Proof has arrived. The digital world really was born in San Antonio in 1970.
As was explained in my story last year, the mass-produced personal computer first saw the light of day in San Antonio at a company later called Datapoint. It’s also laid out in my book Datapoint: The Lost Story of the Texans Who Invented the Personal Computer Revolution. Better yet, the resulting microprocessor chip, the eight-bit 8008 developed by Intel for Datapoint, gave rise to generations of increasingly powerful processors called the x86 dynasty that have formed the foundation of the Information Age. You are probably using one to read these words.
Unfortunately for it, Datapoint abandoned all rights to the chip—possibly the worst business decision of the 20th Century. But there was no documentary proof since Datapoint has gone under and Intel’s archives did not have anything about the 8008 deal with Datapoint. So revisionists have been able to stick with their California-based creation myth for the personal computer, centering around the Altair and Apple machines five years later.
Proof has surfaced—Bob McDowell of Dallas, who was the freelance sales rep in 1970 for Intel serving Computer Terminal Corp. (Datapoint’s original name), has found the agreement between Intel and CTC.
Apparently, the 8008 contract is not in Intel’s archives because there was no contract, only a purchase order (P.O.) as shown. Its terms were rather strange, but do fit the recollections of various surviving executives interviewed for the book, who remembered that the agreement between Intel and CTC took the form of a bet.
Starting at the top, the P.O.’s date (March 18, 1970) implies that arrangements between CTC and Intel took about three months to reach, as the idea of a processor chip was originally broached in a meeting during the 1969 Christmas season. The Datapoint 2200 desktop computer that CTC was developing had a processor that covered an entire board, and reducing it to a chip would save space and power. B at a later meeting Intel president Bob Noyce was reluctant to develop the chip, as his customers were computer firms and he didn’t want to develop a chip that they might see as competition.
Indeed, the confirming “signature” says “Graham.” McDowell was sure that was Intel co-founder Bob Graham, the firm’s first marketing executive. McDowell remembered that Graham convinced Noyce to go through with the deal. Graham left Intel soon after and died in 1998.
The P.O. shows that Intel’s name for the project was SPD-1, for Semiconductor Processor Development. Clearly, Intel and CTC saw the chip as a processor. This is significant because the chip emulated the internal operations of the Datapoint 2200, which some revisionists write off an “intelligent terminal.”
Next, the P.O. called for the purchase of 100,000 units at $30 each. As a production target, 100,000 units was wildly unrealistic. Beyond Datapoint, there was no immediate market for a microcomputer chip, since no chip like it had ever previously existed. The chip would have been initially sold into the mini-computer market, which in 1969 had seen world-wide sales of 6,000 units. At the end of 1972, CTC (which had been renamed Datapoint) was proud to announce that it was selling 160 computers per month.
Under “Terms and Conditions” the P.O. stated that, “Engineering prototype to be delivered by January 1, 1971,” giving Intel a development deadline of about nine months.
The so-called bet was embedded in the next section:
“Since this is a development program on the part of COMPUTER TERMINAL CORPORATION and INTEL CORPORATION the following terms apply:
1. There will be no charge to COMPUTER TERMINAL CORPORATION for development until and unless the engineering prototypes meet the specification as mutually agreed upon by COMPUTER TERMINAL CORPORATION and INTEL.”
2. If either COMPUTER TERMINAL CORPORATION or INTEL terminates the program after delivery of ten thousand (10,000) units the party terminating the agreement will pay the other party one hundred fifty thousand dollars ($150,000) as a termination fee.”
In 2016, McDowell recalled that the words “after delivery” in Section 2 were a mistake, and should have said “before delivery.” He also recalled that the $150,000 was the engineering fee to develop the chip.
That correction turns the P.O. into two mutual bets. The first bet was that Intel could get the chip to work, presumably by the deadline, or CTC would not have to pay the $150,000 development fee.
The other bet was that CTC could thereafter buy at least 10,000 units (at $30 apiece). If CTC chose to cancel the agreement before that volume was reached, they would have to pay Intel a $150,000 termination fee. If Intel canceled before 10,000 were sold, presumably because it wanted out of the computer market, CTC would receive a $150,000 termination fee.
Executives in both companies were excited about the chip — correctly so, as the events of the last 46 years have demonstrated. But instead of a terse P.O. they should have hired a lawyer to write a real contract, since a lawyer would have included contingency clauses, including potential items like a party asking for a delay.
Because that’s what happened: the notation on the top left of the paper says, “9/29/70 P.O. on hold—awaiting customer schedule.” Six months into the project, CTC put it on hold, presumably due to its own financial crisis. However, the project was later revived, and the chip was delivered about a year later.
By then, though, CTC was no longer interested in it. The chip emulated the operations of Version I of the Datapoint 2200, and CTC was readying Version II (again using a board-sized processor) which was about 100 times more powerful.
Intel missed the deadline, but CTC had also asked for a delay. So who owned money to whom? That wasn’t obvious from the terse wording of the P.O.
Meanwhile, there was the second bet—CTC had not taken delivery of 10,000 (or any) units. Did they have to pay $150,000 or did the delay invalidate the second bet too?
Rather than fighting about it, CTC surrendered the chip’s intellectual property to Intel, which on April 15, 1972, put it in the Intel catalog as the 8008 chip, retailing for $120. The CTC freed itself of a problem that could have cost $150,000— but they also could have attached its name, and bottom line, to one of the most important inventions of the era.
The 8008– as catalog item that anyone could buy– sparked a revolution, though it took several years to get off the ground. Intel enhanced the 8008 as the 8080 two years later, and again revamped it as the 8086 in 1978. A year later, Intel produced a variant called the 8088 which was used in the first IBM PC, and then the revolution truly took off.
Datapoint did not participate, attempted to compete against the PC wave, and eventually they went under. However, the company’s fate doesn’t change its accomplishments. If you want to see the results, just look around you.
Top image: Datapoint 2200 Computer owned by Jack Rubin. The production version of Datapoint 2200, shown here, had two cassette tape drives in the top, typically one for the software and one for the data. Original photo edited by Michael Holley.