While there were lots of I/O manufacturers in the earlier years (Eaton, Dana, Chrysler, Borg Warner, BMW & Yamaha) Volvo was the 1st to produce a drive, MerCruiser & OMC followed quickly. They were the 3 main drive brands until OMC merged with Volvo in 1994. All the others listed above are gone.
Rumors have it that Carl Kiekieffer then President at Mercury Marine rejected the I/O concept & Jim Winn left Mercury taking the idea to Volvo. So, MerCruiser then played catch up. The story also goes that Mercury used the u-joint idea that Volvo had the patent on. I've heard the stories that they stole the idea & that they paid Volvo to use the idea. I don't know which is true. OMC wanted to avoid the u-joint patent problems, so the ball gear was used.
While the ball gear had its limitations for running tilted, It did allow for a higher tilt range and a sharper turning radius. Back when it was introduced, no one had power trim, so that wasn't an issue.
I believe OMC was trying to get a drive to market & so they used their available engine as the introduction. The V6 followed by just a year or so. The 200 hp V8 came out as a 1966 model. So, it is interesting that by 1966, OMC had a V8 hooked to a stringer drive. The same basic drive that survived thru 1977 as an electric shift then evolved into the mechanical 400/800 drive used until 1985.
I say it's interesting because MerCruiser never offered anything larger than a 165 HP inline 6 hooked to the #1 drive (which became an Alpha 1/Alpha 1 gen 2 still in production) until 1971. That is when the 302 was used as an 888 (188 HP) drive. All the V8 MerCruisers prior to the 888 used the #2 & #3 drives. Parts are hard to find and the drives are big. A #2 drive is the size of a Bravo 2. The #3 was even bigger.
MerCruiser then introduced a model 0 drive rated at 60 HP using a Renault engine. Did they see potential in a light weight lower HP package? Hard to say. The 60 evolved into the 80 then the 90 before being discontinued after 1972.
It is too bad that the entry level boat (especially fiberglass I/Os) has grown into something that is now out of reach of 1st time buyers. Volvo no longer makes the inline 4 & I can't believe it has long to live at MerCruiser. MerCruiser tried to introduce a 100 HP "Vaser" I/O a few years back based on a 1.6L GM 4 cylinder. The drive was smaller & lighter. The Vaser was discontinued. Lots of money spent and lost. I believe the timing was horrible, boat manufacturers were just trying to survive. No one would spend money to retool and produce a 15 to 16' I/O. Too risky given the economy.
All things considered, when the boat building world (and economy) recovers, the Vaser may be an idea whos time comes. But they should use an Optimax 2 stroke. BRP could use an E-Tec but 1st they would need to retool some type of outdrive. Interesting, maybe a 21st century DU drive?????
BTW, the 14' trihull wasn't the 1st OMC boat. The 17' was. The 14' came a few years later.