The mass increase in the use of computers accelerated with 'Third Generation' computers. These generally relied on Jack Kilby's invention of the integrated circuit (or microchip), starting around 1965. However, the IBM System/360 used hybrid circuits, which were solid-state devices interconnected on a substrate with discrete wires.
The first integrated circuit was produced in September 1958, but computers using them didn't begin to appear until 1963. Some of their early uses were in embedded systems, notably used by NASA for the Apollo Guidance Computer, by the military in the LGM-30 Minuteman intercontinental ballistic missile, the Honeywell ALERT airborne computer, and in the Central Air Data Computer used for flight control in the US Navy's F-14A Tomcat fighter jet.
Large mainframe computers, such as the System/360, increased storage and processing abilities, while the integrated circuit also allowed development of much smaller computers. The minicomputer was a significant innovation in the 1960s and 1970s. It brought computing power to more people, not only through more convenient physical size but also through broadening the computer vendor field. Digital Equipment Corporation became the number two computer company behind IBM with their popular PDP and VAX computer systems. Smaller, affordable hardware also brought about the development of important new operating systems such as Unix.
In November 1966, Hewlett-Packard introduced the 2116A minicomputer, one of the first commercial 16-bit computers. It used CTµL (Complementary Transistor MicroLogic) in integrated circuits from Fairchild Semiconductor. Hewlett-Packard followed this with similar 16-bit computers, such as the 2115A in 1967, the 2114A in 1968, and others.
In 1969, Data General introduced the Nova and shipped a total of 50,000 at $8,000 each. The popularity of 16-bit computers, such as the Hewlett-Packard 21xx series and the Data General Nova, led the way toward word lengths that were multiples of the 8-bit byte. The Nova was first to employ medium-scale integration (MSI) circuits from Fairchild Semiconductor, with subsequent models using large-scale integrated (LSI) circuits. Also notable was that the entire central processor was contained on one 15-inch printed circuit board.
By 1971, the Illiac IV supercomputer was the fastest computer in the world, using about a quarter-million small-scale ECL logic gate integrated circuits to make up sixty-four parallel data processors.
The basis of the fourth generation was the invention of the microprocessor by a team at Intel.
Third generation minicomputers were essentially scaled-down versions of mainframe computers, whereas the fourth generation's origins are fundamentally different.
Microprocessor-based computers were originally very limited in their computational ability and speed, and were in no way an attempt to downsize the minicomputer. They were addressing an entirely different market.
Processing power and storage capacities have grown beyond all recognition since the 1970s, but the underlying technology has remained basically the same of large-scale integration (LSI) or very-large-scale integration (VLSI) microchips, so it is widely regarded that most of today's computers still belong to the fourth generation.
On November 15, 1971, Intel released the world's first commercial microprocessor, the 4004. It was developed for a Japanese calculator company called Busicom as an alternative to hardwired circuitry, but computers were developed around it, with much of their processing abilities provided by one small microprocessor chip. The RAM chip was based on an invention by Robert Dennard of IBM, offering kilobits of memory on one chip. Intel coupled the RAM chip with the microprocessor, allowing fourth generation computers to be smaller and faster than prior computers. The 4004 was only capable of 60,000 instructions per second, but its successors brought ever-growing speed and power to computers, including the Intel 8008, 8080 (used in many computers using the CP/M operating system), and the 8086/8088 family. (The IBM personal computer (PC) and compatibles use processors that are still backwards-compatible with the 8086.) Other producers also made microprocessors which were widely used in microcomputers.
The following table shows a timeline of significant microprocessor development.
The powerful supercomputers of the era were at the other end of the computing spectrum from the microcomputers, and they also used integrated circuit technology. In 1976, the Cray-1 was developed by Seymour Cray, who had left Control Data in 1972 to form his own company. This machine was the first supercomputer to make vector processing practical. It had a characteristic horseshoe shape to speed processing by shortening circuit paths. Vector processing uses one instruction to perform the same operation on many arguments; it has been a fundamental supercomputer processing method ever since. The Cray-1 could calculate 150 million floating point operations per second (150 megaflops). 85 were shipped at a price of $5 million each. The Cray-1 had a CPU that was mostly constructed of SSI and MSI ECL ICs.
Computers were generally large, costly systems owned by large institutions before the introduction of the microprocessor in the early 1970s — corporations, universities, government agencies, and the like. Users were experienced specialists who did not usually interact with the machine itself, but instead prepared tasks for the computer on off-line equipment, such as card punches. A number of assignments for the computer would be gathered up and processed in batch mode. After the jobs had completed, users could collect the output printouts and punched cards. In some organizations, it could take hours or days between submitting a job to the computing center and receiving the output.
A more interactive form of computer use developed commercially by the middle 1960s. In a time-sharing system, multiple teleprinter terminals let many people share the use of one mainframe computer processor. This was common in business applications and in science and engineering.
A different model of computer use was foreshadowed by the way in which early, pre-commercial, experimental computers were used, where one user had exclusive use of a processor. Some of the first computers that might be called "personal" were early minicomputers such as the LINC and PDP-8, and later on VAX and larger minicomputers from Digital Equipment Corporation (DEC), Data General, Prime Computer, and others. They originated as peripheral processors for mainframe computers, taking on some routine tasks and freeing the processor for computation. By today's standards, they were physically large (about the size of a refrigerator) and costly (typically tens of thousands of US dollars), and thus were rarely purchased by individuals. However, they were much smaller, less expensive, and generally simpler to operate than the mainframe computers of the time, and thus affordable by individual laboratories and research projects. Minicomputers largely freed these organizations from the batch processing and bureaucracy of a commercial or university computing center.
In addition, minicomputers were more interactive than mainframes, and soon had their own operating systems. The minicomputer Xerox Alto (1973) was a landmark step in the development of personal computers, because of its graphical user interface, bit-mapped high resolution screen, large internal and external memory storage, mouse, and special software.
In the minicomputer ancestors of the modern personal computer, processing was carried out by circuits with large numbers of components arranged on multiple large printed circuit boards. Minicomputers were consequently physically large and expensive to produce compared with later microprocessor systems. After the "computer-on-a-chip" was commercialized, the cost to produce a computer system dropped dramatically. The arithmetic, logic, and control functions that previously occupied several costly circuit boards were now available in one integrated circuit which was very expensive to design but cheap to produce in large quantities. Concurrently, advances in developing solid state memory eliminated the bulky, costly, and power-hungry magnetic core memory used in prior generations of computers.
In France, the company R2E (Réalisations et Etudes Electroniques) formed by five former engineers of the Intertechnique company, André Truong Trong Thi and François Gernelle introduced in February 1975 a microcomputer, the Micral N based on the Intel 8008. Originally, the computer had been designed by Gernelle, Lacombe, Beckmann and Benchitrite for the Institut National de la Recherche Agronomique to automate hygrometric measurements. The Micral N cost a fifth of the price of a PDP-8, about 8500FF ($1300). The clock of the Intel 8008 was set at 500 kHz, the memory was 16 kilobytes. A bus, called Pluribus was introduced and allowed connection of up to 14 boards. Different boards for digital I/O, analog I/O, memory, floppy disk were available from R2E.
Development of the single-chip microprocessor was an enormous catalyst to the popularization of cheap, easy to use, and truly personal computers. The Altair 8800, introduced in a Popular Electronics magazine article in the January 1975 issue, at the time set a new low price point for a computer, bringing computer ownership to an admittedly select market in the 1970s. This was followed by the IMSAI 8080 computer, with similar abilities and limitations. The Altair and IMSAI were essentially scaled-down minicomputers and were incomplete: to connect a keyboard or teleprinter to them required heavy, expensive "peripherals". These machines both featured a front panel with switches and lights, which communicated with the operator in binary. To program the machine after switching it on the bootstrap loader program had to be entered, without error, in binary, then a paper tape containing a BASIC interpreter loaded from a paper-tape reader. Keying the loader required setting a bank of eight switches up or down and pressing the "load" button, once for each byte of the program, which was typically hundreds of bytes long. The computer could run BASIC programs once the interpreter had been loaded.
The MITS Altair, the first commercially successful microprocessor kit, was featured on the cover of Popular Electronics magazine in January 1975. It was the world's first mass-produced personal computer kit, as well as the first computer to use an Intel 8080 processor. It was a commercial success with 10,000 Altairs being shipped. The Altair also inspired the software development efforts of Paul Allen and his high school friend Bill Gates who developed a BASIC interpreter for the Altair, and then formed Microsoft.
The MITS Altair 8800 effectively created a new industry of microcomputers and computer kits, with many others following, such as a wave of small business computers in the late 1970s based on the Intel 8080, Zilog Z80 and Intel 8085 microprocessor chips. Most ran the CP/M-80 operating system developed by Gary Kildall at Digital Research. CP/M-80 was the first popular microcomputer operating system to be used by many different hardware vendors, and many software packages were written for it, such as WordStar and dBase II.
Many hobbyists during the mid-1970s designed their own systems, with various degrees of success, and sometimes banded together to ease the job. Out of these house meetings the Homebrew Computer Club developed, where hobbyists met to talk about what they had done, exchange schematics and software, and demonstrate their systems. Many people built or assembled their own computers as per published designs. For example, many thousands of people built the Galaksija home computer later in the early 1980s.
It was arguably the Altair computer that spawned the development of Apple, as well as Microsoft which produced and sold the Altair BASIC programming language interpreter, Microsoft's first product. The second generation of microcomputers, those that appeared in the late 1970s, sparked by the unexpected demand for the kit computers at the electronic hobbyist clubs, were usually known as home computers. For business use these systems were less capable and in some ways less versatile than the large business computers of the day. They were designed for fun and educational purposes, not so much for practical use. And although you could use some simple office/productivity applications on them, they were generally used by computer enthusiasts for learning to program and for running computer games, for which the personal computers of the period were less suitable and much too expensive. For the more technical hobbyists home computers were also used for electronics interfacing, such as controlling model railroads, and other general hobbyist pursuits.
The advent of the microprocessor and solid-state memory made home computing affordable. Early hobby microcomputer systems such as the Altair 8800 and Apple I introduced around 1975 marked the release of low-cost 8-bit processor chips, which had sufficient computing power to be of interest to hobby and experimental users. By 1977 pre-assembled systems such as the Apple II, Commodore PET, and TRS-80 (later dubbed the "1977 Trinity" by Byte Magazine) began the era of mass-market home computers; much less effort was required to obtain an operating computer, and applications such as games, word processing, and spreadsheets began to proliferate. Distinct from computers used in homes, small business systems were typically based on CP/M, until IBM introduced the IBM-PC, which was quickly adopted. The PC was heavily cloned, leading to mass production and consequent cost reduction throughout the 1980s. This expanded the PCs presence in homes, replacing the home computer category during the 1990s and leading to the current monoculture of architecturally identical personal computers.