One of IBM’s last machines built around vacuum tubes, the RAMAC 305, is described by IBM as the world’s first volume computer and it incorporated the world’s first commercial disk drive, the IBM 350 Disk Unit. On this day fifty years ago, IBM announced the coming availability of the machine, and its then president Thomas J Watson said: Today is the greatest new product day in the history of IBM, and I believe in the history of the office equipment industry.

The 350 disk device was size of a small newspaper kiosk, and held up to 5 million characters on no less than 50 two-foot diameter disks. Those characters were coded as 7 bits each, so the total capacity was less than 4.4MB, with access times of over half a second.

This state-of-the-art mid-’50s technology carried a hefty price tag, which was a $3,200 monthly leasing fee for the entire RAMAC 305. That translates to a massive $220,000 in today’s currency.

That was a lot of money. The RAMAC was for the military, and for the Fortune 500, said IBM’s marketing manager Craig Butler. Sure enough, after the 1956 launch of the RAMAC box at IBM’s headquarters in New York City, journalists were flown to Virginia to watch the US Navy demonstrate the RAMAC 305 in action.

IBM might be forgiven for feeling a little nostalgic. Back then it enjoyed a near monopoly in some markets, and could set its prices accordingly. But working from today’s prices, $220,000 per month would pay the salaries and overheads of more than two dozen clerical workers. Even allowing for the cost of hiring expensive programmers and technicians to feed and care for the Space Age technology, the RAMAC 305 paid for itself. More than one thousand were made before production ended in 1961.

IBM’s 1956 press release makes much of the speed at which the RAMAC would process and retrieve data. Because transactions are processed as they occur, the fresh facts held in a random access memory show business as it is right now, not as it was hours or weeks ago, the company said.

Butler said the emergence of the disk drive transformed computing, because of its ability to provide rapid and random access to large volumes of data relatively speaking. Until then, data processing had been restricted to batch runs involving sequentially-read tape and punched cards. Without disk drives, databases would never have been created.

Butler said the 350 was developed in San Jose, California, under the leadership of IBM project engineer Ray Johnson. It had the feel of a Skunk Works operation 12 hours away by plane from IBM’s management on the East Coast, he said.

Remington Rand was at one stage as big a supplier of computers as IBM. (Remington beat IBM to the punch with the UNIVAC 1, which was the world’s third commercial computer. The first two were the German Z4, and the British Ferranti Mark 1). But Remington chose not to develop magnetic disks, and lost its position.

Three years ago, IBM sold off its disk drive making business to Hitachi Ltd. It’s become a cut-throat, volumes-oriented business, Butler said.

Hitachi recently said that it expects to be shipping 2TB disk drives by the end of the decade. On the same day, the other major maker of data center disk drives Seagate Technology LLC claimed to have achieved a record 421Gbits per square inch areal density at the International Disk Drive Equipment and Materials Association’s DISKCON 2006 conference.

About 380 million disk drives of all sorts were manufactured last year, and IDEMA quotes forecasts that the industry will ship as many disk drives in the next five years as it did during the past 50 years.

There was no shortage of optimism in 1950s America, and IBM was typical. Because of the RAMAC’s ground-breaking technology, Business transactions will be completely processed right after they occur, it said

Not quite. Banks still take three days to clear checks in the US, and four days in the UK.