The DEC Rainbow 100 was an early MS-DOS computer that wasn’t 100% IBM compatible. In retrospect, this seems like an obvious mistake. But they took a different strategy, betting that they could win by providing a degree of compatibility, but that the market would choose their solution if they provided some amount of technical superiority. In this blog post, I’ll explore what DEC tried, and why it ultimately failed.
Who was DEC?
At the time, Digital Equipment Corporation, also known as DEC or just Digital, was the second largest computer company in the world, behind IBM. IBM dominated the market for large computers called mainframes, but Digital had carved out a nice niche in the market for somewhat smaller machines called minicomputers. “Mini” was relative. Small DEC minicomputers were still easily the size of a 5U rackmount server of today, and they were more commonly the size of a refrigerator. They were only miniature compared to an IBM mainframe, which could occupy most of a room.
When IBM entered the market for desktop computers, or what we then called microcomputers, it was only natural that Digital would follow suit. Digital’s entry into this market resembled the IBM PC in several ways, but in Digital’s mind, they were building a personal computer with fewer compromises then IBM had done.
In retrospect, we can see that in their efforts to build a no-compromises PC, they compromised on the thing that mattered the most, which was compatibility.
If you’re going to fail, fail fast
The paradox is that the Rainbow failed in the marketplace, but because Digital underestimated the size of the market, the Rainbow did meet Digital’s expectations for success. So by the time DEC realized they had a problem, they didn’t have a lot of options. About all they could do was lower the price and hope for the best.
They did lower prices and that helped the machine survive as a niche solution, but it didn’t achieve the dominance DEC was hoping for.
When Digital began work on the Rainbow, it expected to be able to sell tens of thousands of units. This wasn’t out of line. IBM initially expected to sell 1,000 units in its first six months, and ended up selling 60,000 units instead. DEC split the difference, since it wasn’t necessarily clear whether PC sales would continue to increase, or tail off.
The problem was that Digital didn’t increase its expectations when PC sales took off. It took about 5 and 1/2 years for Digital to sell 183,000 units. That was completely in line with its initial expectations. The problem was, Compaq came along and it sold about a quarter of a million units in its first year. Meanwhile, IBM ended up selling around 1.3 million units between 1981 and 1983.
By then, it was arguably a bit late to change its approach. DEC did try lowering their price and raising expectations, and arguably, the Rainbow could have survived as a niche product bridging multiple worlds. The idea of dual booting to unrelated operating systems was still new and novel and certainly useful for some segment of the population.
How rare is the DEC Rainbow today?
So I think that’s why it took Digital 5 years to pull the plug on the Rainbow in spite of IBM pulling the plug on the PCjr after just two years and half a million units sold. The Rainbow ended up staying on the market for as long as some successful computers were, and longer than some notable flops were, such as the IBM PCjr, Apple III, and Commodore Plus/4.
And if the number of eBay listings is any indication, the Rainbow outsold some brand-name IBM PC clones that we don’t generally regard as failures. But sales figures aren’t necessarily the best measure of success. Digital sold 200,000 units, but they lost half a billion dollars in doing so. If a random PC clone sold half as many units, but turned a profit, that’s how a machine can be rarer than a Rainbow today but not be considered a failure in the marketplace.
The importance of IBM PC compatibility
The obvious mistake was that DEC didn’t make the Rainbow completely IBM compatible. They thought they could build a better machine, release it soon after IBM, and the market would see DEC was better and DEC would win.
This was neither the first nor the last time someone made that mistake.
But winning in any market is not just a simple matter of being the first, or the best, or the most cost effective. The IBM PC is just one of many examples in history of products that were neither the best nor the cheapest in their category.
And it’s possible Digital might have been correct, if the market hadn’t become flooded with inexpensive IBM PC clones that were 100% or very nearly 100% compatible.
DEC Rainbow vs IBM PC
With regard to running MS-DOS, Digital made the same mistake several other early vendors made. Noting that the various CP/M machines were not 100% hardware compatible, they expected the MS-DOS market would take a similar direction, with software vendors figuring out how to accommodate the differences. So they felt free to make improvements to their design, even if it meant sacrificing a bit of compatibility.
And if the market for IBM PCs and nearly exact clones hadn’t exploded as quickly as it did, Digital might have been correct.
So let’s look at how the DEC Rainbow compared to the IBM PC.
DEC Rainbow graphics
Make no mistake, the Rainbow was several years ahead of the IBM PC. When they called it the Rainbow, it wasn’t a political statement. They called it the Rainbow because its graphics card could display 16 colors at a time, out of a possible 4096 choices. That’s compared to four colors out of a possible 16 with the IBM PC’s CGA in bitmapped mode, and you didn’t get to choose which four, either. You got garish magenta and cyan, black, and white. If you didn’t like it, you could stick to monochrome, or you could buy something else.
DEC, like several others, provided something else. Despite the attitude, IBM won.
Disk drives
DEC’s disk drives stored three times as much data as the IBM drives. They used an odd quad density format that didn’t catch on, but must have seemed compelling in 1982. Not many companies used this format, but Tandy and Commodore both tried it as well.
Digital took the unusual compromise of using one spindle and one stepper motor to control to drive units. This didn’t give you the full benefit of having two drives, since the drives couldn’t work independently. When copying files from one disk to another, it slowed down because it had to read one drive, then perform a seek operation to write to the other, then seek again before it could read the first again. It was an odd compromise, but it basically gave you dual single-sided drives for the cost of one double-sided drive. If the cost of disk drives hadn’t plummeted soon after the Rainbow’s release, this would have seemed like a brilliant move.
One odd side effect of this is that it was possible to install a standard PC floppy drive, so it’s not super uncommon to find examples of a Rainbow with a half height 360K double-sided, double-density floppy drive installed.
CP/M
Probably the biggest departure was including compatibility with 8-bit CP/M by building in a 4 MHz Zilog Z-80 processor. This let you run old software that hadn’t been moved to the IBM PC yet. Building something better than the IBM PC and including compatibility with 8-bit CP/M probably seemed compelling. An add-on to make the Apple II compatible with CP/M had proven hugely popular, so why not just include it?
Keyboard
The DEC Rainbow used a different keyboard than the IBM PC as well. The Model F had a legendary feel, but the layout was a bit awkward. The shift keys weren’t quite in the right place and the enter key was too, and all of them were a bit too small. DEC’s keyboard layout was better overall, and the IBM PS/2 layout ended up looking a lot like DEC’s layout. The DEC keyboard didn’t have IBM’s buckling springs, so maybe this is a toss-up. But the DEC keyboard layout was highly regarded for more than a decade, so we can’t blame DEC for playing to its strength.
Compatibility
In hindsight, none of this mattered if there was certain key IBM PC software that didn’t run on a DEC Rainbow. DEC was good about ensuring publishers built special versions of the most popular titles for the Rainbow, but there was always the perception that some key piece of software might not end up on the Rainbow. Or you’d have to buy your software at a DEC dealer, while discounters selling IBM PC software kept popping up all over the place, both as brick and mortar retailers and mail order.
Over time, some third-party software to improve IBM compatibility appeared, but there were some limits to what it could do.
Arguably, the biggest problem was the hardware incompatibility. Digital did not copy the ISA expansion bus, but used its own methodology for expansion slots that wasn’t compatible. This meant you couldn’t plug IBM PC expansion cards into the Rainbow. That limited your expansion options, and it also removed one possible option for resolving some of the compatibility problems.
If it hadn’t been for bad luck, DEC wouldn’t have had any luck at all
Overall, the Rainbow was a good idea that failed because Digital guessed incorrectly about what the market was going to do. If CP/M-86 had caught on, the Rainbow would have been very compelling, because it had the ability to run both eight and 16-bit programs when you ran CP/M. It had the facility to detect the type of program and activate the appropriate processor automatically. So it wasn’t a matter of dual booting the 8- and 16 bit-versions. The IBM PC couldn’t run CP/M-80 at all. So if you were upgrading from an 8-bit CP/M machine, or knew someone who had an 8-bit CP/M machine and some nice software, the Rainbow was compelling. Here was a machine with a link to the past, with 8-bit CP/M compatibility, and a link to the future, with high-tech disk drives and color graphics.
How Digital could have done better
It’s clear from the Rainbow’s design that Digital didn’t just want to clone the IBM PC. They wanted to build a better computer. And there’s no question they could have, just like any number of other companies did. But like those other companies, they guessed incorrectly what the market wanted. Inevitably, if Digital had built a straightforward clone, some critics would have been disappointed and criticized Digital for not trying to improve on the PC rather than just cloning it. Or at least, it seems that’s what Digital feared.
In effect, Digital was trying to do with the Rainbow what Compaq would later do with the Deskpro 386. I can’t fault Digital for the ambition. It’s just that the necessary parts to seize the leadership from IBM weren’t available yet. Tandy tried to do the same thing with the Tandy 2000, and it didn’t go so well for them either.
Thank you
Thank you for reading this far. I write about four times a week, typically about DIY, old and new computers, 80s nostalgia, and vintage electric trains. If you enjoy this type of content, you can follow me on Pinterest or Facebook, or subscribe to my RSS feed. And if you don’t mind doing me a favor, if you enjoyed one of my blog posts, would you share it with a friend? Shares over social media, hangouts like Discord or Slack, discussion groups, news aggregators, or even old-fashioned e-mail are the most effective way for me to reach new readers. Thanks again.
David Farquhar is a computer security professional, entrepreneur, and author. He started his career as a part-time computer technician in 1994, worked his way up to system administrator by 1997, and has specialized in vulnerability management since 2013. He invests in real estate on the side and his hobbies include O gauge trains, baseball cards, and retro computers and video games. A University of Missouri graduate, he holds CISSP and Security+ certifications. He lives in St. Louis with his family.
While doing some research for one of my own blogs recently, I learned there was some chatter in the press around 1988 about DEC purchasing Apple. My guess is that this actually came from Apple, as John Sculley might have been looking for an exit strategy as the Mac continued to struggle in the business market. By this point, DEC had abandoned the Rainbow and entered into a marketing alliance with Apple. It never progressed that far, but there was an idea that the Mac could be sold to businesses as basically fancy terminals for the VAX.