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One of the more remarkable events in the history of personal computers was IBM contemplating basing their PC on Atari technology. That this was seriously considered, everyone agrees, but it's hard to pin down specifics. Some versions include:

http://www.360doc.com/content/12/0124/10/28217_181627497.shtml

At first, IBM thought about rebranding an existing computer, and had selected the Atari 800. However, after a visit to Atari headquarters, where IBM businessmen were literally put in a box and run through the assembly line by unorthodox and sometimes stoned Atari employees, the computing giant decided they would rather build their own computer.

So that version suggests the deal would have gone ahead but for the difference in corporate culture, which admittedly was large.

https://www.thoughtco.com/history-of-the-ibm-pc-1991408

At one point, IBM considered buying the fledgling game company Atari to commandeer Atari's early line of personal computers. However, IBM decided to stick with making their own personal computer line and developed a brand new operating system to go with.

That version suggests they would have outright bought the company, which is not what they did with Microsoft or offered to do with Digital Research. (Also, I don't think I would call Atari still a fledgling company at that stage.)

https://arstechnica.com/gadgets/2017/06/ibm-pc-history-part-1/

The machine that would become known as the real IBM PC begins, of all places, at Atari. Apparently feeling their oats in the wake of the Atari VCS' sudden Space Invaders-driven explosion in popularity and the release of its own first PCs, the Atari 400 and 800, they made a proposal to IBM's chairman Frank Cary in July of 1980: if IBM wished to have a PC of its own, Atari would deign to build it for them.

Far from being the hidebound mainframer that he’s often portrayed as, Cary was actually something of a champion of small systems—even if "small systems" in the context of IBM often meant something quite different from what it meant to the outside world. Cary turned the proposal over to IBM's Director of (data) Entry Systems, Bill Lowe, based out of Boca Raton, Florida. Lowe in turn took it to IBM's management committee, who pronounced it "the dumbest thing we've ever heard of." (Indeed, IBM and Atari make about the oddest couple imaginable.)

That version suggests the proposal was initiated by Atari, and that it was not in fact seriously considered by the people who would have had to sign off on the deal. It doesn't say why, but the tone suggests corporate culture is a likely reason.

None of these versions points out that a 40-column computer would be unsuitable for business computing in the first place.

I would love to know exactly what happened. Who was in favor of the proposal, and who turned it down? What exactly would it have consisted of; purchase of the company, technology license or something else? An Atari 800 with an IBM badge, or an IBM PC with some Atari technology in the guts, or something in between? How close did it get? What were the stumbling blocks? Why didn't they go to Apple or Commodore, whose technology and corporate culture would both have been closer matches?

Are any more detailed and authoritative sources known to exist?

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    "None of these versions points out that a 40-column computer would be unsuitable for business computing in the first place." - 80-column cards were available for the 800, and building one in would have been relatively simple. It remains a mystery to my why they didn't do that in the 1200XL, which would have justified it's high price. – Maury Markowitz Jul 31 '18 at 13:43
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    I recall an article, maybe in Compute!, that had code for a software 80-column “device” for the 400/800. I remember typing it in and using it, though it wasn’t totally ideal, it wasn’t all that bad. – mannaggia Jul 31 '18 at 14:13
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    IBM didn't talk to Apple because Apple was the primary competition they were targeting. And Commodore had a reputation (by then, at least in the U.S. ) for making "toy" computers that was even worse than Atari's association with video games. So IBM took the path of least resistance to follow Apple's market leadership and compete directly against them. – Brian H Jul 31 '18 at 16:18
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    @BrianH I'm not sure that Commodore had that reputation yet - IBM would have been looking around in early 1980 which is when the PET line were the only offerings from CBM and were as serious as Tandy or Apple were (short of the original 2001 model chicklet keyboard). I believe the "toy" bias came after the release of the VIC-20 and C64 machines which didn't appear until June '80 and August '82, respectively. – bjb Aug 2 '18 at 16:11
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    Atari ST uses standard MS-DOS format (720k) for its floppies. Coïncidence? – Jean-François Fabre Aug 6 '18 at 20:05
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We can no longer ask Bill Lowe, may he rest in peace.

But here's a little more information:

According to Blue Magic by James Chposky and Ted Leonsis, when Entry Level Systems Lab Director Bill Lowe went to IBM's Corporate Management Committee in July 1980 to propose the project, he told them, "The only way we can get into the personal computer business is to go out and buy part of a computer company, or buy both the CPU (central processing unit) and software from people like Apple or Atari--because we can't do this within the culture of IBM."

The book may reveal some more insights about the decision making process at IBM at the time. But check the following review of the book:

The story mostly presents the decision-making within IBM management, the IBM corporate culture, and the interdepartmental politics of the company. There is no coverage of the engineers and technicians who worked on the project, and scant attention is given to the computer's technical development. Indeed, the computer hardware and software itself is incorrectly described; obviously these two authors are complete computer ignoramuses. More on this below.

The same month as the Atari meeting, July 1980, IBM approached Microsoft about writing an operating system for the new computer. Since IBM apparently didn't spend much time deciding whether to partner with Atari, there may not be much to say about it at all.


Added 2019-01-05:

And in the book Atari Inc.: Business Is Fun:

William Lowe would be the one to break from IBM's standard business methodologies and models. He knew if IBM was going to have a new class of product, then it couldn't be done through the normal bureaucracy channels of 'Big Blue.' So he looked at two avenues. One would be to set up an island, a totally separate team outside of IBM to build an entirely new system design. The other would be to evaluate existing computer companies and look to acquire them or their own technologies, and it was in this avenue that he took particular note of some intriguing new designs from a company out in California called Atari.

William Lowe contacted Atari in 1979 [emphasis added] and requested a meeting to discuss their home computer systems. "We had two meetings actually, one in my office and another at my apartment in San Francisco with IBM," recalls Ray Kassar. "I was asked to come down from the Cyan offices up in Grass Valley down to the Sunnyvale offices to meet with IBM. We discussed our computer systems with them. I think the two problems were, we had a closed proprietary design and also, because our systems had to work on televisions, we only had 40-column displays, and those factors just wouldn't work for IBM," [emphasis added] recalls Steve Mayer. For one brief shining moment, IBM had actually considered acquiring the Atari home computers to use as IBM's new personal computer systems. If that had happened, the open architecture personal computer landscape that made Bill Gates a multi-billionaire might have looked far different.

Both of these accounts agree that IBM's Bill Lowe initiated the conversation, although the dates disagree. The difference in corporate culture between IBM and Atari wasn't mentioned as a deal killer, only the closed nature of Atari's hardware and the issue with 40 columns.

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    But IBM ended up doing exactly what those managers thought they couldn't do - designing the PC within IBM, but outside of IBM's culture. "Skunk Works", at its finest. – Brian H Jul 31 '18 at 16:24
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    @BrianH Learning about that culture change might provide more insights into the failed Atari deal. – traal Jul 31 '18 at 17:24
  • Thanks! I've placed an order for the book, will report back after I read it. – rwallace Jul 31 '18 at 18:11
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    Halfway through now, which is enough for an assessment: excellent book, definitely recommended. Sure, what little it says about the technology is not useful; that's okay, the technology is well documented elsewhere. This book contains what is far as I can tell is a pretty accurate account of IBM corporate politics that as far as I know is documented nowhere else. – rwallace Aug 8 '18 at 19:08
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    And it answers the question. The way the book puts it is that when Bill Lowe told the corporate management committee 'IBM corporate culture is not up to producing a good PC in a useful timescale, we would need to buy one from Apple or Atari' he was not in fact expecting them to say 'okay then go work out a licensing deal', he was expecting them to say 'well that would be completely unacceptable so we hereby grant you carte blanche to operate outside IBM normal corporate culture' - and they did. – rwallace Aug 8 '18 at 19:09
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First off, the website stating IBM execs were placed in carts and allegedly turned-off by Atari's culture is flat out wrong. That happened with Sears executives and Atari's management tried to hide a bunch of the stoners from view. The famous story is often told that a Sears exec reviewed the "Atari Video Music" box and jokingly asked what the engineer was smoking when he created it only to have said engineer pop out with a lit joint to answer the Sears exec.

Second, the Ars article is very dismissive of Atari and is rather insulting considering the genius engineers employed there at the time, such as Jay Miner, Al Alcorn, and Joe Decuir.

Third, the 400/800 architecture was "closed" due to the FCC. The FCC prohibited those computers from having expansion card slots because they were "home computers" and would cause interference with radios and TVs. Apple skirted this because they were allegedly meant to be "business computers". They both still had edge connectors on them that Joe Decuir at least intended to offer external expansion via a chassis. That was separate of the Atari SIO Port - the granddaddy of USB and Firewire - he created in direct response to the FCC's challenges.

Fourth, Warner CEO Steve Ross was at the time trying to interest IBM in acquiring a 50% stake in Atari Inc. He thought a joint-venture with IBM would be advantageous, plus, it would spread the risk pool just as Warner had done with their cable operations [Warner Amex] at the time, which was 50% owned by American Express.

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    At the time the Atari 400/800 were being designed, FCC emissions rules were designed around the assumption that the primary high-frequency signals that would be present in a device connected to a television set would be directly related to the video signal and would need to be shielded quite well in order to make the device perform well. Additional shielding may increase the cost of a device, but would also make the device work better. FCC created looser rules for computers shortly after that, but the design damage had already been done. – supercat Jan 28 at 18:47
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    Yes, the FCC did loosen up the rules after the 400/800 was designed. That was due to Tandy/Radio Shack's lobbying Congress after they ran afoul of the FCC. The Speaker of the House was from Tandy's area. Amazing what campaign contributions can achieve. – Jeremy Holloway Jan 28 at 18:50
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    The cost/benefit trade-offs for analog video circuitry are very different than those for digital circuitry. Tandy may have been the entity responsible for drafting rules that are more appropriate for digital circuitry, and their success may have been a result of their being in the proper Congressional district, but such changes were necessary regardless of who initiated them. – supercat Jan 28 at 19:06

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