This information was taken from sources such as thesehttp://library.microsoft.com/msinfo/mshist/1981.htm http://www.msci.memphis.edu/~ryburnp/comp1200/history/microhist.html http://video.cs.vt.edu:90/cgi-bin/ShowPage/1980-81.html?Whence=Chronology 1981
IBM introduces its Personal Computer, which uses Microsoft's 16-bit operating system, MS-DOS 1.0, plus Microsoft BASIC, COBOL, PASCAL, and other Microsoft products. The IBM PC, based on the 8088, running at 4.77 mHz with a 160K floppy disk drive, hit the market. After waiting for the opposition to soften up the market, IBM entered the field in 1981 with the IBM "PC" and supported by the DOS operating system developed under an agreement that gave Microsoft all the profits in exchange for the development costs having been borne by Microsoft. Disregarding CP/M that had been the choice for earlier machines, IBM chose to go in a radically different direction on the marketing assumption (that turned out to be correct) that the purchasers of the PC were a different breed than those who were prepared to build their own system from a kit. Using a caricature of Charlie Chaplin as the user who was able to take the PC out of the box and immediately begin using it, IBM attracted a community of users who wanted the machine for its usefulness rather than its intrinsic engineering appeal.
So why did IBM chose the 8086 series when most of the alternatives were so much better? Apparently IBM's own engineers wanted to use the 68000, and it was used later in the forgotten IBM Instruments 9000 Laboratory Computer, but IBM already had rights to manufacture the 8086, in exchange for giving Intel the rights to its bubble memory designs. Apparently IBM was using 8086s in the IBM Displaywriter word processor. Other factors were the 8-bit 8088 (1979) version, which could use existing low cost 8085-type components, and allowed the computer to be based on a modified 8085 design. 68000 components were not widely available, though it could use 6800 components to an extent. After the failure and expense of the IBM 5100 (the first attempt at a peronal computer - discrete random logic CPU with no bus, built in BASIC and APL as the OS), cost was a large factor in the design of the PC.[Back to Timeline]