The IEEE single-precision format with a hidden bit has replaced earlier single-precision formats, most of which had a 24-bit significand and a 7-bit exponent, chosen thus for alignment on byte boundaries, which simplified the emulation in software of the hardware floating-point units at a time when many computers lacked hardware FPUs.

When the idea of using a hidden bit freed one bit in the memory format, a decision was required, whether to use it for the exponent or for the significand.

The experience of using the older single-precision formats before 1980 indicated that the frequent overflows and underflows caused by a 7-bit exponent were more annoying than insufficient precision in the significand, so it was decided to use the hidden bit for increasing the exponent from 7 bits to 8 bits.

At that time, by 1980, the efficient implementation in hardware had become the main consideration in the design of the number formats, and not whether there are some tricks that could be useful for software emulation. The use of a hidden bit is inconvenient for software, which is why it had not been used earlier.

Some earlier formats had also used an 8-bit exponent and a hidden bit, but they differed from the IEEE format because the exponent was byte-aligned and the sign bit was stored over the hidden bit. This simplified the software emulation, but it had the disadvantage that comparing floating-point numbers was more complicated, as one could not compare the bytes in the same order as for integer numbers.