Information Technology Reference
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systems. These small third generation computers became possible with the rise of ever-
more sophisticated integrated circuit and core memory technologies.
Compared to mainframes, which took up the size of a large room, minicomputers were
merely the size of a large refrigerator. The first commercially successful mini was DEC's
12-bit PDP-8, released in 1965, of which the firm would eventually sell more than 50,000
units. The PDP had a base cost of $16,000. (Interestingly, DEC's first customer for the PDP
in its earliest form - the PDP-1, released 1964 - was the Cambridge, Massachusetts consult-
ing company Bolt Beranek & Newman [BBN], which would eventually become renowned
for its role in helping to create the Internet.) Minicomputers (sometimes called "midrange
computers") offered relatively high processing power and capacity that matched the needs
of mid range organizations.
The developer of the PDP, Digital Equipment Corporation, had been founded in 1957
by Kenneth H. Olsen and Harlan Anderson. A Massachusetts (Route 128) company with
close ties to the Massachusetts Institute of Technology, DEC fostered a culture which
encouraged Spartan efficiency, loose management and individual innovation. In Digital's
management structure, Olsen was the supreme figure who hired smart people and then
turned them loose on projects. Olsen gave his engineers responsibility and expected them
"to perform as adults," says Edgar Schein, who once taught organizational behavior at MIT
and frequently consulted with Olsen over the course of 25 years. "Lo and behold," reports
Schein, "they performed magnificently." Gordon Bell, an early DEC employee intimately
involved in DEC's greatest successes (later a principal researcher at Microsoft) has com-
mented that all DEC alumni "think of Digital fondly and remember it as a great place to
work."
Beginning in the mid 1960s, DEC was destined to grow quickly, due in large measure
to the sales of its minis. The firm had revenue of a meager $15 million in 1965, and
876 employees. By 1970, however, revenues were $135 million and the firm's employees
numbered 5,800. Even at that size, DEC still boasted nowhere near the corporate heft of
IBM. (IBM's 1963 revenue equaled $1.2 billion. 1965 revenue was over $3 billion; and
1970 saw the firm at $7.5 billion.) Nevertheless the smaller firm was selling as many
PDP-8 machines as IBM was its 360s. (Note: Another firm growing due to sales of minis
was Control Data.)
In 1986,
Fortune
was to describe Ken Olsen as "arguably the most successful entre-
preneur in the history of American business." DEC, said the magazine, "changed the way
people use computers" and was "IBM's most serious challenger." Indeed, Olsen and Ander-
son always saw their firm as not just a maker of devices purely ancillary to the mainframe,
but also as a mainframe provider. Released at the same time as the PDP-8, DEC's 36-bit
PDP-6 (improved in 1966 as the PDP-10) did not put a sizable dent into the market for
IBM's 7090 and 360 machines; however, the DEC machine did develop a cult-like follow-
