Over 40 years ago, Route 128 near Boston, Massachusetts rivaled Silicon Valley for high tech supremacy
Silicon Valley, a sprawling area south of San Francisco, California, is the acknowledged nexus of high technology in the United States. Yet in the late 1970s and early 1980s, a small, compact sector near Boston, Massachusetts known as the “Route 128 corridor” was the country’s second major center of high technology.
By 1980, minicomputers accounted for 34 percent of the nation’s $26 billion computer industry, and over 70 percent of their value came from Massachusetts firms, according to an MIT study. That statistic is all the more impressive because Massachusetts was undergoing a manufacturing meltdown prior to becoming a hotbed of hi-tech. This astounding turnaround has often been referred to as the “Massachusetts Miracle.”
Hard to believe, but the Massachusetts Institute of Technology (MIT) was founded in 1861. Why? Because Massachusetts was, in fact, the heart of American industry in the early 1800s. From the very start, MIT played an integral role in technology, although in those days, “technology” meant machines and manufacturing equipment. MIT wasn’t just an educational institution, it was responsible for spinning off companies as early as the turn of the century.
During World War II and in the post-war period, MIT and other Massachusetts universities benefitted from the flow of federal research dollars associated with the military. To maintain academic freedom, these universities kept an arm’s length from the government by establishing off-campus laboratories.
MIT’s Lincoln Laboratory, founded in 1951 during the Cold War era, focused on research for the US Air Force. Lincoln Laboratory alone spun off dozens of companies, including the unique MITER Corporation, a private not-for-profit company designed to provide engineering and technical guidance for the federal government. Other companies that were spun off from MIT or formed by MIT alumni before America entered the war included Draper Laboratory (1932), Hewlett-Packard (1939), McDonnell Douglas (1921, 1939), Raytheon (1922) and Texas Instruments (1930) .
MIT wasn’t the only player in high technology. For example, Harvard University’s Computation Laboratory, established in 1944, evolved into the Harvard Computing Center in 1962. A Harvard mathematician, Howard Aiken, designed the IBM Mark I, used by the Navy beginning in 1944. The Mark I was the first programmable computer In the US Still, Harvard is likely better known for its role in business development, churning out top-notch MBAs who would go on to start numerous major firms in the Bay State.
Federal research dollars continued to come to MIT in the postwar years. In 1947, MIT researcher Jay Forrester designed “Whirlwind,” the first reliable real time electronic digital computer. When the computer was further refined for military applications at MIT’s Lincoln Laboratory, an engineer named Ken Olsen worked on it. Olsen eventually left to start his own company, Digital Equipment Corporation, in 1957.
A key aspect of high technology growth was and continues to be capital. In 1946, Harvard, MIT, the Federal Reserve Bank of Boston and othersd to help local entrepreneurs raise collaborative money, resulting in the formation of American Research and Development, the first modern-day venture capital firm. In the late 1950s, The First National Bank of Boston pioneered the practice of accepting federal research contracts as collateral for loans to entrepreneurs of hi-tech companies.
Despite this robust period for high technology in Massachusetts, the area’s companies did not have much of a commercial customer base through the 1960s; Instead, they depended heavily on government contracts. At the same time, traditional manufacturing, such as apparel, leather goods and textiles, was suffering. The national recession of 1970 dealt a serious blow to the economy of the Commonwealth of Massachusetts. Job losses mounted and taxes increased. The state bristled at its new nickname, “Taxachusetts.”
While there doesn’t seem to be a single moment in time, a dramatic turnaround in the state’s fortunes occurred in the late 1970s, in large part thanks to the high technology industry.
One organization that played an influential role was the Massachusetts High Technology Council (MHTC), formed in 1977. It consisted of CEOs of eighty-nine companies, including notable names such as Analog Devices, BASF Systems, Computervision, Data General, Digital Equipment Corp ., Hewlett-Packard, Honeywell Information Systems, Prime Computer and Wang Laboratories. MHTC promised 60,000 new jobs in hi-tech, as well as 90,000 jobs in manufacturing and support services, if the state government would promise to be more pro-business and cut taxes. The agreement between MHTC and the Commonwealth of Massachusetts, signed in 1979, was a symbolic turning point for the state’s economy.
There were other factors, not the least of which was the strength of the local computer industry. The computer began as a World War II-era military machine but its commercial applications emerged in the 1950s. By the late 1970s, the minicomputer, first pioneered by Digital Equipment Corporation headquartered in an old mill building in Maynard, Massachusetts, was a sensation. “DEC,” as the company was commonly known, ultimately became the world leader in minicomputers.
MIT and other local universities provided a highly qualified pool of knowledge workers. They were also breeding grounds for academics who wrote computer programming languages and whose professors and alumni went on to start computer manufacturing, computer services and consulting firms.
The geographic center of this activity was on the outskirts of Boston and Cambridge, where both MIT and Harvard University were located. Most of the high technology firms operated along Route 128, a beltway that encircled Boston. This 57-mile state highway ran in a wide arc from Canton in the south to Gloucester in the north. The proliferation of hi-tech firms in this area was nothing short of remarkable. A 1983 MIT study stated “there were almost 900 establishments, including branch plants, in 1980 in the seven fastest growing high tech manufacturing industries in the state, not counting the 700 Computer and Data Processing Service establishments.”
The development of high technology companies in the 128 Corridor was largely informal and spontaneous. In contrast, Silicon Valley was more methodically created as the result of the vision of Frederick Terman, who attended both Stanford University and MIT. As an administrator at Stanford, Terman was instrumental in creating Stanford Research Park in 1951. The Park, which leased out space to technology companies, is considered the forerunner of Silicon Valley.
While Massachusetts was known for computing and electronics, the strength of Silicon Valley initially was in semiconductors. MIT’s electrical engineering department was renowned by the end of World War II whereas Stanford’s expertise in engineering developed after the war. Early on, Silicon Valley was in close proximity to the aerospace industry, offering an advantage over Massachusetts in that area. Regardless, the explosive growth of both areas in the 1970s and 1980s was impressive. Today, Silicon Valley is widely considered the global center of information technology. High technology in Massachusetts remains vital, but it has become more diversified to include biotechnology and pharmaceuticals.
Unfortunately, the computer market changed with the ascension of the microcomputer. Massachusetts was littered with failing hi-tech firms in the 1990s. These are a few of the independent computer companies considered industry darlings that declined and were acquired after prospering during the Massachusetts Miracle:
Founded in 1980; one of the first makers of graphical workstations. Acquired by Hewlett-Packard in 1989.
Founded in 1969; an early pioneer in CAD/CAM. Acquired by Prime Computer in 1988.
Digital Equipment Corporation (DEC)
Founded in 1957; first and largest in the minicomputer market. Acquired by COMPAQ in 1998.
Founded in 1968 by former DEC engineers; leading minicomputer maker. Acquired by EMC Corporation in 1999.
Lotus Development Corporation
Founded in 1982; created the first robust spreadsheet application. Acquired by IBM in 1995, which sold it in 2018.
Founded in 1972; leading minicomputer maker. Renamed Computervision in 1992 and then was acquired by Parametric Technology Corporation in 1988.
Founded in 1951; leading diversified computer manufacturer. Filed for bankruptcy in 1992 and then was acquired by Getronics of the Netherlands in 1999.