In 1949, The Soviet Union successfully carried out its first atomic bomb test. Combined with its capability to send bombers to the mainland US, the nuclear threat suddenly became serious.
Having recognized the shifting power balance in the Cold War, the Department of Defense (DoD) decided to replace their outdated air defense system. They feared hostile aircraft could sneak into the airspace of the US as their radar system's coverage area was not enough.
The most obvious way to improve its capability was to dramatically increase the number of radar sets. And since the ultimate objective of the air defense system was not just to detect but to intercept hostile aircraft before taking any military action, it was almost meaningless unless it could provide real-time airspace information.
Therefore, the system had to receive and process data coming from hundreds of radars without delay, but there were no computers which meet such high demand.
At that time, there was an associate professor of Physics at MIT named George Valley. He also had concern about Soviet nuclear strikes and had been making suggestions to the Air Force about improving air defense.
So, the DoD launched Air Defense Systems Engineering Committee and appointed him as its chairman. Then, he consulted several computer manufacturers about the possibility of realizing real-time computations, but none of them had a good solution.
Fortunately, he found the answer lying in his own campus. During the WWII, MIT was involved in various military research projects. Among them, a project named Whirlwind attracted his interest.
Whirlwind computer, a resulting product of the project had a massive computing power, which was enabled by very efficient and powerful memory units invented by one of its members. The project had been receiving funds from the Office of Naval Research and the machine was meant to be used for a flight simulator. But after years of delay of completion, the sponsor lost interest and decided to abandon it.
It was at just this time that Valley heard from one of his colleagues about its technological progressiveness. So, he decided to invite members of the project to join his new project and let them continue developing more fast and powerful computers.
Having found a promising computer technology, he was given a green light to advance the project to the implementation phase. Thus, the committee was dissolved and a large project currently known as Project Lincoln and the construction of MIT's Lincoln Laboratory was started. After just a few years, they hired thousands of talented researchers and engineers and the lab became an epicenter of innovation.
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For example, the Internet has its origin here.
To gather information from radar sets installed in all parts of the nation, they required a reliable and efficient data transfer network. A centralized network which covers the entire nation is easy to build, but apparently vulnerable to destruction as its central hub becomes the single point of failure. Therefore, they divided the nation into 24 areas, each of which was managed by a direction center, and constructed a distributed network among them.
Although today's Internet was evolved from another military-funded network called ARPANET, its concept was thus born in the Lincoln Laboratory.
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Anyway, having received abundant funds, the Whirlwind computer was much improved in speed.
By 1951, it had evolved enough to process incoming data in real-time, so they carried out their first live test of an interception.
It went perfect. The machine was able to process data without delay and the location of the aircraft which acted as an enemy was successfully transmitted to the interceptor aircraft.
So, this is the beginning of real-time computing.
Eventually, this technology became the driving engine behind video games but it was not a foreseeable future for people back then.
AN/FSQ-7, the deployed version of Whirlwind, not only cost an enormous amount of money, but also required a dedicated building with expensive cooling equipment to prevent it from overheating. Besides, since it was composed of thousands of very fragile and unreliable vacuum tubes, specially trained maintenance workers had to be standing by 24/7.
Therefore, the computer itself had little impact outside the military, but it indirectly caused the creation of two distinct categories of computers, which have been affecting our lives in many ways since then.
Primary references:
"History" on MIT Lincoln Laboratory
http://www.ll.mit.edu/about/History/history.html
YouTube: Military promotional video of "SAGE" air defense system