Asserting that advances in hardware technology have outstripped educators' anticipations and that software is the key to the successful use of computer hardware, this paper addresses developments in both hardware and software and discusses possible directions for computer use in education. The first section covers the physical attributes of computer hardware and describes changes in memory, operating systems, storage capacity, and input output devices between 1970 and 1985. The decrease in cost of computing power is also described. The paper then examines software developments and asserts that although improvement in instructional software is slow, it is real and can be expected to continue. Characteristics of software are divided into three categories--subject matter content, instructional process or pedagogy, and technical characteristics--and advances in each of the areas are examined. A nine-item bibliography is included. (THC)