Despite early success, Osborne struggled under heavy competition. Kaypro Computer offered portables that, like the Osborne 1, ran CP/M and included a software bundle, but Kaypro offered larger 9-inch screens. Apple Computer's offerings had a large software library of their own and with aftermarket cards, could run CP/M as well. IBM's 16-bit IBM PC was faster, more advanced, and offered a rapidly growing software library, and Compaq offered a portable computer that was almost 100% compatible with IBM's offering. Osborne's efforts to raise $20 million in capital to rush an IBM-compatible computer to market were unsuccessful.
The final blow occurred in 1983, when Adam Osborne boasted about an upcoming product months before it could be released, killing demand for the company's existing products. It is unclear whether this boast was about the Osborne Executive, which was released in May 1983 for $2,495 and featured a 7-inch screen and did not sell as well as its predecessor, or, more likely, the Osborne Vixen, a smaller portable that promised to offer compatibility not only with earlier Osborne models but also with MS-DOS, allowing it to run software designed for IBM and Compaq computers. Dealers rapidly started cancelling orders for the Osborne 1.
Unsold inventory piled up and in spite of dramatic price cuts--the Osborne 1 was selling for $1295 in July 1983 and $995 by August--sales did not recover. Losses, already higher than expected, continued to mount, and OCC declared bankruptcy on September 13, 1983. This marketing blunder came to be known as "Osborneing" and the phrase circulated in Silicon Valley for the next decade.