How Could One Magazine Be Worth More Than $1 Trillion?

On this day in business and computing history...

The first copies of the January 1975 issue of Popular Electronics reached subscribers and newsstands on or around Dec. 19, 1974 -- six days before Christmas. That issue is worth more than $1 trillion today -- not because of the magazine itself, which is only worth several hundred dollars in good condition, but because of the object on its cover: the Altair 8800, which launched the personal-computing revolution.

MITS, the company behind the Altair, had been developing increasingly complex electronics products since 1969, beginning with model rocket kits before advancing to electronic calculators and test equipment. By 1972, semiconductor pioneer Texas Instruments had developed its own electronic calculator, which pushed many smaller players out of a once-profitable market. MITS needed a new product to overcome its mounting debts, and founder Ed Roberts decided that a low-cost minicomputer would be his company's next meal ticket.

The Altair's timing was perfect. The Intel (NASDAQ: INTC  ) 8080 processor had been released earlier in 1974, and it was the first processor to have enough power and functionality to control a worthwhile minicomputer. Roberts was able to get a deep discount by ordering in bulk. By 1974, a growing cabal of technologically inclined college students had been attending computer programming courses for years, and the public had been exposed to two years of Pong, the first truly successful "computer game." Interest in computer ownership had been building, but no one had yet managed to release a useful computer hobby kit.

The bare-bones Altair kit cost only $439, and even a complete assembled kit with all the add-ons cost less than $2,000, which would be about the same as $8,500 today. By the end of February 1975, MITS had more than 1,000 orders for the minicomputer, and by the end of August it had filled more than 5,000 orders. This rough, primitive kit was a huge hit with the computer hobbyist community, but its largest impact fell on three industry legends who would soon lead the PC revolution: Bill Gates, Steve Jobs, and Steve Wozniak.


Source: Jason Scott via Wikimedia Commons.

Paul Allen purchased a copy of Popular Electronics shortly after it hit newsstands and showed it to Gates with great enthusiasm, suggesting that the pair create a BASIC interpreter to make the Altair far more functional for computer-science kids trained on BASIC programming. Their successful development earned them a distribution agreement with MITS, and Microsoft (NASDAQ: MSFT  ) was formed in Albuquerque, N.M., where MITS was based, in early 1975.

The Homebrew Computer Club was also founded in early 1975, largely to capitalize on the Altair's popularity. This hobbyist club allowed like-minded folks to trade computer parts and information, pooling knowledge, abilities, and hardware beyond what any one hobbyist would have available. The club's (fictionalized) meetings are a highlight of the early parts of Pirates of Silicon Valley, which shows the genesis of Apple (NASDAQ: AAPL  ) in Steve Jobs' house as an outgrowth of Steve Wozniak's engineering for the club. Apple was founded less than two years after MITS received its first orders and quickly became the hottest computer company in the world -- for a while.

By popularizing Intel's processors and Microsoft's software, the Altair can be considered directly responsible for the success of two of the largest computing companies in the world -- and it's also (at least in part) behind the transformations of 1970s-era business-hardware titans IBM (NYSE: IBM  ) and Hewlett-Packard into personal computing companies (although IBM later transitioned away after losing a race to the bottom in PC hardware manufacturing). These four companies, along with Apple, boasted a combined market cap of more than $1.1 trillion 39 years after that groundbreaking issue of Popular Electronics hit the newsstands.

Ed Roberts, whose creation helped spark the computer revolution, didn't stick around in the industry for long. He sold MITS in 1977, the same year that Apple was formally incorporated, and retired to Georgia, where he studied medicine and became a small-town doctor before his death in 2010 at the age of 68.

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