Project Chess

Some employees opposed IBM entering the market. One said, "Why on earth would you care about the personal computer? It has nothing at all to do with office automation." "Besides", he added, "all it can do is cause embarrassment for IBM". The company had determined from studying the market for years, and building the prototypes during the 1970s, that IBM was unable to internally build a personal computer profitably.

IBM President John Opel was not among those skeptical of personal computers. He and CEO Frank Cary had created more than one dozen semi-autonomous "Independent Business Units" (IBU) to encourage innovation. After Lowe became the first head of the Entry Level Systems IBU in Boca Raton his team researched the market. Computer dealers were very interested in selling an IBM product, but told Lowe that the company could not design, sell, or service it as IBM had previously done. An IBM microcomputer, they said, must be composed of standard parts that store employees could repair. While dealers disliked Apple's business practices, including a shortage of the Apple II while the company focused on the more sophisticated Apple III, they saw no alternative because they doubted that IBM's traditional sales methods and bureaucracy would change.

Atari in 1980 proposed that it act as original equipment manufacturer for an IBM microcomputer. Aware that the company needed to enter the market quickly—even the schools in Broward County, near Boca Raton, purchased Apples—in July 1980 Lowe met with Opel, Cary, and others on the important Corporate Management Committee. He mentioned the Atari proposal, and also suggested acquiring Atari "because we can't do this within the culture of IBM". Lowe demonstrated the concept with an industrial design model based on the Atari 800 platform.

Instead of acquiring Atari, Cary ordered Lowe to build a personal computer within a year. The committee allowed him to form an independent group of employees—"the Dirty Dozen", led by engineer Bill Sydnes—which, Lowe promised, could design a prototype in 30 days. The crude prototype barely worked when he demonstrated it in August, but Lowe presented a detailed business plan that proposed that the new computer have an open architecture, use non-proprietary components and software, and be sold through retail stores, all contrary to IBM tradition.

The committee agreed that Lowe's approach was the most likely to succeed. With Opel's strong support, in October it approved turning the group into another IBU codenamed "Project Chess" to develop "Acorn", with unusually large funding to help achieve the goal of introducing the product within one year of the August demonstration. After Lowe's promotion in November Don Estridge became the head of Chess, and by January 1981 the team made its first demonstration of the computer within IBM. Other key members included Sydnes, Lewis Eggebrecht, David Bradley, Mark Dean, and David O'Connor. Many were already hobbyists who owned their own computers including Estridge, who had an Apple II. After the team received permission to expand to 150 by the end of 1980, it received more than 500 calls in one day from IBM employees interested in joining the IBU.