Anthony J. Pennings, PhD

WRITINGS ON DIGITAL ECONOMICS, ENERGY STRATEGIES, AND GLOBAL COMMUNICATIONS

Lotus 1-2-3 – A Star is Born

Posted on | April 7, 2017 | No Comments

It was during the November of 1982 on the giant floor of the Comdex show in Las Vegas that Lotus 1-2-3 would first make its mark. While VisiCalc for the Apple II had shown both the viability of digital spreadsheets and the new “microcomputers,” Lotus 1-2-3 showed that spreadsheets would become indispensable for modern organizations and global digital finance.

Initially Jonathan Sachs was worried. He had spent nearly a year working with Mitch Kapor and his small startup company called Lotus Development Corporation on a new spreadsheet program for the recently released IBM PC. A former programmer at Data General Corp, he was apprehensive about the prospects of his new creation. “It was too difficult for its intended audience, he thought, and would scare users away.

With questions in his mind and an updated resume in hand, Sachs took his baby to the crowds on the Las Vegas show floor.” Lotus had begun to publicize its new spreadsheet nearly a half a year before the Comdex show and a Wall Street Journal article just before the event was particularly helpful. But the new application was nearly as popular as Apple’s debut at the West Coast Computer Faire. Lotus 1-2-3 turned out to be a big hit with the swarming exhibit crowd.

“By the time the workers started to tear down the exhibit stalls at the end of the Comdex show, Lotus had taken about $3 million in orders based on the demo alone. Little did Sachs know his creation would change the computer industry forever.”[1] Nor did he know it would change the world of finance.

But that was just the start of their success. Soon Lotus 1-2-3 would top the sales list of all computer software. After the new electronic spreadsheet was officially released on January 26, 1983, the company logged sales of some 60,000 copies in its first month. Because software can be reproduced quickly after it is developed, they were able, barely, to keep up with demand. In a few months 1-2-3 was heading distributor Softsel Computer Products Inc.’s best-seller list and where it would stay for the next two years. Lotus 1-2-3 would go on to become the number one best-seller computer software application of the 1980s.

Lotus 1-2-3’s success was based on a combination of great programming skills and market savvy. Sachs and Kapor had decided to create a spreadsheet that would better the functionality and speed of VisiCalc, the tremendously popular application designed for the Apple II. Kapor had created graphics capabilities for VisiCalc while Sachs had written for minicomputers while at Data General. Because of his experience with the popular market, Kapor called the marketing shots while Sachs had the better programming experience and worked to realize Kapor’s conceptual software ideas.

With startup funds from Ben Rosen, who had left Morgan Stanley to become venture capitalist, the small firm began to work on a new product for the business market. Together they decided to create a new microcomputer spreadsheet product by using a faster programming language than most of the competition such as Context MBA and SuperCalc. Their target was a software application for the newly released IBM PC market.

Instead of the easier Pascal programming language, Kapor and Sachs decided to use the more tedious assembly language to construct their new software package. Assembly worked closer to the original machine language of the computer. That meant that it was much harder to program, but could provide a faster and more robust final spreadsheet package. They spent 10 months developing the application that grew from a core product to the final 1-2-3 through a series of decisions to add on various features.

Step-by-step they built on and tested the new prototype, at one point dropping a word processor module because it too difficult. As Sachs said afterwards, “From a programmer’s standpoint, it was a mind-boggling challenge to write that much code in assembly language that fast and get it to be really solid.” The finished product, Lotus 1-2-3 Release 1 For DOS, which included a spreadsheet, graphing capabilities, database storage and a macro language, required only 192K of RAM to run. Because of the functionality of the assembly language, it was much faster than its major competitors: Context MBA, Multiplan and VisiCalc, despite including the extra features.

Just as VisiCalc helped Apple’s sales, Lotus 1-2-3’s popularity helped IBM’s sales take off. Launched in the late summer of 1981, IBM faced stiff competition in the Apple II and a host of new computer manufacturers using the CP/M operating system. Although IBM had the name recognition, particularly in the business world, it still needed the kind of practical application that would justify its expense. Lotus 1-2-3 would supply the type of incentive that would put a PC “on top of every desk in the business world”. Sachs reminisced on the impact of Lotus 1-2-3 on the IBM PC, “It was pretty amazing because a factor of five more PCs got sold once that software was available. It was very closely tuned to the original IBM PC and pretty much used all of its features.”[2] Lotus could also run on “IBM-compatible” machines such as the simultaneously developed Compaq portable computer.

Both Sachs and Kapor left Lotus Corporation in the mid-1980s. The fast growth had taken its toll and created many problems that diminished their enthusiasm. Lotus faced many formidable challenges: Supply shortages, labor problems, and disputes with distributors took their toll on the original cast. Sachs left in 1985 after the introduction of Release 2 for MS-DOS that included add-in support, better memory management, as well as more rows and support for math coprocessors. Kapor left in 1987 after Release 2.01 was introduced.

But neither left leave before Lotus 1-2-3, with its combination of graphics, spreadsheets, and data management caught the eye of business entrepreneurs and corporate executives who saw the value of a computer program that simplified the monumental amount of numerical calculations and manipulation needed by the modern corporation. By October 1985, CFO magazine was reporting that “droves of middle managers and most financial executives are crunching numbers with spreadsheet programs such as Lotus 1-2-3.”[3]

Notes

[1] Information about Lotus at Comdex from “From the floor at Comdex/Fall in 1982, Lotus 1-2-3 hit the ground running and has not slowed down”. CMP Media LLC. Accessed on August 26, 2003.
http://www.crn.com/sections/special/supplement/816/816p71_hof.asp
[2]Quotes attributed to Sachs were taken from “From the floor at Comdex/Fall in 1982, Lotus 1-2-3 hit the ground running and has not slowed down”. CMP Media LLC. Accessed on August 26, 2003.
http://www.crn.com/sections/special/supplement/816/816p71_hof.asp
[3] Quote from CFO on the impact of Lotus 1-2-3 in the corporate world from David M. Katz, “The taking of Lotus 1-2-3? Blame Microsoft.” CFO.com. December 31, 2002.

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AnthonybwAnthony J. Pennings, PhD is Professor and Associate Chair of the Department of Technology and Society, State University of New York, Korea. Before joining SUNY, he taught at Hannam University in South Korea and from 2002-2012 was on the faculty of New York University. Previously, he taught at St. Edwards University in Austin, Texas, Marist College in New York, and Victoria University in New Zealand. He has also spent time as a Fellow at the East-West Center in Honolulu, Hawaii.

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    Professor at State University of New York (SUNY) Korea since 2016. Moved to Austin, Texas in August 2012 to join the Digital Media Management program at St. Edwards University. Spent the previous decade on the faculty at New York University teaching and researching information systems, digital economics, and strategic communications.

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