In the early 1980s, the personal computer market was a fragmented bazaar of incompatible systems from Atari, Apple, Commodore, and others. Microsoft BASIC was the only near-universal language. IBM dominated mainframes with 40% global share but had no personal computer offering.

IBM's earlier attempts failed: the 5100 cost $9,000 and the Datamaster (Intel 8085) was over budget and delayed. Bill Lowe told CEO Frank Cary that IBM was culturally incapable of building a PC and suggested white-labeling an Atari device.

Frank Cary rejected this, creating Project Chess as an Independent Business Unit with a one-year deadline. Bill Lowe soon left for a promotion, leaving Don Estridge to lead development of the IBM Personal Computer launched in 1981.