The Soul of a New Machine
By Tracy Kidder
(C)1997 Random House Inc.
All rights reserved.
How to Make a Lot of Money
For a time after the first pieces of Route 495 were laid
down across central Massachusetts, in the middle
1960s, the main hazard to drivers was deer. About fifteen
years later, although traffic went by in processions,
stretches of the highway's banks still looked lonesome.
Driving down 495, you passed some modern buildings,
but they quickly disappeared and then for a while there
would be little to see except the odd farmhouse and
acres of trees. The highway traverses some of the ghost
country of rural Massachusetts. Like Troy, this region
contains evidence of successive sackings: in the pine and
hardwood forests, which now comprise two-thirds of the
state, many cellar holes and overgrown stone walls that
farmers left behind when they went west; riverside textile
mills, still the largest buildings in many little towns,
but their windows broken now, their machinery crumbling
to rust and the business gone to Asia and down
south. However, on many of the roads that lead back behind
the highway's scenery stand not woods and relics,
but brand-new neighborhoods, apartment houses, and
shopping centers. The roads around them fill up with
cars before nine and after five. They are going to and
from commercial buildings that wear on their doors and
walls descriptions of new enterprise. Digital Equipment,
Data Generalthere on the edge of the woods, those
names seemed like prophecies to me, before I realized
that the new order they implied had arrived already.
A few miles north of the junction of Route 495 and
the Massachusetts Turnpike, off an access road, sits a
two-story brick building, surrounded by parking lots. A
sign warns against leaving a car there without authority.
The building itself looks like a fort. It has narrow windows,
an American flag on a pole out front, a dish antenna
on a latticed tower. Mounted on several corners of
the roofs, and slowly turning, are little TV cameras.
This is Building 14A/B14B was fastened seamlessly
to 14A. Some employees call the place "Webo,"
but most refer to it as "Westborough," after the name of
the town inside whose borders the building happens to
exist. "Westborough" is worldwide headquarters of the
Data General Corporation. Driving up to the building
one day with one of the company's public relations men,
I asked, "Who was the architect?"
"We didn't have one!" cried the beaming press agent.
Company engineers helped to design Westborough,
and they made it functional and cheap. One contractor
who did some work for Data General was quoted in Fortune
as saying, "What they call tough auditing, we call
thievery." However they accomplished it, Westborough
cost only about nineteen dollars a square foot at a time
when the average commercial building in Massachusetts
was going for something like thirty-four dollars a foot.
But looks do matter here. The company designed Westborough
not just for the sake of thriftiness, but also to
make plain to investors and financial analysts that Data
General really is a thrifty outfit. "There's no reason in
our business to have an ostentatious display," a company
analyst for investor relations explained. "In fact, it's
The TV cameras on the roofs, the first defense against
unscrupulous competitors and other sorts of spies and
thieves, must comfort those who have a stake in what
goes on inside. As for me, I imagined that somewhere in
the building men in uniforms were watching me arrive,
and I felt discouraged from walking on the grass.
The only door that opens for outsiders leads to the
front lobby. A receptionist asks you to sign a logbook,
which inquires if you are an American citizen, wants
your license plate number, and so on. Still you cannot
pass the desk and enter the hallways beyondnot until
the employee you want to see comes out and gives you
escort. When I inquired, the cheerful young receptionist
said that once in a great while some outsider would try
to break the rules and try to slip inside.
The lobby could belong to a motor inn. It has orange
carpeting and some chairs and a sofa upholstered in
vinyl, on which salesmen and would-be employees languish,
awaiting appointments. Now and then, a visitor
will stand and gaze into a plastic case. It contains the
bare bones of a story that will feed the dreams of any
ambitious businessman. The First NOVA, reads a legend
on the case. Inside sits a small computer, about the
size of a suitcase, with a cathode-ray tubea thing like
a television screenbeside it. A swatch of prose on the
back wall, inside the case, explains that this was the first
computer that Data General ever sold. But the animal in
there isn't stuffed; the computer is functioning, lights on
it softly blinking as it produces on the screen beside it a
series of graphsten years' worth of annual reports, a
préis of Data General Corporation's financial history.
Left to their own devices, the engineers who worked
in the basement of Building 14A/B could surely have
produced a flashier display, but a visitor from Wall Street
who had never paid attention to this company before
might have felt faint before the thing. The TV screen
was blue. The graphs, etched in white, appeared in rotating
sequence, and each one bore a name. "Cumulative
Computers Shipped Since Our Founding" started with
100 in 1969 and went right up to 70,700 in 1979. The
image vanished. "Net Sales" appeared, to show that revenues
had ascended without a hitch from nothing in
1968 to $507.5 million in 1979. That graph went away
and in its place came one describing profit margins.
These hardly varied. The profits just rolled in, year after
year, along a nearly straight line, at about 20 percent (before
taxes) of those burgeoning net sales.
Someone unaccustomed to reading financial reports
might have missed the full import of the numbers on the
screen, the glee and madness in them. But anyone could
see that they started small and got big fast. Mechanically,
monotonously, the computer in the case was telling an
old familiar storythe international, materialistic fairy
tale come true.
* * *
The first modern computers arrived in the late 1940s,
and although many more or less single-handed contributions
fostered the technology, they did so mainly in
the shade of a familiar association in America among the
military, universities and corporations. On the commercial
side, IBM quickly established worldwide hegemony;
it brought to computers the world's best sales force, all
dressed in white shirts and blue suits. For some years the
computer industry consisted almost exclusively of IBM
and several smaller companies"IBM and the seven
dwarfs," business writers liked to say. Then in the 1960s
IBM produced a family of new computers, called the
360 line. It was a daring corporate undertaking. "We're
betting the company," one IBM executive remarked. Indeed,
the project cost somewhat more than the development
of the atom bomb, but it paid off handsomely. It
guaranteed for a long time to come IBM's continued
preeminence in the making of computers for profit.
Meanwhile, though, new parts of the business were
growing up, and out from under IBM.
In the early days, computers inspired widespread awe
and the popular press dubbed them giant brains. In fact,
the computer's power resembled that of a bulldozer; it
did not harness subtlety, though subtlety went into its
design. It did mainly bookkeeping and math, by rote
procedures, and it did them far more quickly than they
had ever been done before. But computers were relatively
scarce, and they were large and very expensive.
Typically, one big machine served an entire organization.
Often it lay behind a plate glass window, people in
white gowns attending it, and those who wished to use it
did so through intermediaries. Users were like supplicants.
The process could be annoying.
Scientists and engineers, it seems, were the first to express
a desire for a relatively inexpensive computer that
they could operate themselves. The result was a machine
called a minicomputer. In time, the demand for
such a machine turned out to be enormous. Probably
IBM could not have controlled this new market, the way
it did the one for large computers. As it happened, IBM
ignored it, and so the field was left open for aspiring
entrepreneursoften, in this case, young computer engineers
who left corporate armies with dreams of building
corporate armies of their own.
For many years sociologists and others have written
of a computer revolution, impending or in progress.
Some enthusiasts have declared that the small inexpensive
computer inaugurated a new phase of this upheaval,
which would make computers instruments of egalitarianism.
By the late seventies, practically every organization
in America had come to rely upon computers, and
ordinary citizens were buying them for their homes.
Within some organizations small bands of professionals
had exercised absolute authority over computing, and
the proliferation of small computers did weaken their
positions. But in the main, computers altered techniques
and not intentions and in many cases served to increase
the power of executives on top and to prop up venerable
institutions. A more likely place to look for radical
change was inside the industry actually producing computers.
Generally, that industry grew very big and lively,
largely because of a single invention.
Shortly after World War II, decades of investigation
into the internal workings of the solids yielded a new
piece of electronic hardware called a transistor (for its
actual invention, three scientists at Bell Laboratories
won the Nobel Prize). Transistors, a family of devices,
alter and control the flow of electricity in circuits; one
standard rough analogy compares their action to that of
faucets controlling the flow of water in pipes. Other devices
then in existence could do the same work, but transistors
are superior. They are solid. They have no cogs
and wheels, no separate pieces to be soldered together;
it is as if they are stones performing useful work. They
are durable, take almost no time to start working, and
don't consume much power. Moreover, as physicists and
engineers discovered, they could be made very small, indeed
microscopic, and they could be produced cheaply
in large quantities.
The second crucial stage in the development of the
new electronics came when techniques were developed
to hook many transistors together into complicated
circuitsinto little packets called integrated circuits, or
chips (imagine the wiring diagram of an office building,
inscribed on the nail of your little toe). The semiconductor
industry, which is named for the class of solids
out of which transistors are made, grew up around these
devices and began producing chips in huge quantities.
Chips made spaceships and pocket calculators possible.
They became the basic building blocks of TVs, radios,
stereos, watches, and they made computers ubiquitous
and varied. They did not eliminate the sizable, expensive
computer; they made it possible for the likes of IBM to
produce machines of increased speed and capability and
still make handsome profits without raising prices much.
At the same time, the development of chips fostered an
immense and rapid growth of other kinds of computing
After mainframes, as the big computers were known,
came the cheaper and less powerful minicomputers.
Then the semiconductor firms contributed the microprocessor,
the central works of a computer executed on
a chip. For a while, the three classifications really did
describe a company's products and define its markets,
but then mainframers and microcomputer companies
started making minis and minicomputer companies
added micros and things that looked like mainframes to
their product lines. Meanwhile, a host of frankly imitative
enterprises started making computers and gear for
computers that could be plugged right into systems built
around the wares of the big successful companies. These
outfits went by the names of "plug compatibles" and
"third-party peripheral manufacturers"; those who lost
some business to them called them "knockoff companies."
Probably they helped maintain competition in
prices. Many "software" houses sprang up, to write programs
that would make all those computers actually do
work. Many customers, such as the Department of Defense,
wanted to buy complete systems, all put together
and ready to run with the turn of a key; hence the rise of
companies known as original equipment manufacturers,
or OEMsthey'd buy gear from various companies and
put it together in packages. Some firms made computer
systems for hospitals; some specialized in graphicscomputers
that draw picturesand others worked on
making robots. It became apparent that communications
and computing served each other so intimately that they
might actually become the same thing; IBM bought a
share in a satellite, and that other nation-state, AT&T,
the phone company, started making machines that
looked suspiciously like computers. Conglomerates, of
which Exxon was only the largest, seemed determined
to buy up every small computer firm they could. As for
those who observed the activity, they constituted an industry
in themselves. Trade publications flourished;
they bore names such as Datamation, Electronic News, Byte,
Computermania. IBM, one executive of a mainframe company
once said, represented not competition but "the
environment," and on Wall Street and elsewhere some
people made a business solely out of attempting to predict
what the environment would do next.
I once asked a press agent for a computer company
what was the reason for all this enthusiasm. He held a
hand before my face and rubbed his thumb across his
fingers. "Money," he whispered solemnly. "There's so
goddamn much money to be made." Examples of spectacular
success abounded. The industry saw some classic
dirty deals and some notable failures, too. RCA and
Xerox lost about a billion dollars apiece and GE about
half a billion making computers. It was a gold rush. IBM
set up two main divisions, each one representing the
other's main competition. Other companies did not have
to invent competitors and did somewhat more of their
contending externally. Some did sometimes use illicit
tools. Currying favor, seeking big orders for chips, some
salesmen of semiconductors, for instance, were known
for whispering to one computer maker news about another
computer maker's latest unannounced product.
Firms fought over patents, marketing practices and employees,
and once in a while someone would get caught
stealing blueprints or other documents, and for these
and other reasons computer companies often went to
court. IBM virtually resided there. Everyone sued IBM,
it seemed. The biggest suit, the Farndyce v. Farndyce of the
industry, involved the Justice Department's attempt to
break up IBM. Virtually an entire large law firm was created
to defend IBM in this case, which by 1980 had run
ten years and had been in continuous trial for several.
Data General took its place in this bellicose land of
opportunity in 1968, as a "minicomputer company." By
the end of 1978 this increasingly undescriptive term
could in some senses be applied to about fifty companies.
Their principal but by no means their only business,
the manufacture and sale of small computers, had
grown spectacularlyfrom about $150 million worth of
shipments in 1968, to about $3.5 billion worth by 1978and
it would continue to grow, most interested parties
believed, at the rate of about 30 percent a year. By 1978
Data General ranked third in sales of minicomputers
and stood among the powers in this segment of the industry.
The leader was Digital Equipment Corporation,
or DEC, as it is usually called. DEC produced some of
the first minicomputers, back in the early sixties. Data
General was the son, emphatically the son, of DEC.
A chapter of DEC's official history, a technical work
that the company published, describes the making of a
computer called the PDP-8. DEC sent this machine to
market in 1965. It was a hit. It made DEC's first fortune.
The PDP-8, says the official history, "established the
concept of minicomputers, leading the way to a multibillion
dollar industry." But the book doesn't say that
Edson de Castro, then an engineer in his twenties, led
the team that designed the PDP-8. The technical history
mentions de Castro only once, briefly, and in another
context. They expunged de Castro.
In 1968 de Castro and two other young engineers seceded
from DEC. Several completely different versions
of their flight exist and have by now acquired the impenetrable
quality of myth. Did they quit because, after
long and heartfelt labor on a new design, they found that
DEC's management would not build their new machine?
DEC's management did turn down a new design of de
Castro's, and afterward, along with a man from another
company named Herb Richman, de Castro and the two
other engineers from Digital incorporated Data General
and started building their own minicomputer. But did
they design this new machine after they seceded, or had
they done that job in secret, using DEC's facilities, while
still on DEC's payroll? One version of the story suggested
the latter. More than ten years later, DEC's
founder and president would tell reporters from Fortune,
"What they did was so bad we're still upset about it." But
DEC never sued Data General's founders, and clearly
there were other reasons why Digital might have become
upset. For within a year, de Castro and company
had set up shop in DEC's own territory and had started
raking in the loot.
They rented space in what had been a beauty parlor,
in the former mill town of Hudson, Massachusetts. Practically
all that remains of that time is a black-and-white
photograph of this first headquarters. In the foreground
stand four young men with short hair, wearing white
shirts and skinny ties and the sort of plain black shoes
that J. Edgar Hoover's men favored. They are engaged in
what is obviously meant to look like routine conversation.
The linoleum floor, the metal furniture, evoke
motor vehicle departments, and the youths in the picture
could be members of some junior chamber of commerce,
playing capitalists for a day. Not shown in this
bemusing picture is the shrewd and somewhat older
lawyer from a large New York firm who helped Data
General's founders raise their capital and who became a
crucial member of their team. What also doesn't show is
the fact that some of these young men were already
computer engineers of no mean reputetheir age in
this case was no impediment, for computer engineers
like athletes often blossom early.
They started Data General at an auspicious time. In
the late 1960s, the period memorialized in John Brooks's
The Go-Go Years, venture capital (among other things)
abounded, and although they started out with only
$800,000, more lay in reserve. They also entered a good
territory for fledglings. They could not have dreamed of
moving in on IBM's markets without truly vast amounts
of capital. But the people who bought minicomputersengineers,
scientists, and, mainly, purchasing agents of
OEMsunderstood the machines. A new manufacturer
could reach them through relatively inexpensive ads in
the trade journals, and didn't need to build a service organization
right away, since these customers could take
care of themselves. These were also the sorts of customers
who could be expected to embrace a newcomer,
if the price was right; they'd prefer a bargain to a brand
But around the time when Data General established
itself in the beauty parlor, other entrepreneurs were
starting up minicomputer companies at the rate of about
one every three days. Only a few of those other new outfits
survived the decade, whereas Data General, before it
had exhausted its first and fairly modest dose of capital,
achieved and never fell from that state of grace, a positive
cash flow. Why?
TABLE OF CONTENTS: "The Soul of a New Machine"
|Introduction to the Modern Library Edition || || ix
|Prologue ||A Good Man in a Storm||3
|Chapter 1 ||How to Make a Lot of Money||9
|Chapter 2 ||The Wars||36
|Chapter 3 ||Building a Team||64
|Chapter 4 ||Wallach's Golden Moment||88
|Chapter 5 ||Midnight Programmer||113
|Chapter 6 ||Flying Upside Down||146
|Chapter 7 ||La Machine||171
|Chapter 8 ||The Wonderful Micromachines||204
|Chapter 9 ||A Workshop||226
|Chapter 10 ||The Case of the Missing NAND Gate||242
|Chapter 11 ||Shorter Than a Season||279
|Chapter 12 ||Pinball||291
|Chapter 13 ||Going to the Fair||306
|Chapter 14 ||The Last Crunch||327
|Chapter 15 ||Canards||352
|Chapter 16 ||Dinosaurs||364
|Epilogue || ||378
|Acknowledgments || ||383