With the advent of transistors, core memory and printed circuit boards, the price of electronics began to plummet. Established vendors such as IBM and UNIVAC used these new technologies, but Experimental computers like the MIT TX0 proved that there was also a possibility of building inexpensive computers.
One MIT spinoff would play an important role from 1960 into the 1990s. Digital Equipment Corporation (DEC), founded in 1957, began as a manufacturer of transistorized logic modules. Their first higher-level products were logic testers and core-memory testers, but in 1959, they assembled a machine they called the PDP-1 using their logic modules. The PDP-1 had an 18-bit word and was in many ways a direct descendant of the TX0. 53 were eventually built, selling for $120,000. 3 have survived to the present.
The initials PDP, as used to name DEC computers, stood for Programmable Data Processor. In the early 1960s, everyone knew that computers were huge and expensive, requiring computer centers, and typically leased to their end users by the manufacturer. Apparently, DEC concluded that selling computers for under a million dollars would conflict with market expectations so much that they decided it would be best not to call them computers.
CDC (Control Data Corporation) was the next computer vendor to take up the small-computer challenge, building the CDC-160, a computer with a 12-bit word and 4K words of core memory, all packaged into a desk that also included a paper tape reader and punch. The 160 came out in 1960, and it was successful enough that an improved version, the 160A was released, selling for $110,000. The University of Iowa physics department purchased several of these machines (long after they were obsolete, they remained in use as desks for physics TAs).
Wesley Clark at MIT's Lincoln Labs saw the need for a small laboratory instrumentation computer, particularly in biomedical research, and in 1962, he built a machine he called the LINC (an acronym for Laboratory INstrumentaiton Computer and short for LINColn labs). The LINC was built mostly with off-the-shelf logic modules, power supplies and packaging from DEC, and the design was put into the public domain. It featured a 12-bit word, analog to digital and digital to analog converters, and a unique (at the time) tape drive system called the LINCtape that used pocket-sized tapes to serve much the same purpose as the floppy disks of later personal computers.
The first LINCs were built by their end users, but DEC and Spear, Inc. both saw the market and began building LINCs commercially, priced at around $40,000. Many people attempting to identify the first personal computer have concluded that the LINC is the first production computer that comes closest to fitting in that category. A total of 50 were built (20 built by DEC).
DEC designed its own 12-bit machine, the PDP-5; this was built wit essentially the same technology as the LINC, but it contained some important innovations. Perhaps the most important was an I/O bus and a bus-oriented IOT (I/O Tansfer) instruction. This allowed the PDP-5 (and its successors) to address an arbitrary and open-ended variety of I/O devices. 116 PDP-5 computers were sold at a price of $27,000 each -- the base price included just the CPU, 4K of core memory, and a console teleprinter.
While the PDP-5 was in production, DEC designed a new series of logic modules -- replacing the germanium transistors of their first generation of modules with silicon transistors, and using card-edge connectors instead of the pin-plugs of their first generation. In addition, they (along with competitors such as IBM and Burroughs) moved from hand-wired backplanes to backplanes wired using robotic wire-wrap machines. These new Flip-Chip logic modules (as they were called) led to a significant price reduction for digital logic.
DEC re-engineered the PDP-5 using their new Flip-Chip modules, creating the PDP-8. This machine, released in 1965 at a base price of $18,000, featured upward compatability from the PDP-5. It came with a number of options, including optional support for hardware multiply and divide (the Extended Arithmetic Unit or EAE, $3500), and an optional memory management unit (the Memory Extension Control, $3000). Given the latter, you could add additional 4K core modules at $10,000 each. The typical PDP-8 configuration, sold for on the order of $30,000.
On the order of 1450 PDP-8 systems were built between 1965 and 1968. The income from these sales drove DEC's explosive growth, providing much of the capital needed for DEC's development of larger computers. The follow-up PDP-8/S, released in 1966, was built using the same technology as the PDP-8, but used a bit-serial ALU, sacrificing speed for price, setting a new record low price of $10,000 (4K 12-bit words of core memory plus a console teletype). DEC sold 1024 of these machines, and in a bit of grandstanding, they stocked one machine in each DEC field-service office, available for retail sale on a cash-and-cary basis.
As TTL (transistor-transistor logic) integrated circuits came on the market, DEC released new versions of the PDP-8, the PDP-8/I (I for Integrated Circuit) and the low-end PDP-8/L. The PDP-8/E, released in 1970, sold for under $6,500 and was the first computer to sell ofer 10,000 machines. The PDP-8/E. By this point, medium-scale integrated circuits had allowed DEC to reduce the CPU to just 3 circuit boards.
Eventually, the PDP-8 was reduced to a single integrated circuit chip. These were built by Intersil and later Harris, and served as the basis of DEC's word-processing products sold as recently as 1990. While the DECmate product line were usually sold as word processors, floppy-disk-based operating systems were available and some users (and hobbiests) continued to use them as general-purpose PDP-8 systems.