The Rise and Fall of Steve Jobs’s Greatest Rival

In the Oscar-nominated film The Holdovers, the lead character, a history teacher, says, “Before you dismiss something as boring or irrelevant, remember, if you truly want to understand the present or yourself, you must begin in the past. You see, history is not simply the study of the past. It is an explanation of the present.”

This quote aptly describes the work of Gareth Edwards, a digital strategist, writer, and historian who’s previously written for Every about the secret father of modern computing, the rise and fall of Elon Musk's earlier incarnation of X, and the trust thermocline. Today’s businesses and technologies were not just defined by the names we remember, and in his new column, The Crazy Ones, Gareth will tell the stories of the forgotten men and women who thought differently and helped build the future. His latest piece demonstrates how the personal computing battles of the early 1980s—when Steve Jobs and Adam Osborne battled for supremacy—echo to today. It’s a reminder of how easy it is for founders to repeat mistakes from the past. Read this to 1) bask in the incredible writing, 2) enjoy the fascinating story, and 3) learn how others’ missteps can help solve your problems. (If you prefer an audio version, listen to Gareth's narration on Spotify.)

Gareth will be bringing a new story to light in his column on the first Monday of each month—making a subscription to Every that much more valuable for paid subscribers. As always, let us know what you think in the comments. —Kate Lee

On June 5, 1981, journalists from around the world gathered at NASA’s headquarters in Washington, D.C. to watch as the Voyager 2 spacecraft became the first man-made object to reach Saturn. In the aftermath of this historic event, the main attraction wasn’t NASA’s staff. It was fellow journalist Jerry Pournelle. Pournelle had something none of them had ever seen before: a portable computer, the first mass-market one in history.

“There were over 100 members of the science press corps packed into the Von Karman Center (the press facility),” Pournelle wrote in his regular column for Byte magazine a few months later. “Most had typewriters. One or two had big, cumbersome word processors…nobody had anything near as convenient as the Osborne 1.”

Just six years earlier, the Altair 8800 had been unveiled at the first meeting of the Homebrew Computer Club. There, Steve Jobs recognized that the future of computing lay in the consumer market, not the hobbyist. But Jobs was not alone. He stood alongside someone who would go on to become a “frenemy” of sorts. Like Jobs, he was intensely charismatic. Like Jobs, he had a near-supernatural ability to sense what consumers wanted before they knew it themselves. And, like Jobs, he knew how to sell his ideas to the world.

That man was Adam Osborne, creator of the Osborne 1 that had wowed those gathered at NASA. He was Jobs’s first true rival—one who seemed destined to beat him, until his $100 million company was no more, almost overnight. Today, Adam Osborne is mostly forgotten. He only survives as a warning whispered to business students and first-time entrepreneurs: “Beware the Osborne effect!”

This is the story of Osborne’s spectacular rise and fall. It is based on contemporary articles in publications such as the New York Times, Business Insider, Infoworld, Dr. Dobbs Journal, and Byte; published accounts from those who were there; books such as Steve Jobs by Walter Isaacson and Fire in the Valley by Michael Swaine and Paul Frieberger; and, finally, on the words of Adam Osborne himself.

The sage

In late 1943, a three-year-old boy approached Bhagavan Sri Ramana Maharshi, a Hindu sage living in Tamil Nadu, a state in southern India. The boy’s name was Adam and he lived at the Maharshi’s ashram with his mother.

To the many seekers of enlightenment visiting the ashram, a young western child on its premises would have seemed unusual. His familiarity and informal interactions with the great man would have bordered on the disrespectful. Yet the sage responded with warmth. He had offered the boy’s mother sanctuary from the war sweeping through the world after Adam’s father, a British philosopher, had been captured by the Japanese at the fall of Singapore. There had been no news of him since—until that morning when, with Adam watching on, his mother received a telegram from the War Office announcing that her husband was dead.

Adam refused to believe this was true. He pushed his way through the crowd until he caught Sri Ramana’s eye.

 “Bhagavan, please bring my daddy back safely,” Adam asked matter-of-factly in fluent Tamil.

Bhagavan Sri Ramana Maharshi looked at him, smiled, and promised Adam that everything would be okay. And it was. At the end of the war, his father was found weak but alive in a Japanese internment camp.

The pace of life at the ashram represented a stark contrast to the world outside it. While relatives his age in England were being evacuated to the countryside or spending their nights in air raid shelters to avoid German bombs, Adam and his friends were exploring the hills and valleys of Tamil Nadu. His early life was one free of materialism, in a community of devotees who believed that moderation and self-reflection were the route to happiness. It was a time free of fear and full of love, one that only became more pronounced once his father joined them after the war.

“The years after he came home from the war were, for us children, a great joy,” Adam’s older sister recalled. 

For a brief period, Adam continued to live an idyllic life in the ashram, and his creativity and desire to explore were encouraged. But it couldn’t last forever. Although his father became a devotee of the Bhagavan, he believed that Adam needed to experience the outside world. At the age of 11, Adam was enrolled in boarding school in England while his parents remained at the ashram.

The culture shock for young Adam was enormous. Life in India was about freedom and creativity—neither of which postwar boarding schools in England believed had a place in a young boy’s life. On top of this, Adam faced another huge challenge. While he was fluent in English, Tamil was the language he considered his own. His wardrobe of light summer clothes contrasted with the more formal shirts and gray shorts of his English peers. On arrival, everything about Adam would have screamed: foreigner. Different.

In a boarding school environment, being different was the worst thing a young boy could be. It made you a target.

This experience could have been the breaking of Adam, as it has been for many young boys before and since. Instead, he responded in the way he would learn to respond to everything in life—by changing himself and pushing ruthlessly forward.

He charmed those around him with the same easy confidence he had seen the Bhagavan exhibit time and again. It was perhaps the only part of his Indian upbringing (other than a life-long fascination with eastern philosophy) that he decided to preserve. Over his remaining years at school and later university, he would gradually shed all the other parts of his old self. How he used words changed. He discarded the southern Indian accent of his youth in favor of a more clipped, upper-class English tone. He modified how he dressed, adopting a more conservative, British style.

Adam, the young boy who had played in the hills of Tamil Nadu, was gone. He had become Adam Osborne, a young man determined to move forward without ever looking back. This would be the Adam the world would see for almost all of his life. 

A restless force of nature

Almost everyone who met Adam Osborne would describe him the same way. Well dressed. Soft-spoken. The owner of a not-quite-English accent, which still carried a hint of his Indian upbringing. In England, he’d worked hard to rid himself of it. In America, he discovered it caught people’s attention. And once Adam had your attention, you were in trouble, at least if you had something he wanted. He was viciously smart, almost impossibly persuasive, utterly ambitious, and eternally restless. He was a man driven by twin goals: to succeed and to make money. He also enjoyed indulging in the excesses that achieving those goals enabled. From parties to poker games, Osborne was a regular at them all. Nor was he afraid to broadcast his achievements to the world. 

All of these things would eventually make Osborne one of Silicon Valley’s first true tech celebrities, but they came at a personal cost. His goals and lifestyle were the antithesis of everything taught by the Maharshi back at the ashram, where his parents remained. This was not the Adam they had raised, and, to his frustration, they rarely acknowledged what he believed to be his successes. 

“He never forgave his parents for sending him away,” author and journalist Michael Swaine wrote of Osborne later. Swaine knew Osborne personally, describing him as someone driven by twin demons—a desire to be seen as worthy of their love, but determined to make them acknowledge him on his terms, not theirs.

Whether Swaine’s insight into Osborne’s motivations is accurate or not, it’s certainly true that by the time Osborne moved to Silicon Valley, his relationship with his parents was fractious. Not long after, that fracture would become almost permanent. This would also lead to a strained relationship with his siblings for most of his life. 

When the Altair 8800 was revealed in 1975, Osborne, like Jobs, had an instant vision of the future it foretold. He was in California, working as a chemical engineer for Shell until he grew bored with his occupation and became active in the world of computing. He’d always been a good writer, and his 1972 book The Value of Power—a title commissioned by a large computer manufacturer—was one of the earliest books on mainframe computing that was written for business people, not engineers. This was the start of a reasonably lucrative career as a consultant and technology journalist.

After seeing the Altair, Osborne was determined to write the first business-friendly guide to using it, so he quickly wrote his next book—Introduction to Microcomputers. Traditional publishers didn’t believe there was a market for Osborne’s book and hesitated to publish it. But his reckless energy wouldn’t allow him to wait. He decided to start his own publishing company. By March 1976, the book had sold 20,000 copies.

“Publishing was clearly a better business than consulting,” Osborne wrote later, “so I refocused my attention.”

Osborne’s company became the leading publisher of books on home and business computing in California. That landed him a regular column in Interface Age, one of the first personal computer magazines. Osborne called his column “From the Fountainhead,” and he became one of the most widely known, respected, and even feared writers on the home computing revolution.

Osborne’s bold and forthright columns were part of a calculated plan. He’d come to believe that everything was about momentum in the rapidly changing world of home computing. You had to be part of the digital zeitgeist or you would be left behind. “From the Fountainhead” was the perfect way to stay current, which, in turn, drove his company’s book sales. By 1979, Osborne was the foremost publisher of personal computing books in the world and a well-known figure in Silicon Valley. Then, in late 1979, to the astonishment of everyone, Osborne sold it to McGraw-Hill, one of the oldest and most traditional publishers in America.

Osborne agreed to stay on in a leadership role at the newly rebranded Osborne/McGraw-Hill. However, he ensured that his agreement with McGraw-Hill would allow him to pursue other projects. He could also leave the company without penalty by 1983, three years after he had sold. The truth was that Osborne felt like he’d conquered computer publishing and was losing momentum. He wanted—no, needed—to get that momentum back. And having watched the hardware business from the outside for a while, he thought he had a way to do it.

Osborne sought out the one person he trusted not to laugh at his plan: fellow Homebrew Computer Club veteran Lee Felsenstein. To Felsenstein’s astonishment, Osborne told him that he was setting up a new company to build the world’s first truly portable computer, and that Felsenstein was going to design it for him. Felsenstein objected, saying it was a bad idea. It would require squeezing a lot of components into a very small space—and was entirely contingent on whether these components could be sourced at all, and at prices that weren’t prohibitive. Unfortunately, he already knew it was futile to say no.

“He was extraordinarily charismatic,” Georgette Psaris, who would later work at Osborne Computers, said of Osborne. “When he feels that someone doesn’t get something, the whole dam of his charisma opens up. His passion was contagious.”

By the end of their conversation, Felsenstein agreed to design Osborne’s portable computer. In return, he would receive a small salary and 25 percent of Osborne’s new company, Brandywine Holdings.

Beating Apple at its own game

For several years, Osborne had been thinking seriously about what—and who—stood out in the home computing marketplace. It had grown crowded by the 1970s, and Apple, Tandy, and Commodore seemed to have cornered the market. To Osborne, his old acquaintance Jobs and Apple, which had launched the Apple II in 1977, was doing the best job.

“Technology has nothing to do with Apple's success,” he wrote later. “Nor was the company an aggressive price leader. Rather, this company was the first to offer real customer support and to behave like a genuine business back in 1976 when other manufacturers were amateur shoe-string operations.”

Osborne understood that copying Apple wasn’t enough. The company had too much of a head start. So he looked at IBM, which was still focused on mainframes, and asked himself why it had been able to secure such a significant share of its market, even when competitors had better products. He came to a realization—one that would become something of a mantra for him.

“Adequacy is sufficient. Everything else is irrelevant."

He didn’t need to design a computer that was beautiful or special. Let Steve Jobs do that. He would instead create one that did 90 percent of the basic business tasks most regular people needed it to do.

"If the market was to grow,” Osborne said, “it would have to rely on customers who would plug a computer into the wall, as they might a toaster."

Another logical step followed: If you’re going to make a self-contained computer—with a keyboard, drives, and monitor all in one—you might as well make it portable.

Felsenstein and Osborne spent early 1980 in a space they shared with a Berkeley electronic anarchist collective working on a final specification for their new machine. They used relatively cheap parts to help keep the overall cost low. It would have the popular Z80 microprocessor, 64k of RAM (the most the Z80 could support), a five-inch screen, and two disk drives. They could fit all of this into a case small enough to comply with airline carry-on luggage requirements.

Felsenstein was surprised—but happy—to admit that Osborne had been right. They could indeed build a portable computer that was powerful enough to run any software the customer decided to buy. 

Osborne then hit Felsenstein with his next masterstroke: This computer would come with all the software the customer needed, for free.

The invention of software bundling

Software bundling—the practice of including key pieces of software with the purchase of a PC or console —is universal in the modern era. But in 1980, it was considered a bad idea.

Today, only a few names dominate the world of business productivity software, which encompasses word processors, spreadsheets, and databases. In the 1980s, things were different. The market was full of products, all offering different features or optimized around certain ways of working. Nor were they cheap. Prices for a good word processor ranged from about $150 up to $500. Adjusting for inflation, that would be like paying $1,700 for Microsoft Word today.

As a result, most manufacturers considered it bad business to include major software with hardware. Osborne realized that there was a misconception that ran through the industry. Most people believed that computer buyers were technically literate, and would want to do their own research before buying software. Bundling software was seen as something that increased the price of the machine for everyone in order to appeal to a few buyers.

Osborne’s theory of adequacy allowed him to see differently. For the average business or home customer, the variety of software was a problem. They didn’t care which piece of software was best—they just wanted something good enough. So if his computer came with a range of useful software, that might be an attractive proposition.

Of course, it wouldn’t be attractive if the software license costs inflated the price of the machine, so Osborne turned the full force of his personality on his industry connections. 

The first and most important deal was struck with Gary Kildall and Dorothy McEwen, the owners of Digital Research. Kildall was the creator of CP/M, an operating system that was starting to lose market share. Osborne gambled that this slide would increase his chance of getting a better deal on the price.

He was right. First, he procured a fixed-cost universal, perpetual license for CP/M for just $55,000. Not only was this a good price, but the universal license meant that the more machines they sold, the better the value of Osborne’s purchase. CP/M would never offer such a license again. 

Osborne closed on a number of fixed-cost software licensing agreements on equally beneficial terms. Such agreements weren't generally offered to manufacturers by the major software companies of the time. However, most manufacturers weren't run by Osborne. Throughout 1980 and into early 1981, he leveraged his easy charm and personal relationships with many of the leaders in computing to great effect.

Most notably, Microsoft agreed to an unlimited license for Microsoft BASIC. Then, MicroPro agreed to the same for WordStar, one of the most popular and well-respected word processors on the market. In return, both companies got no money; they received shares in Osborne’s new company. Failing to tempt the makers of VisiCalc, the world’s first spreadsheet program, with the same deal, Osborne approached Richard Frank at Sorcim Software instead.