Even though transistor technology made computers smaller and cheaper, transistors still managed to overheat and cause damage to parts of the computer. To solve this problem the Integrated Circuit was invented by Jack Kilby of Texas Instruments.
The Integrated Circuit shrunk the multiple transistors and placed them onto a small silicon disk made of quartz which prevented overheating. The integrated circuit also had small silicon chips, or semiconductors, which markedly increased efficiency and speed of the computer.
This was one of the first steps toward the modern day microprocessors.
These 3rd generation computers were also the first computers to use keyboards and monitors as input and have an operating interface. Because of this, machine language such as punchcards and tape were no longer needed to talk to the machine. 3rd generation operating systems allowed for computers to run multiple programs at a time while also monitoring the computer's memory. Simplifying operation and lowering prices meant that computers now appealed to a broader audience and was much more affordable than ever before.
sources cited:
http://library.thinkquest.org/C0125787/firgen.htm
http://www.webopedia.com/DidYouKnow/Hardware_Software/2002/FiveGenerations.asp
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