Lotus 1-2-3 — The Spreadsheet That Made the IBM PC the Office Standard

Lotus 1-2-3 was a spreadsheet program for the IBM PC, released on 26 January 1983 by Lotus Development Corporation. Mitch Kapor founded the company in 1982 with Jonathan Sachs, who co-created the program. The name described what was in the box: a spreadsheet, business graphics and a database manager, combined in one program. It became the first "killer app" of the IBM PC — the program businesses bought the machine to run — and overtook VisiCalc, the spreadsheet that had done the same for the Apple II.

Where it came from

Kapor had worked for Personal Software, VisiCalc's publisher, which was renamed VisiCorp in 1982. He wrote VisiTrend and VisiPlot, statistics and business-charting programs it sold alongside VisiCalc, while keeping personal rights to his software; according to The Register, VisiCorp bought those rights for $1.7 million, which gave Kapor the means to start his own company. In the summer of 1981 he met Sachs, a programmer who had been porting VisiCalc to DEC and Data General minicomputers. Dan Bricklin, VisiCalc's co-creator, later noted that Kapor also had one of the best-connected venture capitalists in personal computing behind him, Ben Rosen.

What BYTE saw in December 1982

BYTE previewed the program a month before release. Senior editor Gregg Williams called it "modestly revolutionary" for the way it combined three packages, and listed what it could do:

Williams also noted the menus with an explanatory line under each command and pointing at cells with the cursor instead of typing coordinates — and that the menu style resembled VisiPlot's, which BYTE said was no accident: Kapor, who designed VisiPlot, was Lotus's president.

Why it beat VisiCalc

Bricklin, writing on the program's 30th anniversary, gave the clearest account from the losing side. 1-2-3 kept what worked in VisiCalc — such as the A1-style cell names — and fixed what users complained about, such as the lack of thousands separators and individually settable column widths. It added "$" signs for absolute references, used the IBM PC's function keys, and used the extra memory and second disk for better prompts and context-sensitive help.

Above all it was fast. 1-2-3 was written in tight assembly language for the IBM PC, accepting that this would make porting to other machines harder. It also wrote directly to the PC's video memory instead of going through the operating system, which made the screen respond quickly but tied the program to IBM's hardware. That had a side effect on the whole industry: running 1-2-3 became a test of whether a clone was truly IBM-compatible. The Computer History Museum notes it served, along with Microsoft Flight Simulator, as a benchmark for 100 percent hardware compatibility.

Bricklin recalled that when Kapor first showed him the program privately, he thought it would sell $60 million in its first year. Lotus, he wrote, had predicted only $5 million; the actual figure ended up a bit over $50 million. Lotus went public in October 1983.

Protecting a hit

When competitors produced look-alikes, Lotus went to court. Bricklin notes that when Lotus sued makers of products it considered too similar to 1-2-3, it relied on copyright, not patents — software patents were still not the routine tool they later became. In 1985 Lotus bought Software Arts, the company Bricklin and Frankston had founded to create VisiCalc.

Losing the lead

Release 2 came in 1985 and Release 3 in 1989. But according to The Register's history, Lotus spread itself across integrated products such as Symphony and Jazz, and its Windows version, Release 1 for Windows, arrived only in 1991. By then Microsoft had shipped Excel for the Macintosh in 1985 and for Windows in 1987, and when PCs moved to Windows, Excel took over — the CHM puts it simply: 1-2-3 was eventually surpassed by Excel. The Register also points to Microsoft's Office suite eating into Lotus's market share.

IBM bought Lotus in 1995. According to IBM's quarterly filing, it announced a tender offer on 5 June 1995, agreed on 12 June to pay $64 a share in cash — a total equity value of about $3.5 billion — and completed the tender offer in early July. IBM went on developing Lotus's groupware products, while 1-2-3 continued inside the SmartSuite bundle; IBM ended support for the last version, Lotus 123 Millennium Edition, at the end of September 2014.

For more see the hardware timeline, the Microsoft timeline, IBM and Microsoft.