In the mid-1970s, Tandy's Radio Shack division was a successful American chain of more than 3,000 electronics stores. After buyer Don French purchased a MITS Altair kit computer, he began designing his own and showed it to vice president of manufacturing John Roach. Although the design did not impress Roach, the idea of selling a microcomputer did. When the two men visited National Semiconductor in California in mid-1976, Steve Leininger's expertise on the SC/MP microprocessor impressed them. National executives refused to provide Leininger's contact information when French and Roach wanted to hire him as a consultant, but they found Leininger working part-time at Byte Shop and he and French began working together in June 1976. The company envisioned a kit, but Leininger persuaded the others that because "too many people can't solder", a preassembled computer would be better.
Tandy had 11 million customers that might buy a microcomputer, but it would be much more expensive than the US$30 median price of a Radio Shack product, and a great risk for the very conservative company. Many opposed the project; one executive told French, "Don't waste my time—we can't sell computers." As the popularity of CB radio—at one point more than 20% of Radio Shack's sales—declined, however, the company sought new products. In December 1976 French and Leininger received official approval for the project but were told to emphasize cost; for example, leaving out lowercase characters saved US$1.50 in components and reduced the retail price by US$5. In February 1977 they showed their prototype, running a simple tax-accounting program, to Charles Tandy, head of Tandy. The program quickly crashed as the computer could not handle the US$150,000 figure that Tandy typed in as his salary, and the two men added support for floating-point math to its Tiny BASIC to prevent a recurrence. After the demonstration Tandy revealed that he had already leaked the computer's existence to the press, so the project was approved.
MITS sold 1,000 Altairs in February 1975, and was selling 10,000 a year. Leininger and French suggested that Radio Shack could sell 50,000 computers, but others disagreed and suggested 1,000 to 3,000 per year at the target US$199 price. Roach persuaded Tandy to agree to build 3,500—the number of Radio Shack stores—so that each store could use a computer for inventory purposes if they did not sell.
Having spent less than US$150,000 on development, Radio Shack announced the TRS-80 (TRS stands for TANDY RADIO SHACK) at a New York City press conference on August 3, 1977. It cost US$399, or US$599 with a 12 inches monitor and a Radio Shack tape recorder as datacassette storage; the most expensive product Radio Shack previously sold was a US$500 stereo. The company hoped that the new computer would help Radio Shack sell higher-priced products, and improve its 'schlocky' image among customers. Small businesses were the primary target market, followed by educators, then consumers and hobbyists; despite its hobbyist customer base, Radio Shack saw them as "not the mainstream of the business".
Although the press conference did not receive much media attention because of a terrorist bombing elsewhere in the city, the computer received much more publicity at the Personal Computer Faire in Boston two days later. A front-page Associated Press article discussed the novelty of a large consumer-electronics company selling a home computer that could "do a payroll for up to 15 people in a small business, teach children mathematics, store your favorite recipes or keep track of an investment portfolio. It can also play cards." Six sacks of mail arrived at Tandy headquarters asking about the computer, over 15,000 people called to purchase a TRS-80—paralyzing the company switchboard—and 250,000 joined the waiting list with a $100 deposit.
Despite the internal skepticism, Radio Shack aggressively entered the market. The company advertised "The $599 personal computer" as "the most important, useful, exciting, electronic product of our time". Company president Lewis Kornfeld stated when announcing the TRS-80, "This device is inevitably in the future of everyone in the civilized world—in some way—now and so far as ahead as one can think", and Tandy's 1977 annual report called the computer "probably the most important product we've ever built in a company factory". Unlike competitor Commodore—which had announced the PET several months earlier but had not yet shipped any—Tandy had its own factories and distribution network, and even small towns had Radio Shack stores. The company announced plans to be selling by Christmas a range of peripherals and software for the TRS-80, began shipping computers by September, and opened its first computer-only store in October. Still forecasting 3,000 sales a year, Radio Shack sold over 10,000 TRS-80s Model Is in its first one and a half months of sales, and over 200,000 during the product's lifetime; one entered the Smithsonian's National Museum of American History. By mid-1978 the waits of two months or more for delivery were over, and the company could state in advertisements that TRS-80 was "on demonstration and available from stock now at every Radio Shack store in this community!".
The first units, ordered unseen, were delivered in November 1977, and rolled out to the stores the third week of December. The line won popularity with hobbyists, home users, and small-businesses. Tandy Corporation's leading position in what Byte Magazine called the "1977 Trinity" (Apple, Commodore and Tandy) had much to do with Tandy's retailing the computer through more than 3,000 of its Radio Shack storefronts. Notable features of the original TRS-80 included its full-stroke QWERTY keyboard, small size, its floating-point BASIC programming language, an included monitor, and a starting price of US$600. The pre-release price was US$500 and a US$50 deposit was required, with a money-back guarantee at time of delivery.