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Prior to the 1980s, IBM had largely been known as a provider of business computer systems.<ref name="pollack19810813">{{Cite news|last=Pollack|first=Andrew|date=August 13, 1981|title=Big I.B.M.'s Little Computer|language=en-US|page=D1|work=The New York Times|url=https://www.nytimes.com/1981/08/13/business/big-ibm-s-little-computer.html|access-date=March 16, 2020|issn=0362-4331}}</ref> As the 1980s opened, their market share in the growing minicomputer market failed to keep up with competitors, while other manufacturers were beginning to see impressive profits in the microcomputer space. The market for personal computers was dominated at the time by [[Tandy Computers|Tandy]], [[Commodore International|Commodore]], and [[Apple Inc.|Apple]], whose machines sold for several hundred dollars each and had become very popular. The microcomputer market was large enough for IBM's attention, with $15 billion in sales by 1979 and projected annual growth of more than 40% during the early 1980s. Other large technology companies had entered it, such as [[Hewlett-Packard]], [[Texas Instruments]] and [[Data General]], and some large IBM customers were buying Apples.<ref name="morgan198003">{{cite news|author=Morgan, Christopher P|date=March 1980|title=Hewlett-Packard's New Personal Computer|page=60|work=[[Byte (magazine)|Byte]]|url=https://archive.org/stream/byte-magazine-1980-03/1980_03_BYTE_05-03_Computers_in_the_Labratory#page/n63/mode/2up|access-date=October 18, 2013}}</ref><ref name="swaine19811005">{{cite news|author=Swaine, Michael|date=October 5, 1981|title=Tom Swift Meets the Big Boys: Small Firms Beware|page=45|work=InfoWorld|url=https://books.google.com/books?id=JT0EAAAAMBAJ&pg=RA1-PA45|access-date=January 1, 2015}}</ref>
As early as 1980 there were rumors of IBM developing a personal computer, possibly a miniaturized version of the [[IBM System/370]],<ref name="byte198101">{{cite news|date=January 1981|title=Interest Group for Possible IBM Computer|page=313|work=[[Byte (magazine)|Byte]]|url=https://archive.org/stream/byte-magazine-1981-01/1981_01_BYTE_06-01_Hand-held_Computers#page/n313/mode/2up|access-date=October 18, 2013}}</ref> and [[Panasonic|Matsushita]] acknowledged publicly that it had discussed with IBM the possibility of manufacturing a personal computer in partnership, although this project was abandoned.<ref name="libes198106">{{cite news|author=Libes, Sol|date=June 1981|title=IBM and Matsushita to Join Forces?|page=208|work=[[Byte (magazine)|Byte]]|url=https://archive.org/stream/byte-magazine-1981-06/1981_06_BYTE_06-06_Operating_Systems#page/n209/mode/2up|access-date=October 18, 2013}}</ref><ref name="morgan198107">{{cite news|author=Morgan, Chris|date=July 1981|title=IBM's Personal Computer|page=6|work=[[Byte (magazine)|Byte]]|url=https://archive.org/stream/byte-magazine-1981-07/1981_07_BYTE_06-07_Energy_Conservation#page/n7/mode/2up|access-date=October 18, 2013}}</ref> The public responded to these rumors with skepticism, owing to IBM's tendency towards slow-moving, bureaucratic business practices tailored towards the production of large, sophisticated and expensive business systems.<ref name="ibm5120">{{cite web|date=January 23, 2003|title=IBM 5120|url=http://www-03.ibm.com/ibm/history/exhibits/pc/pc_6.html|archive-url=https://web.archive.org/web/20050311044344/http://www-03.ibm.com/ibm/history/exhibits/pc/pc_6.html|url-status=dead|archive-date=March 11, 2005|access-date=March 20, 2016|publisher=IBM}}</ref> As with other large computer companies, its new products typically required about four to five years for development,<ref name="morgan198201">{{cite news|author=Morgan, Chris|date=January 1982|title=Of IBM, Operating Systems, and Rosetta Stones|page=6|work=[[Byte (magazine)|Byte]]|url=https://archive.org/stream/byte-magazine-1982-01/1982_01_BYTE_07-01_The_IBM_Personal_Computer#page/n7/mode/2up|access-date=October 19, 2013}}</ref><ref name="bunnell19820203">{{cite news|author=Bunnell, David|date=Feb–Mar 1982|title=The Man Behind The Machine? / A PC Exclusive Interview With Software Guru Bill Gates|page=16|work=PC Magazine|url=https://books.google.com/books?id=w_OhaFDePS4C&pg=PA16|access-date=February 17, 2012}}</ref> and a well publicized quote from an industry analyst was, "IBM bringing out a personal computer would be like teaching an elephant to tap dance."<ref>{{Cite web|date=January 23, 2003|title=IBM Archives: The birth of the IBM PC|url=https://www.ibm.com/ibm/history/exhibits/pc25/pc25_birth.html|access-date=October 3, 2020|website=www.ibm.com|language=en-US}}</ref>
IBM had previously produced microcomputers, such as 1975's [[IBM 5100]], but targeted them towards businesses; the 5100 had a price tag as high as $20,000.<ref>{{cite web|title=Obsolete Technology Website|url=http://oldcomputers.net/ibm5100.html|access-date=August 14, 2008}}</ref> Their entry into the home computer market needed to be competitively priced.
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=== Debut ===
The IBM PC debuted on August 12, 1981, after a twelve-month development. Pricing started at $1,565 for a configuration with 16 KB RAM, [[Color Graphics Adapter]], keyboard, and no disk drives. The price was designed to compete with comparable machines in the market.<ref name="ibmpc25">{{cite web|date=January 23, 2003|title=The birth of the IBM PC|url=http://www-03.ibm.com/ibm/history/exhibits/pc25/pc25_birth.html|archive-url=https://web.archive.org/web/20060814072714/http://www-03.ibm.com/ibm/history/exhibits/pc25/pc25_birth.html|url-status=dead|archive-date=August 14, 2006|access-date=June 13, 2014|publisher=IBM Archives}}</ref> For comparison, the Datamaster, announced two weeks earlier as IBM's least expensive computer, cost $10,000.<ref name="Pollack">{{Cite news| last1 = Pollack | first1 = Andrew |date=March 27, 1983|title=Big I.B.M. Has Done It Again| language=en-US | work = [[The New York Times]] | url = https://www.nytimes.com/1983/03/27/business/big-ibm-has-done-it-again.html|access-date=October 4, 2020|issn=0362-4331 | df = dmy-all}}</ref>
IBM's marketing campaign licensed the likeness of [[Charlie Chaplin]]'s character "[[The Little Tramp]]" for a series of advertisements based on Chaplin's movies, played by Billy Scudder.<ref name="papson1990">{{cite journal|author=Papson, Stephen|date=April 1990|title=The IBM tramp|url=http://www.ejumpcut.org/archive/onlinessays/JC35folder/IBMtramp.html|journal=Jump Cut: A Review of Contemporary Media|issue=35|pages=66–72}}</ref>
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