VisiCalc Spreadsheet Software Is Marketed

Date October, 1979

Daniel Bricklin’s VisiCalc, the first electronic spreadsheet program, brought the power of the personal computer to businesspeople. VisiCalc revolutionized the practice of business and undoubtedly contributed to the success of the Apple II computer.

Locale Wellesley, Massachusetts

Key Figures

• Daniel Bricklin (b. 1951), Harvard Business School student and VisiCalc’s designer
• Robert Frankston (b. 1949), Harvard Business School student and VisiCalc’s programmer
• Daniel Fylstra (b. 1954), Harvard Business School student and VisiCalc’s marketer

Summary of Event

Students often undertake tremendous efforts to avoid doing their homework. The introduction of computers offered the opportunity for them to get computers to do it instead. One student perfected the process, creating a multimillion-dollar corporation from his efforts.

That is the story of first-year Harvard Business School student Daniel Bricklin. While struggling in 1978 to solve financial-planning problems on his calculator, he wondered how much easier the task would be with the aid of his Apple II computer. He was one of the first owners of a computer that many people were calling a high-tech toy. He discussed his idea with a longtime friend and expert programmer, Robert Frankston. The program that resulted from their discussions and work would not only make them millions of dollars but also change the way people perceived the personal computer.

At the time, Frankston was a partner in Personal Software, a company he founded with another student, Daniel Fylstra, with an initial investment of $500. In 1978, their only big seller was a chess game. They agreed to implement and market Bricklin’s ideas. They called their program VisiCalc, short for “visible calculator.” It was their first computer program designed to aid in juggling financial figures.

VisiCalc was an instant success after its release in October, 1979. More than 100,000 copies were sold by late 1979 at a price of $100 to $300 each. To serve varying customers’ needs, the company offered several versions. VisiCalc was so successful that it began to outsell other business programs of the day, such as Data Factory and General Ledger. The specialized product even outsold many general-market game programs.

Prior to the advent of VisiCalc, most business managers had to learn a computer programming language such as BASIC or the business-oriented COBOL if they were to have computers help them make decisions. The prospect of learning such languages was daunting, with the payoff uncertain. Programming itself often resulted in hours wasted in the creation of inefficient or unsatisfactory programs. As a result, sales of personal computers were limited. When VisiCalc came along, requiring no programming knowledge, managers could see for the first time the power of the personal computer. By creating the first electronic spreadsheet, Bricklin gave them an invaluable tool and a good reason to purchase personal computers. Businesspeople could now see the personal computer as more than just a high-tech toy.

Managers using VisiCalc could ask the most important questions concerning business plans, then analyze the impact of decisions before implementing them. Any plan that could be expressed in the format of formulas and columns of numbers was open to testing. Different numerical assumptions could be made and tested quickly, with the computer doing all the necessary recalculation. VisiCalc provided the means to play “what if” games almost effortlessly. Investment, inventory, and budget issues all could be analyzed. For example, before taking any action, a manager could use VisiCalc to help analyze how the company’s expenses, sales, profits, and dividends would be affected.

This computer program was useful to people other than business managers. People of all professions seemed to find a use for it. Some used it to track income taxes. Teachers began to use it to keep track of students’ grades, as it provided an easy method of recording grades and computing averages. It was even reported that a theater in Massachusetts bought VisiCalc to figure out which pattern of showing times attracted the highest revenues from films.

By 1982, Bricklin, Frankston, and Fylstra had earned fortunes from VisiCalc. Personal Software moved from Massachusetts to the Silicon Valley and was renamed VisiCorp. VisiCalc had sold more than 200,000 copies and inspired a host of competing products, referred to as “visiclones” and “calcalikes.” These included packages with names such as SuperCalc, EasyCalc, and UltraCalc. Major software companies also joined the race to create the best clone. Lotus Development Corporation’s 1-2-3 and Microsoft’s Multiplan were popular contenders. The companies that could afford to do so offered integrated packages combining electronic spreadsheet programs with other applications such as word processors, databases, business graphics, or communications.

In the highly competitive software market that emerged, many companies simply could not keep up with changes. Bricklin learned this the hard way. VisiCorp’s expected annual sales were about $35 million. Industry analysts projected that VisiCorp would go public within two years and speculated that its stock market valuation would be as high as $125 million. Bricklin and Frankston decided to market VisiCalc on their own. They founded a new company called Software Arts and went through a costly lawsuit with their marketing partner. VisiCorp continued to market the program under an exclusive agreement until 1984. When the lawsuit between the two companies was resolved, Software Arts began selling VisiCalc under its own name. Unfortunately, the lawsuit had drained company resources. In one year, Software Arts’ revenues fell almost 75 percent, to $3 million in 1984. Bricklin and Frankston could not afford to update VisiCalc and keep it competitive with other products on the market. As a result, competing programs began to outperform it.

In 1985, Bricklin sold what little remained of Software Arts to Lotus. A year later, Lotus announced that it would no longer produce the pioneer spreadsheet program VisiCalc, believing that Lotus 1-2-3 was a better product. The original spreadsheet program had a life of only six years and total sales of approximately one million copies.

Significance

In 1978, when personal computers were being introduced to the market by such companies as Apple and Tandy, many people thought of them as high-tech toys. After Bricklin decided to go into business for himself and sell an electronic spreadsheet program, this view changed. His VisiCalc, the first business-oriented program to bring the power of the computer to businesspeople, changed the personal computer from a toy into a powerful business tool, one that would soon be seen as essential.

VisiCalc revolutionized the practice of business. The early users of Apple II computers were mostly hobbyists, scientists, and intellectuals. News of the productivity of the new VisiCalc program spread quickly, and its popularity increased. As a result, the businessperson’s perceptions changed with respect to the worth of the personal computer. People began to see that personal computers could be used for serious business work.

VisiCalc’s success undoubtedly contributed to the success of the Apple II computer, as it gave an entire new market segment, that of businesspeople, a reason to buy the machine. Most analysts credit the incredible growth rate of Apple Computer in part to VisiCalc’s success. Within eight years of the program’s release, the personal computer software business was a $5 billion industry with fourteen thousand companies and twenty-seven thousand different products. The release of VisiCalc began this personal computer explosion. VisiCalc quickly climbed to the top of the software best-seller list and stayed there. Programming was evolving and markets for programs were expanding, but Bricklin’s insight marked a leap in the development of the software industry and use of personal computers.

Before VisiCalc was released, most managers had to use BASIC or another programming language such as COBOL to get their work done on a computer. Few could even see the value of owning a computer, since the programming that most people could accomplish was limited. VisiCalc presented managers with a complete, versatile program; all they had to do was plug in their own data and formulas. For the price of a few hundred dollars, they could purchase a decision-making tool that they never would have been able to develop on their own and that could save hundreds or thousands of hours of calculating time. Bricklin’s success would exceed his dreams: Every future spreadsheet product would be no more than an enhancement of his basic idea. The market became cluttered with hundreds of similar packages.

Although financial modeling and planning programs were available on mainframe computers, none had the potential of VisiCalc. VisiCalc created a breakthrough in personal productivity. Taking advantage of Apple II hardware, VisiCalc let users recalculate the rows and columns of a spreadsheet quickly. The almost instant reworking of calculations involving complex formulas gave users a new sense of power. They experienced how a computer could enhance their own productivity by letting data manipulations keep up with the pace of their own thoughts and ideas. No longer would they have to send an idea and its associated data to the computing department and wait for answers from a mainframe computer: Now they could enter data on their own machines and see results almost instantly. The fact that answers came so quickly encouraged more experimentation and fine-tuning of business plans.

Mainframe financial modeling packages were often slow, online systems. VisiCalc created new possibilities beyond improved performance. After users entered values and formulas in their mainframe programs, they had to wait for the computer to recalculate the related parts of the spreadsheet. The typical wait was about three seconds for each edit and about five minutes for each recalculation. Because of VisiCalc’s increased speed in comparison to mainframe programs, users felt a sense of freedom to experiment. Before VisiCalc, refining a spreadsheet once the first draft had been formatted often took more time than it was worth. VisiCalc changed that. Users could perform more “what ifs” per hour than ever before.

VisiCalc also gave the business world a new, affordable accounting system. Prior to its release, some businesses could not afford computerized mainframe record keeping and were forced to keep records manually. Tracking of business matters was prone to inaccuracies, records were sometimes lost, and files were not always readily accessible. Spreadsheets made computerized information storage efficient, fast, and affordable. Furthermore, VisiCalc’s ease of use allowed businesses to replace high-priced accounting services with clerical work. The availability of data also helped managers do their jobs more quickly and effectively. The fact that information was available in an easily accessible form encouraged them to use it more frequently.

Bricklin presided over the birth of the personal software industry, with his greatest contribution being the electronic spreadsheet. By 1982, his product had sold 200,000 copies and inspired an industry of competitors; by the end of its life, VisiCalc had sold about a million copies.

By the mid-1980’s, industry software sales began to decline for the first time. As Bricklin’s competitors captured more of the marketplace by offering more features, integrated packages, and advances in technology, VisiCalc began to lose sales. His own company could not compete. This was a trend that many other small businesses would follow. In 1985 alone, fifty-seven personal computer software companies were bought out, up from twenty-three the year before. The annual growth rate of personal-computer software sales slowed to 15 percent, down from the 64 percent yearly growth over the previous five years. The top fifteen companies creating personal computer software were taking in 72 percent of all sales, up from 37 percent in 1981. The three biggest companies—Lotus, Ashton-Tate, and Microsoft—accounted for 35 percent of all sales. Consequently, Bricklin watched his electronic spreadsheet idea expand and grow in other firms’ hands.

With advances in technology, the electronic spreadsheet package of the 1990’s became even more powerful and even easier to use. Worksheets were larger. Users could almost instantly convert numerical data into graphs and charts of many styles and colors. With the aid of a computer mouse, they could sum rows or columns of numbers, format data, and print impressive reports more easily. Laser printers made it possible for them to create high-quality printed products quickly and without leaving their desks. By learning a few simple programming commands built into the programs, they could also create their own operations for the program to perform. Software and hardware thus evolved to complement each other. Bricklin’s 1979 marketing of VisiCalc began that evolution.

Bibliography

Fertig, Robert T. “Spreadsheet Calculators.” In The Software Revolution: Trends, Players, Market Dynamics in Personal Computer Software. New York: North-Holland, 1985. Discusses hardware, markets, and types of applications used on personal computers.

Field, Anne R., and Catherine L. Harris. “Software: The Growing Gets Rough.” BusinessWeek, March 24, 1986, 128-134. Discusses business trends in the personal computer market. Discusses the top fifteen firms in the personal computer hardware and software business in 1986. Also discusses the impact of the explosive growth of the personal computer market and makes several predictions.

Gibney, Frank, Jr. “The Tail That Wags the Dog.” Newsweek, February 22, 1982, 55. Suggests that Bricklin’s brainstorm for VisiCalc came from staring at a blackboard in class one day. Includes a photo of Bricklin and Frankston representing Software Arts at a trade show.

Langdell, James. “VisiCalc Production Ends.” PC Magazine, August 6, 1985, 33. Gives the details of a historic moment in the personal computer saga. Filled with quotations from a spokesman for Lotus Development Corporation. Announces other products Lotus acquired from Software Arts, such as Spotlight and TK! Solver.

“Sagas of Five Who Made It.” Time, February 15, 1982, 42-44. In addition to covering VisiCalc, discusses the success stories of Federal Express, Nike, Pizza Time, and Schwab & Company. Focuses on VisiCorp and Dan Fylstra, including many quotations from him. Credits Fylstra’s marketing abilities for VisiCalc’s success.

Seymour, Jim. “Who Owns the Standards?” PC Magazine, May 26, 1987, 174-176. Discusses how VisiCalc was copied and improved by a number of software companies. Also discusses copyright laws and their general effects on the market and users.

Taylor, Alexander. “The Smash Hit of Software.” Time, March 2, 1981, 69. A good brief summary of the story of VisiCalc. Taylor draws analogies between the music and computer industries, explaining that software is to a computer what a record album is to a stereo. Offers a creative example of how to use an electronic spreadsheet.