The IBM 1401 Data Processing System
While the 650 put IBM on the map, its replacement, the IBM 1401 Data Processing System, was the computer that made punched-card machines obsolete. It is considered to be the "Model T" of the computer industry, since its combination of functionality and relative low cost allowed many businesses to start using computer technology. Its popularity helped IBM become the dominant computer company of the era. Ironically, its success was not entirely good for IBM, and this machine was surely not its biggest or most profitable. In fact, in some cases, it was just used as an adjunct to its bigger brothers to transfer data on punched cards to tape and to print.
However, for the first time, the cost, reliability, and functionality made computers very attractive to many customers. Compared to the 650 it replaced, the 1401 was roughly seven times faster, more reliable, and better-supported. Perhaps most importantly, it had better I/O. IBM had the perspicacity to develop a machine that actually did what its customers really needed and at a cost that made sense to them. In some ways it was too good, as it was problematic when customer after customer returned their rented accounting machines to IBM for these new wonders. This caused a lot of short-term problems for IBM, but it was farsighted enough to bear the pain. And history has recorded how well the new computing business model later paid off.
So, what made this computer resonate so well with customers? Core memory, transistors, software, and a printer were all tremendous advances, any one of which would have made the computer a big advance over the 650. Put them all together, and the machine outsold IBM's expectations by over 12 to one.
We have already been introduced to core memory in the description of the 704. Its virtues of speed, reliability, high capacity, and lower power use made this a very important technology. The 704 was a very expensive machine, however, and was not affordable for many businesses. The 1401 moved this technology to a much larger market.
By now we all know what transistors are, but the improvement over existing technologies at the time included reliability, power use, heat dissipation, and cost.
The holistic approach IBM took also included software. For the first time, free of charge, IBM included software packages for most of the needs of its customers rather than make its customers develop their own. This was critically important, since it saved considerable time and money on in-house development and allowed businesses that did not have programmers to finally derive the benefits of computers.
And strangely, one of the biggest advantages of the 1401 was its printer. The 1403 "chain" printer had a rated speed of 600 lines per minute, which was four times the speed of the 407 accounting machine. It was also very reliable. In fact, for many, the 1403 was a salient characteristic of the system and often sold the computer that went with it.
All of these contributed to a machine that transformed the computer industry. It was extremely successful not only thanks to its excellent technical characteristics, but also due to its low starting price of only $2,500 per month. In fact, after the release of the 1401, the computer industry became known as IBM and the seven dwarfs. The 1401 was that good.