

Sprint                                                                   $70 for 1G,     $80 for unlimited G

T-Mobile                                       $50 for ½ G,   $60 for 2½G,  $70 for unlimited G

On top of those monthly service fees, you must add federal taxes, state taxes, and fake taxes (which the carriers call “fees”). The first time you turn on the phone, you must also pay an activation fee (typically $35).


Acer, Gateway, eMachines

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

“Gateway” computers were sold mainly through mail-order.

“eMachines” computers were sold mainly through chain stores such as Best Buy and Circuit City.

“Acer” computers were sold mainly through small computer stores.

In 2004, Gateway bought eMachines. In 2007, Acer bought Gateway. So now Acer, Gateway, and eMachines are all under the same ownership.

Here are the details.…


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 a chain of discount computer superstores called Computer City. Tandy had trouble running 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. In September 1998, he started his own company, eMachines, which invented cheap computer systems (under $500) and sold them to retail stores such as CompUSA. To start eMachines, he used money invested by 2 Korean companies: Trigem (which made eMachines’ computers) and Korea Data Systems (KDS) (which made eMachines’ monitors).

He was wildly successful. 9 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 afterwards, 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 wasn’t much more than the 3 million sold by September 2000.

eMachines became number 2 in retail U.S. sales, far behind Hewlett-Packard (which sold 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). Then eMachine computers became finally worth getting: they were good computers at rock-bottom prices. Consumer surveys show that computers from eMachines were 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 repeatedly waited 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. I solved the problem by giving the computer a command to disable the microphone jack.

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

eMachines computers remained popular for many years afterwards. They were sold in Walmart, Best Buy, and many other stores. The eMachines contribution to the world of cheap computers was: distribution!

“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 to his great-grandson, Norm, who built the Waitt Cattle Company into one of the biggest cattle firms in the Midwest. The company was 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 5th, 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:

Year     Computers sold              Revenue       Employees

1985              50 computers                  $100,000                   2

1986            300 computers               $1,000,000                   4

1987            500 computers               $1,500,000                   8

1988         4,000 computers             $11,700,000                 33

1989       25,000 computers             $70,500,000               176

1990     100,000 computers           $275,500,000               600

1991     225,000 computers           $626,700,000            1,300

1992     even more computers!    $1,100,000,000            1,876

1993     even more computers!    $1,700,000,000            3,500

1994     even more computers!    $2,700,000,000            4,500

1995     1,338,000 computers         $3,700,000,000            9,300

1996     1,909,000 computers         $5,000,000,000            9,700

1997     2,580,000 computers         $6,300,000,000          13,300

1998     even more computers!    $7,500,000,000          19,300

1999     even more computers!    $8,600,000,000          21,000

2000     even more computers!    $9,600,000,000          even more employees!

That chart shows how many computers were sold during the year, the total money customers paid for them and for add-ons, and how many employees Gateway had at year’s end.

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

In 1986, they moved to a bigger office in the Sioux City Livestock Exchange Building.

In 1988, Ted began a national marketing campaign by designing his own ads and running them in Computer Shopper magazine. His most famous ad showed a gigantic two-page photo of his family’s cattle farm and the headline, “Computers from Iowa?” The computer industry was cowed by the ad’s huge size and the low prices it offered for IBM clones. In the ad, Ted emphasized that Gateway was run by hard-working, honest Midwesterners who gave honest value. (At that time, most clones came from California or Texas; but Californians had a reputation for being “flaky”, and Texans had a reputation for being “lawless”). Cynics called Gateway “the cow computer”, but it was a success. In September, the company moved a few miles south to a larger plant in Sergeant Bluff, Iowa. Gateway’s operations there began with 28 employees.

In the summer of 1989, Gateway grew to 150 employees, so Gateway began building a bigger plant. To get tax breaks and business grants, Gateway built it upriver at North Sioux City, South Dakota, and moved there in January 1990.

In 1990, Gateway became more professional. In 1989, the “instruction manual” was 2 pages; in 1990, it was 2 books. In 1989, the “tech support staff” (which answers technical questions from customers) consisted of just 1 person, and you had to wait 2 days for him to return your call; in 1990, the tech support staff included 35 people, and you could get through in 2 minutes. In 1990, Gateway switched to superior hard drives and monitors. In 1990, customers paid Gateway 275½ million dollars, generating a net profit of $25 million.

By early 1992, Gateway was selling nearly 2,000 computers per day and had 1,300 employees, including over 100 salespeople and 200 tech-support specialists to answer technical questions. Not bad, for a company whose president was just 30! Since Gateway was owned by just Norm Junior and Ted, those two boys got rich!


In March 1993, Gateway hired its 2000th employee. In April 1993, Gateway sold its one millionth computer. In December 1993, Gateway went public, so others could buy Gateway stock. By May 1995, Gateway had become so big that it answered over 12,000 tech-support calls in one day.

On September 5th, 1995, Gateway’s 6000 employees celebrated the company’s 10th anniversary.

Gateway became huge, with offices worldwide in France, Germany, Ireland, Australia, and Japan, but it was still headquartered in North Sioux City, a small town that was behind the times: it didn’t have any traffic lights yet.

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

Gateway became a rapidly growing cash cow, full of moo-lah! But Gateway didn’t lose its sense of humor: each Gateway computer shipped to customers in a box 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 were finally settled.

Gateway’s ads

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

In early ads, the photos showed individuals in beautiful landscapes. Later ads showed hordes of Gateway employees dressed as Robin Hood’s men in Sherwood Forest, top-hatted performers in Vegas cabarets, teenagers in a nostalgic 1950’s diner with glowing neon, and movie directors applauding a ship full of pirates.

Those eye-popping photos grabbed attention. Their captions related the photos to Gateway’s computers. Finally, after all that multi-page image-building nonsense, came the ad’s finale, which reveals Gateway’s great technical specifications (specs), great service policies, and low prices.

That way of building an ad — fluff followed by stuff — succeeded. Idiots admired the photos, techies admired the specs, and everybody wanted to buy!

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. All components were high-quality. A Gateway system was a dream system, with dreamy ads and a low price. Gateway had 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 Gateway’s day-to-day operations over to Jeff Weitzen, who’d worked at AT&T for 18 years then Gateway for 2. 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 were wrong.

He moved 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 moved Gateway’s executive offices 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. 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.

He called it the “beyond-the-box initiative”. To accomplish that, he set up Gateway Country Stores in hundreds of cities — and also inside Office Max stores — so customers could walk in and get local service.

But the Gateway Country Stores were confusing, since customers there could stare at sample computers but typically couldn’t walk out the door with them; classes were offered just rarely; and phoning those stores for “tech support” got you a recorded message to call headquarters instead, since the store’s “tech support” was mainly restricted to selling upgrades and installing them.

The cost of running the Gateway Country Stores forced Gateway to raise computer prices, so Gateway started charging even more than HP, Compaq, Dell, and IBM. Gateway was wasting so much energy running stores that Gateway started lagging behind Dell in making manufacturing efficient.

Gateway was no longer a low-priced discounter. Gateway had forgotten its roots.

Gateway’s new high prices and still-substandard tech support made Gateway a company to avoid: Gateway was charging more than Dell and giving worse service than Dell.

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

I can’t blame all of Gateway’s problems on Jeff: the whole computer industry had a tough year in 2000, when consumers decided 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 resigned, and Ted Waitt became the CEO again — but 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 could brag about was that it wasn’t more expensive than retail? The ad bombed. So did the company. In 2001, Gateway made no profit: it lost a billion dollars. Here’s how Gateway fell:

Year       Revenue              Result

1999        $8,600,000,000        $428,000,000 profit

2000        $9,600,000,000        $241,000,000 profit

2001        $6,100,000,000     $1,034,000,000 loss

Then Ted laid off employees, closed international sales offices, closed Gateway Country Stores, made Gateway a tiny company, and reduced Gateway’s reliance on mail-order computer sales: he tried to diversify into selling big-screen TV sets, digital cameras, and DVD players. Details:

By July 2002, Ted had cut half the staff, so the number of employees was down to 12,000. In 2003, the company was even smaller: revenue was just $3,402,400,000, employees were just 7,407, and the company lost “just” $514,800,000. In March 2004, Gateway bought eMachines. In April 2004, all Gateway Country Stores were shut down, and the number of Gateway employees dropped to 4,000.

I felt sad about Gateway. I was one of the first journalists to recommend Gateway. I was 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. He replaced 41-year-old Ted Waitt (though Ted remained chairman of the 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).


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:

The main company is still called Acer.

The Communications & Multimedia Division is now a separate company called BenQ. It’s Taiwan’s biggest cell phone manufacturer. It also makes CD-RW drives, CD-RW disks, printers, scanners, and screens, under its own name and also secretly for Motorola & NEC.

The Design, Manufacturing, and Services Division is now called Wistron. It secretly designs, manufactures, and repairs computers for Dell, HP, Fujitsu, and Hitachi. Acer owns 40% of Wistron’s stock.

In 2007, Acer bought Gateway (and Gateway’s eMachines division); but in 2013, Acer shut down the eMachines division.


HP & Compaq

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

How HP arose

Hewlett-Packard (HP) was started by two young Stanford University graduates — Bill Hewlett and Dave Packard —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 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 grew:

Year       Revenue       Employees

1939            $5,369          2

1940          $34,396          3

1941        $106,459          6

1942        $522,803          8

1943        $953,294        45

During World War 2, HP sold the U.S. Navy devices that generated microwaves and jammed radar. Later, HP made 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 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 added 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 Compaq’s computers were overdesigned (built more sturdily than necessary for average use and 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 CEO. He lowered Compaq’s prices, gave up the idea that Compaq should have super-high quality, and began selling through a greater variety of dealers and through mail-order.

His 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:

If you phoned Compaq for help, Compaq’s staff asked for your credit-card number first, then listened to your question. Unless your difficulties were caused by a mistake made by Compaq Corporation, you were charged $35 per question.

Eventually, Compaq dropped that nasty policy: tech-support calls became free during the “initial period” (1 year on hardware questions, 3 months on software questions, longer if your Compaq was expensive).

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:

HP’s Pavilion cost less than Compaq’s desktop computers.

HP’s service was slightly better than Compaq’s.

Compaq’s reaction

Compaq started having financial difficulties, for 2 reasons:

Compaq’s CEO, Eckhard Pfeiffer, made Compaq buy Digital Equipment Corporation.

Compaq was having trouble competing against IBM clones priced under $700 (from companies such as HP and Packard Bell).

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

In 1999, the board finally decided to make Compaq’s next CEO be Michael Capellas, a low-key friendly computer technician that everybody liked. Most important, he was 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.


The Compaq-versus-HP debate ended in 2002, when HP bought Compaq, with approval from Michael Capellas and Ben Rosen. The combo was called a “merger”. The combined company is called “Hewlett-Packard”, though Compaq lovers prefer to call it “Hewlett-paq” or “Hewpaq”.

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


Dell & Alienware

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 & 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 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 demand for after-sale service.

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

He charged almost as much as IBM and Compaq.

His quality & service became top-notch. They set the standard for the rest of the computer industry. In speed & 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 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 didn’t.

For example, in 1991 Dell ran an ad calling Dell’s notebook computer a “road warrior” and Compaq’s a “road worrier”. It showed the Dell screen saying, “With next day on-site service in 50 states, nothing’s going to stop you.” It showed the Compaq screen saying, “Just pray you don’t need any service while you’re on the road, or you’re dead meat.”

His ads were misleading. His prices were much lower than Compaq’s list price but just slightly less than the discounted price at which Compaq computers were usually sold. Though Compaq didn’t provide free on-site service, you could sometimes get your Compaq repaired fast by driving to a nearby Compaq dealer.

Dell tried selling through discount-store chains but gave up and decided to return to selling just by mail. While HP/Compaq stayed king of retail sales, Dell became king of mail-order sales.

Dell computers came 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 gave lifetime toll-free technical support for hardware questions and usually answered its phones promptly. Unfortunately, Dell 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 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, 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.

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


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 Alienware is now 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 all differ from each other. 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.

Other IBM clones

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. 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

Micro Center

Though eMachines sold 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 under $500. 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 phoned a secret group of amazing companies that advertised 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.

Most of those companies have shut down, but 2 are still in business:

ProStar Computers,

phone 888-576-6776 or 626-839-6472

837 S. Lawson St., City of Industry CA 91748


phone 800-669-1624 or 626-964-8682

18005 Cortney Ct., City of Industry CA 91748

They sell mainly notebook computers.

These 24 industrial nuts have gone out of business:

A+ Computer, All Computer, Altus, Atlas Micro Logistic, Bit Computer, Comtrade, Cornell Computer Systems, CS Source, Cyberex, Digitron,
EDO Micro, Enpower, Hyperdata Technology, Multiwave, Nimble,
PC Channel, Premio, Professional Technologies, Quanson, Royal,
Syscon Technology, Tempest Micro, Wonderex, Zenon


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 instruction booklet 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:

screens showing colors (instead of just black-and-white)

3½-inch floppy disks (instead of 5¼-inch, which are flimsy and less reliable)

CD-ROM disks (instead of just floppy disks, which hold less data)

solid-state drives (instead of hard drives, which are slower & eat up more watts)

using a mouse (instead of just the keyboard’s arrow keys and Tab keys)

using pictures (called icons) instead of just words

pull-down menus (coming down from a menu bar, which is at the screen’s top)

touch screens

tablet computers (such as the iPad)

smart phones (such as the iPhone)

laser printers (instead of just dot-matrix printers, which print in an ugly way)

desktop publishing (instead of word processing, which can’t handle beauty)

pretty fonts (instead of typewriter-style fonts, which are monospaced and ugly)

paint & draw programs (so you can create graphics easily, without math)

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.

3½-inch disks were invented by Sony. The first mouse was invented by the Stanford Research Institute. The first good mouse software was invented by Xerox. The first personal laser printers were invented by Hewlett-Packard. The first modern desktop-publishing program was invented by a software company, Aldus. But it was Apple’s further product development and marketing that made those products desirable.

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, who said Steve’s computer didn’t fit into Hewlett-Packard’s marketing plan and suggested 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: while high-school students, they’d built and sold blue boxes (which attach to phones to illegally make long-distance calls free). Steve & Steve had sold 200 blue boxes at $80 each, totaling $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 by ads saying the price was $666.60.

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 touch screens, no laser printers, no desktop publishing, no pretty fonts, no paint & draw programs.)

Apple 2

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. It became popular 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 a Minnesota government agency decided to buy lots of Apple 2 computers, put them in Minnesota schools, and write programs for them. That agency, called the Minnesota Educational Computing Consortium (MECC), then distributed the programs free to other schools across America, so 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, 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 Harvard Business School student 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 cheap computer that had a reliable disk operating system. (Commodore’s computers didn’t have disks yet, and Radio Shack’s disk operating system wasn’t reliable yet. 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 had to buy Apple computers to run it on.

VisiCalc was niftier than any other accounting program. VisiCalc proved little Apples had more ability than even gigantic IBM mainframes.

Eventually, VisiCalc became available for other computers; but at first, VisiCalc required an Apple. VisiCalc’s success led to Apple’s.

In a typical big corporation, the corporate accountant wanted to buy an Apple with VisiCalc. Since the corporation’s data-processing director liked big computers and refused to buy microcomputers, the accountant who wanted VisiCalc resorted to an old business trick: he lied. He pretended to spend $2000 for “typewriters” but bought an Apple instead. He snuck it into the company and plopped it on his desk. That happened all across America, so all big corporations had thousands of Apples sitting on the desks of accountants and managers but disguised as “typewriters” or “word processors”. Those Apple computers infiltrated American corporations by subversion, an underground movement that annoyed IBM so much that IBM eventually decided to invent a personal computer of its own.

Apple 2+ In 1979, Apple Computer Corporation shipped 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 old Apple 2’s ROM chips handled just integers.)

Another improvement was how the Reset key acted.

On the old Apple 2, pressing the Reset key would abort a program, so the program would stop running. Too many consumers pressed the Reset key accidentally and got upset. On the Apple 2+, pressing the Reset key aborted a program just if you simultaneously held down the Control key.

Slots In the Apple 2+ and its predecessors, the motherboard had eight slots, numbered from 0 to 7, which could hold printed-circuit cards.

Slot 0 was for a memory card (containing extra RAM). Slot 1 was for a printer card (containing a parallel printer port). Slot 2 was for an internal modem (to attach a phone). Slot 3 was for an 80-column card (to make the screen display 80 characters per line instead of 40). Slot 6 was for a disk controller. Cards in slots 4, 5, and 7 were more exotic.

Apple 2e In 1983, Apple shipped 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.

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

The extra keys helped you type lowercase letters, type special symbols, edit your writing, and control your programs.

For example, the Apple 2e keyboard contained 4 arrow keys (, , , and ), so you could move around the screen in 4 directions easily. (The and keys were missing from the Apple 2+ keyboard.)

The Apple 2e keyboard contained a Delete key, so you could delete an error from the middle of your writing easily. (The Delete key was missing from the Apple 2+ keyboard.)

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

The Apple 2e contained an extra slot, called slot 3A. It resembled slot 3 but held a more modern 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 your Apple contains 128K of RAM altogether.

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

An Apple 2e was generally worse than an IBM XT or an IBM XT clone. For example, the Apple 2e system had less RAM (128K instead of 640K), fewer keys on the keyboard (63 instead of 83), worse disk drives (writing just 140K on the disk instead of 360K), and a crippled version of BASIC (understanding just 114 words instead of 178).

Though worse than an IBM XT, the Apple 2e became popular in 1983, because more educational programs and games were available for the Apple 2e than for any other computer. Fewer educational programs and games were being written for the IBM XT and clones, because the IBM XT was too expensive for schools to buy. Though the IBM XT became the standard computer for business, the Apple 2e became the standard computer for schools and kids.

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

Advanced hobbyists spurned the 2c — and stayed with the 2e instead — because the 2c didn’t have slots for adding cards. But the typical consumer didn’t need extra cards anyway, since the 2c’s motherboard included everything a beginner wanted: 128K of RAM, 80-character-per-line video circuitry, a disk controller, and two serial ports. You could run cables from the back of the 2c to a serial printer, modem, second disk drive, and joystick.

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 Apple computers, some folks bought imitations, such as the Pineapple, the Orange, the Pear, and the Franklin. The 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.

The Laser 128 imitated the Apple 2c. Like the Apple 2c, the Laser 128 included 128K of RAM, a disk drive, and a serial port. In 3 ways, it was better than an Apple 2c: it included a parallel printer port (so you could attach a greater variety of printers), a numeric keypad (so you could enter data into spreadsheets more easily), and a slot (so you could add an Apple 2e expansion card). It ran most Apple 2c programs perfectly: just 5% of the popular Apple 2c programs were incompatible.

A souped-up version, called the Laser 128EX, went three times as fast.

The Laser 128 and 128EX were built by the Laser Computer division of VTech, a company that also made IBM clones.

Apple 3

Back in 1980, shortly after the Apple 2+ was invented, Apple began selling the Apple 3. It was fancier than the Apple 2+ but too expensive (it listed for $4995, plus a monitor and hard drive) and couldn’t run some of the Apple 2+ software. 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.


Back in 1963, when Steve & Steve were 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 (pictures & symbols you can click with the mouse), horizontal menus (lists of topics that appear across the screen’s top), and pull-down menus (which you see when you click items on the horizontal menus). Those features made the computer easier to learn — and fun! The Lisa was the first computer whose business programs were truly fun to run. Because it was so easy to learn to use, customers could start using it without reading the manuals. Everybody praised the Lisa and called it a new breakthrough in software technology.

Though the Lisa was “affordable”, it was affordable by just the rich: it cost nearly $10,000. For the Lisa, Apple invented 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.

Independent programmers had difficulty developing their own programs for the Lisa, since Apple didn’t supply enough programming tools: Apple never invented a Lisa version of Basic, delayed introducing a version of Pascal, and didn’t make detailed manuals available to the average programmer. And though icons and pull-down menus are easy to use, they’re difficult for programmers to invent.

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 was 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 Mac’s original version ran too slowly, but later versions run faster. Since the Mac was so easy to use and priced low enough, many people bought it. Lots of software was 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 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 included 3 parts: the mouse, the keyboard, and the system unit.

The system unit contained a 9-inch black-and-white screen (whose resolution was 512 by 384), a 3½-inch floppy disk drive, and a motherboard. On the motherboard sat an 8-megahertz 68000 CPU, 2 ROM chips (containing most of the operating system and many routines for drawing graphics), rows of RAM chips, a disk controller, and 2 serial ports (for attaching a printer and a modem).

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

Then Apple invented an improvement called the 512K Mac because it included 512K of RAM. Apple wanted to call it the “Big Mac” but feared that customers would think it a hamburger.

Mac Plus In January 1986, Apple shipped an improved Mac, the Mac Plus, which had a bigger RAM (1 megabyte instead of 512K), bigger ROM (128K instead of 64K), better disk drive (double-sided instead of single-sided), bigger keyboard (more keys), and a port that let you add a hard-disk drive more easily. The improved ROM, RAM, disk drive, keyboard, and port permitted hardware & software tricks that let Mac programs run faster.

Mac SE In 1987, Apple shipped an even fancier Mac, 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).

Mac 2 When Apple introduced the Mac SE, Apple also introduced a luxury model, 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, 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 Macs 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.

Apple’s first great modern Mac came in 1991. It was called the Quadra. It contained a 68040 CPU. It was called the Quadra because of the “4” in “68040”. The Quadra was intended for folks smart enough to know that “quadra” is the Latin word for “4”. It was intended to be sold by expert salespeople to expert customers.

In 1992, Apple invented a “simplified Quadra”, called the Performa, for beginners. It was intended to be sold to idiotic customers who think the word “performer” should be pronounced “performa”.

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

Performa computers were sold mainly by idiots in office-supply stores (such as Staples & Office Max).

Quadra computers were sold just by computer experts in computer stores (such as CompUSA).

A Performa’s price included lots of software — especially games and tutorials for beginners.

A Quadra’s price included very little software. You bought your own — or invented it yourself!

For help with a Performa computer, you phoned “babysitters” at Apple’s headquarters (800-sos-Apple).

To repair a Quadra, you phoned the computer technicians at the computer store where you bought it.

A Performa’s price was simple: it included a keyboard, monitor, & fax/modem; no surcharges or choices!

For a Quadra, you had to decide which keyboard, monitor, and fax/modem you wanted; they cost extra.

Though Performas were idiotic, they were the best values: they gave you more hardware & software per dollar than Quadras (which were just for fussy nerds who insisted on customizing, 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 could 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 price didn’t include a monitor.

Mac clones In 1995, Apple’s executives began letting other companies make clones of Macs, in return for a licensing fee. The most successful clone maker 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.


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

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

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

It looked like an airplane’s nose cone — or an ostrich egg from outer space. It was translucent — which means you could 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 included a 15-inch CRT, pair of stereo speakers, and fax/modem. The price also included a keyboard, mouse, and software.

The translucent case was 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, Indigo (blue), Graphite (black), Snow (white), Blue Dalmatian (white spots on a blue background), and Flower Power (a floral print inspired by the 1960’s). Apple got lots of praise for creatively avoiding beige, and many companies imitated Apple’s wild color schemes.

The eMac After inventing the classic iMac, Apple invented the eMac, which was an iMac with a bigger screen: 17-inch instead of 15-inch. It was designed for schools; “eMac” means “educational Mac”. It was originally sold just to schools, but Apple later let everybody buy it. It came in just one color: white.

New iMac Next came the new iMac, which looked totally different: even more out-of-this-world!

It was 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 saw 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 hovered in front of the arm and hid the arm from your view, so the monitor seemed to hover by itself mysteriously in the air, like a UFO propelled by aliens.

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

Since the new iMac looked so mysteriously intriguing, many IBM-clone manufacturers 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.

Modern Mac prices

Now Apple sells just 4 kinds of normal computers.

MacBook Back in 1991, Apple began selling a laptop called a PowerBook. In 1999, Apple began selling a cheaper laptop, called an iBook.

Apple’s stopped selling the PowerBook and iBook. Instead, Apple sells a newer laptop, called the MacBook.

Here’s how the MacBook was priced when this book went to press in February 2014:

Screen                 Main RAM    Flash drive   Intel CPU chip    Price

11.6" 1366´768      4G                 128G              Core i5 at 1.3 GHz      $999

13.3" 1440´900      4G                 128G              Core i5 at 1.3 GHz    $1099

13.3" 1440´900      4G                 256G              Core i5 at 1.3 GHz    $1299

13.3" 2560´1600    4G                 128G              Core i5 at 2.4 GHz    $1299

13.3" 2560´1600    8G                 256G              Core i5 at 2.4 GHz    $1499

13.3" 2560´1600    8G                 512G               Core i5 at 2.6 GHz    $1799

15.4" 2880´1800    8G                 256G              Core i7 at 2    GHz    $1999

15.4" 2880´1800    8G                 512G              Core i7 at 2    GHz    $2299

15.4" 2880´1800  16G                 512G              Core i7 at 2    GHz    $2499

15.4" 2880´1800  16G                 512G             Core i7 at 2.3 GHz    $2599

15.4" 2880´1800  16G                 1T                   Core i7 at 2.3 GHz    $3099

15.4" 2880´1800  16G                 1T                   Core i7 at 2.6 GHz    $3299

In that list, the first 3 MacBooks are called the “MacBook Air”; the others are called the “MacBook Pro with Retina Display”.

Built into each MacBook, you’ll find a touchpad, a pair of stereo speakers, a microphone, and a video camera. The price also includes this software:

the operating system (OS X)

a photo editor (iPhoto), movie editor (iMovie), and music editor (GarageBand)

a word processor (Pages), spreadsheet program (Numbers), and
slide-show creator (Keynote)

The iMac Apple’s all-in-one computer is called the iMac. Here’s how it’s priced:

Screen                 RAM    Hard drive Intel CPU chip    Price

21.5" 1920´1080    8G       1T                   Core i5 at 2.7 GHz    $1299

21.5" 1920´1080    8G       1T                   Core i5 at 2.9 GHz    $1499

27"    2560´1440    8G       1T                   Core i5 at 3.2 GHz    $1799

27"    2560´1440    8G       1T                   Core i5 at 3.4 GHz    $1999

27"    2560´1440    8G       1T                   Core i7 at 3.5 GHz    $2199

27"    2560´1440  16G       1T                   Core i7 at 3.5 GHz    $2399

27"    2560´1440  16G       3T                   Core i7 at 3.5 GHz    $2549

27"    2560´1440  32G       3T                   Core i7 at 3.5 GHz    $2949

Each iMac’s hard drive is fast (7200 rpm).

Built into each iMac you’ll find a pair of stereo speakers, a microphone, and a video camera. The price also includes the Apple Keyboard, the Magic Mouse, and the same software as the MacBook.

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 build your own computer system.

Here’s how the Mac mini is priced:

RAM    Hard drive Intel CPU chip    Price

  4G       500G               Core i5 at 2.5GHz       $599

  4G       1T                   Core i7 at 2.3GHz       $799

  8G       1T                   Core i7 at 2.3GHz       $899

16G       1T                   Core i7 at 2.3GHz     $1099

16G       1T                   Core i7 at 2.6GHz     $1199

The Mac mini’s price includes the same software as the MacBook and the iMac. Apple sells a keyboard and mouse for $49 each ($98 total), but that still doesn’t get you a screen, speakers, microphone, or video camera.

Mac Pro The Mac Pro is a tower that’s a 10-inch tall cylinder. It acts like the Mac mini but is much faster and costs much more. Like the Mac mini, its price doesn’t include a keyboard, mouse, screen, speakers, microphone, or video camera; attach your own.

Here’s how the Mac Pro is priced:

Main RAM    Flash drive       Intel CPU chip    Price

12G                 256G                  Xeon E5   4-core       $2999

16G                 256G                  Xeon E5   4-core       $3099

16G                 256G                  Xeon E5   6-core       $3999

16G                 512G                  Xeon E5   6-core       $4299

16G                 1T                      Xeon E5   6-core       $4799

32G                 1T                      Xeon E5   6-core       $5199

64G                 1T                      Xeon E5   6-core       $5999

64G                 1T                      Xeon E5   8-core       $7499

64G                 1T                      Xeon E5 12-core       $8999


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 Thunderbolt 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 Thunderbolt Display so you have two screens!


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

Dealer                    Internet address              Phone number

Mac Mall                     800-222-2808

Mac Connection       800-800-2222

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. The deals usually involve getting $20 off, or paying full price but getting a free $50 gift card, or getting $100 off because it’s an outdated model that Apple no longer sells or will replace by a better model a few weeks from now.


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).

Most of your questions and difficulties will be during the first 3 months, when Apple’s help 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.

The first version of Windows was terrible, much worse than a Mac. Nobody took that version of Windows seriously. But over the years, Microsoft gradually improved Windows.

When Windows 3.0 came out, it was good enough to be useable. Though still not as nice as a Mac, it became popular because it ran on IBM PC clones, which cost much less than Macs.

When Windows 3.1 came out, some folks even liked it.

When Windows 95 came out in 1995, the Mac became doomed. Most critics agreed that Windows 95 was better than a Mac. Windows 98, Windows Me, Windows XP, Windows Vista, Windows 7, Windows 8, and Windows 8.1 were further improvements. Moreover, a computer running Windows 8.1 costs less than a Mac.

Apple faces a new problem: since practically everybody has switched to buying IBM clones (with Windows 7 or 8 or 8.1) 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 Windows versions. As a result, the Mac has actually become harder to use than a Windows computer!

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 Windows computers instead.


Apple’s iPad is a tablet computer. The newest version is called the iPad Air because it weighs very little: it’s almost as light as air. (It weighs just 1 pound, even though it’s big.) It’s nicknamed the “iPad 5th generation,” because 4 other iPads were invented before it. It includes a 9.7-inch screen (whose resolution is 2048-by-1536), a 1.4 GHz dual-core CPU (invented by Apple and called the A7), 2 tiny video cameras, and the iOS 7 operating system.

Its price depends on how much flash RAM is included. It costs $499 with 16G, $599 with 32G, $699 with 64G, $799 with 128G. There’s no hard drive, since 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).

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 3 reasons:

Microsoft began selling Windows 95 (which let IBM clones become nearly as pleasant as Macs).

Intel dramatically dropped prices on the Pentium chips used in IBM clones.

Spindler guessed wrong about which Macs would sell well, so Apple got stuck with unsold inventory of some models, parts shortages for others.

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. In 2011, Steve died from cancer. Now Apple is run by Tim Cook.