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ing of dedicated users (a following in spirit not unlike those who twenty years later would
become dedicated to the Apple Macintosh amid a sea of PCs).
Speaking in 2006, Bill Gates called Olsen "one of the true pioneers of computing,"
adding "he was also a major influence on my life." Gates traces his interest in software to
his first use of a DEC computer as a 13-year-old. It is also worth noting that Gates and
Microsoft's other founder, Paul Allen, created their first personal computer software on a
DEC PDP-10. "Ken Olsen is the father of the second generation of computing," comments
George Colony, chief executive of Forrester Research, "and that makes him one of the ma-
jor figures in the history of this business." (Note: DEC was acquired by Compaq in 1998,
which in turn was acquired by Hewlett-Packard in 2001. The brand no longer endures.)
Despite its religiously-devoted base of users, the PDP-10 posed little threat to IBM.
By 1970, IBM had installed no less than 35,000 mainframes across the United States
and around the world. As the 60's wore on, industry watchers began to refer to IBM and
its most-commented competitors (Sperry Rand, Control Data, Honeywell, Philco, Bur-
roughs, General Electric and Honeywell - a list for which DEC did not even make the
cut) as "Snow White and the Seven Dwarfs." Later on, once General Electric and RCA
left the industry (GE's computing division being sold to Honeywell in 1970, and RCA's to
UNIVAC in 1971), the remaining IBM competitors were most often referred to simply as
the "BUNCH." DEC would not finally rank inclusion in the BUNCH until the late 1970s,
which saw the release of its successful VAX series of mainframes.
As the 1960s wore on, a profitable ancillary business sprang up in the form of leasing
companies: firms buying mainframes (primarily IBM machines) and then leasing them to
corporations.
IBM's leasing rates were based on an assumption of a five-year obsolescence schedule.
Thus IBM priced leases in such a way as to make back development and manufacturing
costs, plus make a profit, within that time frame. The independent leasing firms based their
business model upon an assumption that many customers would not necessarily choose to
automatically upgrade to next generation IBM machines as soon as these were available,
and that therefore mainframes purchased by the leasing firms would have a far larger win-
dow within which to pay for themselves. Given this assumption, the leasing firms were at
liberty to charge significantly less rent on mainframes than did IBM.
IBM's 1956 consent decree agreement with the Federal government had opened the
window for this activity when it forced IBM to began selling as well as leasing its units;
but it was not until the 1960s that the third-party leasing business really took off, starting
with the 1961 launch of a Brooklyn firm called Leasco.
