Late 1950s - Early 1960s: Second Generation Computers An important change in the development of computers occurred in 1948 with the invention of the transistor. It replaced the large, unwieldy vacuum tube and as a result led to a shrinking in size of electronic machinery. The transistor was first applied to a computer in 1956. Combined with the advances in magnetic-core memory, the use of transistors resulted in computers that were smaller, faster, more reliable and more energy-efficient than their predecessors. Stretch by IBM and LARC by Sperry-Rand (1959) were the first large-scale machines to take advantage of the transistor technology (and also used assembly language instead of the difficult machine language). Both developed for atomic energy laboratories could handle enormous amounts of data, but still were costly and too powerful for the business sector's needs. Therefore only two LARC's were ever installed. Throughout the early 1960s there were a number of commercially successful computers (for example the IBM 1401) used in business, universities, and government and by 1965 most large firms routinely processed financial information by using computers. Decisive for the success of computers in business was the stored program concept and the development of sophisticated high-level programming languages like FORTRAN (Formular Translator), 1956, and COBOL (Common Business-Oriented Language), 1960, that gave them the flexibility to be cost effective and productive. The invention of second generation computers also marked the beginning of an entire branch, the software industry, and the birth of a wide range of new types of careers.

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Operating system An operating system is software that controls the many different operations of a computer and directs and coordinates its processing of programs. It is a remarkably complex set of instructions that schedules the series of jobs (user applications) to be performed by the computer and allocates them to the computer's various hardware systems, such as the central processing unit, main memory, and peripheral systems. The operating system directs the central processor in the loading, storage, and execution of programs and in such particular tasks as accessing files, operating software applications, controlling monitors and memory storage devices, and interpreting keyboard commands. When a computer is executing several jobs simultaneously, the operating system acts to allocate the computer's time and resources in the most efficient manner, prioritizing some jobs over others in a process called time-sharing. An operating system also governs a computer's interactions with other computers in a network.

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