Although it offered good performance, it suffered from a lack of software due to its use of the Z8000 processor and custom operating system, PCOS.

[2]: 10 InfoWorld magazine saw the M20 as an "answer to Tandy's Model 16, the IBM Personal Computer and the Apple III";[3] Olivetti itself compared its computer to the IBM PC, Sirius Victor, Commodore 8000 and Apple II in television advertising.

[4] Although the computer was initially well received,[5] its use of a non-standard OS (Olivetti's proprietary PCOS) and CPU (Zilog Z8001) proved to be its most serious limitations.

[6]: 14 To alleviate a lack of applications, Olivetti sold a CP/M emulator for US$300 and distributed certain CP/M software packages (dBase II and SuperCalc) for their computer.

[7] Olivetti later introduced the "Alternate Processor Board" (APB 1086), based on an 8 MHz Intel 8086 CPU for compatibility with MS-DOS and CP/M-86 software.

The first version (PCOS 1.0) supports 14 characters long filenames, with no directories and a limit of 192 files per disk (called volume).

[1]: 192  Standard OS configuration includes BASIC interpreter, other programming languages (Assembler and PASCAL) are optional.