Santa Clara Valley Historical Association

Perestroika (restructuring) and gladnost (openness) drastically reshaped the Soviet Union's government in 1988, lifting Mikhail Gorbachev to the presidency. In 1989, the winds of change became tornadoes, toppling the Berlin Wall and blowing away Communist regimes in East Germany, Hungary, Poland, Czechoslovakia, Bulgaria, and Romania.

The 40-year Cold War was over, in effect, although the Soviet Union itself did not finally collapse until 1991. The military stand-down shrank Silicon Valley defense contracts -- a painful but not paralyzing blow to the regional economy.

During the late '80s, development of increasingly powerful desktop workstations lifted Silicon Valley to the leadership of the U.S. computer industry, surpassing the microcomputer manufacturers based near Boston. Sophisticated data management programs such as those of Oracle Systems enabled office workers to use high-performance desktop computers linked in networks, rather than the costly minicomputers of yore. A group's most powerful PC acted as a "server," or shared filing cabinet, for the network's data.

Optical fiber, the same material AT&T installed in an undersea cable linking the U.S. and Europe, helped improve local area networks (LANs).

Progress of microchip technology advanced development of the Integrated Services Digital Network (ISDN), which promised to integrate voice, data, text, and video communications in a single worldwide network employing digital rather than analog technology.

Parallel processing with multiple microprocessors also came to the fore. At NASA Ames in 1989, parallel processing nearly matched the performance of advanced supercomputers.

By the end of 1989, Sun Microsystems claimed to be the world's largest supplier of RISC (reduced instruction set chip) computers; MIPS Computers was close behind. A year before, the two companies had opened their respective RISC architectures for license to other computer makers. Meanwhile, Hewlett-Packard claimed the highest revenues from the sale of RISC-based computers, and became the No. 1 work station vendor after buying out Apollo Computers of Chelmsford, Massachusetts, the original work station maker.

Intel Corporation unveiled its i486 microprocessor in 1989, and IBM and Compaq raced to market 486 PCs. Intel also introduced a new microprocessor for RISC architecture, the i860, containing more than 1 million transistors.

Despite the RISC and work station wars, 1989 ended with the computer industry in recession again. Memory chip prices fell considerably. By '89, the number of fax (facsimile) machines in U.S. use had doubled from 1987 to 1.2 million.

Another boom was on in mobile radio telephones. More than 1 million U.S. customers were using them, spurring along a second generation of cellular phones using digital technology. Meanwhile, regulatory changes freed regional telephone companies to provide gateways to services such as Prodigy, offering news, weather, sports, financial and shopping information, and games, to PC users with modems.

ISDNs made their commercial debut in 1990, bringing the vision of a global voice, data, text, and video system closer to reality. ISDN boards for PCs permitted computer-to-computer communications, vastly extending the potential of networks. Wireless technology advances opened the prospect of individuals tapping into a global network with a pocket telephone. Cheaper and more portable cellular phones were feeding a burgeoning demand.

IBM raised the work stations ante in 1990 with machines able to do parallel processing. In software, Microsoft's Windows system blossomed and began to edge out MS/DOS as the industry standard operating system for PCs. Apple Computer sued Microsoft, claiming Windows had copied the "look and feel" of the Macintosh graphical interface.

The Hubble Space Telescope, a Lockheed Missiles & Space Company project, was launched into orbit, but proved to have a flaw that prevented its mirrors from focusing perfectly.

A nascent technology came on the commercial horizon as Conductus Inc. opened a Sunnyvale superconductor factory.

Two Stanford faculty stalwarts won 1990 Nobel Prizes. Canadian-born Richard E. Taylor shared the physics prize with Jerome Friedman and Henry Kendall for proving the existence of quarks in research at SLAC. Quarks, particles within positrons and neutrons, now are regarded as being among the fundamental building blocks of matter. Taylor worked at SLAC from 1962-68, and became a full Stanford professor in 1970. Emeritus Professor of Economics William F. Sharpe shared the economics prize for his capital asset pricing model, which led to the concept of "beta" in measuring portfolio risk. Sharpe's work is applied in stock investment and managing pension funds.

Read about Silicon Valley's Morphing, Downsizing and Restructuring

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