History of IBM Vision

photo src: techcrunch.com

International Business Machines, or IBM, nicknamed "Big Blue", is a multinational computer technology and IT consulting corporation headquartered in Armonk, New York, United States. The company is one of the few information technology companies with a continuous history dating back to the 19th century. IBM manufactures and sells computer hardware and software (with a focus on the latter), and offers infrastructure services, hosting services, and consulting services in areas ranging from mainframe computers to nanotechnology. Ginni Rometty is the president, chairman and CEO of IBM.

IBM has been well known through most of its recent history as one of the world's largest computer companies and systems integrators. With over 400,000 employees worldwide as of 2014, IBM holds more patents than any other U.S. based technology company and has twelve research laboratories worldwide. The company has scientists, engineers, consultants, and sales professionals in over 175 countries. IBM employees have earned five Nobel Prizes, four Turing Awards, five National Medals of Technology, and five National Medals of Science.

photo src: www.performance-ideas.com

Maps, Directions, and Place Reviews

Chronology

1880s-1924: The origin of IBM

The roots of IBM date back to the 1880s. Since the 1960s or earlier, IBM has described its formation as a merger of three companies: The Tabulating Machine Company (with origins in Washington, D.C. founded in 1896), the International Time Recording Company (founded 1900 in Endicott), and the Computing Scale Company (founded 1901 in Dayton, Ohio, USA). However the 1911 stock prospectus states that four companies were consolidated; the three described by IBM and the Bundy Manufacturing Company (founded in 1889). Further, there was no merger, no consolidation. The new company, named the Computing-Tabulating-Recording Company(CTR), was incorporated on June 16, 1911 in the state of New York, U.S.A. CTR was a holding company; the now five companies were an amalgamation. The individual companies continued to operate using their established names until the holding company was eliminated in 1933. The amalgamation was engineered by noted financier Charles Flint. Flint remained a member of the board of CTR until his retirement in 1930.

The companies that were amalgamated to form CTR manufactured a wide range of products, including employee time-keeping systems, weighing scales, automatic meat slicers, coffee grinders, and punched card equipment. The product lines were very different; Flint stated that the "allied" consolidation

... instead of being dependent for earnings upon a single industry, would own three separate and distinct lines of business, so that in normal times the interest and sinking funds on its bonds could be earned by any one of these independent lines, while in abnormal times the consolidation would have three chances instead of one to meet its obligations and pay dividends.

The five amalgamated companies had 1,300 employees and offices and plants in Endicott and Binghamton, New York; Dayton, Ohio; Detroit, Michigan; Washington, D.C.; and Toronto, Ontario.

Of the companies amalgamated to form CTR, the most technologically significant was The Tabulating Machine Company, founded by Herman Hollerith, and specialized in the development of punched card data processing equipment. Hollerith's series of patents on tabulating machine technology, first applied for in 1884, drew on his work at the U.S. Census Bureau from 1879-82. Hollerith was initially trying to reduce the time and complexity needed to tabulate the 1890 Census. His development of punched cards in 1886 set the industry standard for the next 80 years of tabulating and computing data input.

In 1896, The Tabulating Machine Company leased some machines to a railway company but quickly focused on the challenges of the largest statistical endeavor of its day - the 1900 US Census. After winning the government contract, and completing the project, Hollerith was faced with the challenge of sustaining the company in non-Census years. He returned to targeting private businesses in the United States and abroad, attempting to identify industry applications for his automatic punching, tabulating and sorting machines. In 1911, Hollerith, now 51 and in failing health sold the business to Flint for $2.3 million (of which Hollerith got $1.2 million), who then founded CTR. When the diversified businesses of CTR proved difficult to manage, Flint turned for help to the former No. 2 executive at the National Cash Register Company (NCR), Thomas J. Watson, Sr.. Watson became General Manager of CTR in 1914 and President in 1915. By drawing upon his managerial experience at NCR, Watson quickly implemented a series of effective business tactics: generous sales incentives, a focus on customer service, an insistence on well-groomed, dark-suited salesmen, and an evangelical fervor for instilling company pride and loyalty in every worker. As the sales force grew into a highly professional and knowledgeable arm of the company, Watson focused their attention on providing large-scale tabulating solutions for businesses, leaving the market for small office products to others. He also stressed the importance of the customer, a lasting IBM tenet. The strategy proved successful, as during Watson's first four years, revenues doubled to $2 million, and company operations expanded to Europe, South America, Asia and Australia.

At the helm during this period, Watson played a central role in establishing what would become the IBM organization and culture. He launched a number of initiatives that demonstrated an unwavering faith in his workers. He hired the company's first disabled worker in 1914, he formed the company's first employee education department in 1916 and in 1915 he introduced his favorite slogan, "THINK," which quickly became the corporate mantra. Watson boosted company spirit by encouraging any employee with a complaint to approach him or any other company executive - his famed Open Door policy. He also sponsored employee sports teams, family outings and a company band, believing that employees were most productive when they were supported by healthy and supportive families and communities. These initiatives - each deeply rooted in Watson's personal values system - became core aspects of IBM culture for the remainder of the century.

"Watson had never liked the clumsy hyphenated title of the CTR" and chose to replace it with the more expansive title "International Business Machines". First as a name for a 1917 Canadian subsidiary, then as a line in advertisements. For example, the McClures magazine, v53, May 1921, has a full page ad with, at the bottom:

       International Time Recording Company of New York                         Subsidiary of             Computing-Tabulating-Recording Company, New York                             Makers of              International Business Machines  

Finally, in February 14, 1924, the name was used for CTR itself.

Key events

1925-1929: IBM's early growth

The newly minted IBM continued to develop its core cultural attributes during the 1920s. It launched an employee newspaper, Business Machines, which unified coverage of all of IBM's businesses under one publication. It introduced the Quarter Century Club, to honor employees with 25 years of service to the company, and launched the Hundred Percent Club, to reward sales personnel who met their annual quotas. In 1928, the Suggestion Plan program - which granted cash rewards to employees who contributed viable ideas on how to improve IBM products and procedures - made its debut.

IBM and its predecessor companies made clocks and other time recording products for 70 years, culminating in the 1958 sale of the IBM Time Equipment Division to Simplex Time Recorder Company, IBM manufactured and sold such equipment as dial recorders, job recorders, recording door locks, time stamps and traffic recorders.

The company also expanded its product line through innovative engineering. Behind a core group of inventors - James W. Bryce, Clair Lake, Fred Carroll, and Royden Pierce - IBM produced a series of significant product innovations. In the optimistic years following World War I, CTR's engineering and research staff developed new and improved mechanisms to meet the broadening needs of its customers. In 1920, the company introduced the first complete school time control system, and launched its first printing tabulator. Three years later the company introduced the first electric keypunch, and 1924's Carroll Rotary Press produced punched cards at previously unheard of speeds. In 1928, the company held its first customer engineering education class, demonstrating an early recognition of the importance of tailoring solutions to fit customer needs. It also introduced the 80-column punched card in 1928, which doubled its information capacity. This new format, soon dubbed the "IBM Card", became and remained an industry standard until the 1970s.

Key events

1930-1938: The Great Depression

The Great Depression of the 1930s presented an unprecedented economic challenge, and Watson met the challenge head on, continuing to invest in people, manufacturing, and technological innovation despite the difficult economic times. Rather than reduce staff, he hired additional employees in support of President Franklin Roosevelt's National Recovery Administration plan - not just salesmen, which he joked that he had a lifelong weakness for, but engineers too. Watson not only kept his workforce employed, he increased their benefits. IBM was among the first corporations to provide group life insurance (1934), survivor benefits (1935) and paid vacations (1936). He upped his ante on his workforce by opening the IBM Schoolhouse in Endicott to provide education and training for IBM employees. And he greatly increased IBM's research capabilities by building a modern research laboratory on the Endicott manufacturing site.

With all this internal investment, Watson was, in essence, gambling on the future. It was IBM's first 'Bet the Company' gamble, but the risk paid off handsomely. Watson's factories, running full tilt for six years with no market to sell to, created a huge inventory of unused tabulating equipment, straining IBM's resources. To reduce the cash drain, the struggling Dayton Scale Division (the food services equipment business) was sold in 1933 to Hobart Manufacturing for stock. When the Social Security Act of 1935 - labeled as "the biggest accounting operation of all time" - came up for bid, IBM was the only bidder that could quickly provide the necessary equipment. Watson's gamble brought the company a landmark government contract to maintain employment records for 26 million people. IBM's successful performance on the contract soon led to other government orders, and by the end of the decade IBM had not only safely negotiated the Depression, but risen to the forefront of the industry. Watson's Depression-era decision to invest heavily in technical development and sales capabilities, education to expand the breadth of those capabilities, and his commitment to the data processing product line laid the foundation for 50 years of IBM growth and successes.

His avowed focus on international expansion proved an equally key component of the company's 20th century growth and success. Watson, having witnessed the havoc the First World War wrought on society and business, envisioned commerce as an obstacle to war. He saw business interests and peace as being mutually compatible. In fact, he felt so strongly about the connection between the two that he had his slogan "World Peace Through World Trade" carved into the exterior of IBM's new World Headquarters (1938) in New York City. The slogan became an IBM business mantra, and Watson campaigned tirelessly for the concept with global business and government leaders. He served as an informal, unofficial government host for world leaders when they visited New York, and received numerous awards from foreign governments for his efforts to improve international relations through the formation of business ties.

Key events

1939-1945: World War II

In the decades leading up to the onset of WW2 IBM had operations in many countries that would be involved in the war, on both the side of the Allies and the Axis. IBM had a lucrative subsidiary in Germany, which it was majority owner of, as well as operations in Poland, Switzerland and other countries in Europe. As with most other enemy-owned businesses in Axis countries, these subsidiaries were taken over by the Nazis and other Axis governments early on in the war. The headquarters in New York meanwhile worked to help the American war effort.

IBM in America

IBM's product line shifted from tabulating equipment and time recording devices to Sperry and Norden bombsights, Browning Automatic Rifle and the M1 Carbine, and engine parts - in all, more than three dozen major ordnance items and 70 products overall. Watson set a nominal one percent profit on those products and used the profits to establish a fund for widows and orphans of IBM war casualties.

Allied military forces widely utilized IBM's tabulating equipment for mobile records units, ballistics, accounting and logistics, and other war-related purposes. There was extensive use of IBM punched card machines for calculations made at Los Alamos during the Manhattan Project for developing the first atomic bombs. During the War, IBM also built the Automatic Sequence Controlled Calculator, also known as the Harvard Mark I for the U.S. Navy - the first large-scale electro-mechanical calculator in the U.S..

In 1933 IBM had acquired the rights to Radiotype, an IBM Electric typewriter attached to a radio transmitter. "In 1935 Admiral Richard E. Byrd successfully sent a test Radiotype message 11,000 miles from Antarctica to an IBM receiving station in Ridgewood, New Jersey" Selected by the Signal Corps for use during the war, Radiotype installations handled up to 50,000,000 words a day.

To meet wartime product demands, IBM greatly expanded its manufacturing capacity. IBM added new buildings at its Endicott, New York plant (1941), and opened new facilities in Poughkeepsie, New York (1941), Washington, D.C. (1942), and San Jose, California (1943). IBM's decision to establish a presence on the West Coast took advantage of the growing base of electronics research and other high technology innovation in the southern part of the San Francisco Bay Area, an area that came to be known many decades later as Silicon Valley.

IBM in Germany and Nazi Occupied Europe

The Nazis made extensive use of Hollerith equipment and IBM's majority owned German subsidiary, Deutsche Hollerith Maschinen GmbH (Dehomag), supplied this equipment from the early 1930s. This equipment was critical to Nazi efforts to categorize citizens of both Germany and other nations that fell under Nazi control through ongoing censuses. This census data was used to facilitate the round-up of Jews and other targeted groups, and to catalog their movements through the machinery of the Holocaust, including internment in the concentration camps.

As with hundreds of foreign-owned companies that did business in Germany at that time, Dehomag came under the control of Nazi authorities prior to and during World War II. A Nazi, Hermann Fellinger, was appointed by the Germans as an enemy-property custodian and placed at the head of the Dehomag subsidiary.

Historian and author Edwin Black, in his best selling book on the topic, maintains that the seizure of the German subsidiary was a ruse. He writes: "The company was not looted, its leased machines were not seized, and [IBM] continued to receive money funneled through its subsidiary in Geneva." In his book he argues that IBM was an active and enthusiastic supplier to the Nazi regime long after they should have stopped dealing with them. Even after the invasion of Poland, IBM continued to service and expand services to the Third Reich in Poland and Germany. The seizure of IBM came after Pearl Harbor and the US Declaration of War, in 1941.

IBM has said that it did nothing wrong.

Key events

1946-1959: Postwar recovery, rise of business computing, space exploration, the Cold War

IBM had expanded so much by the end of the War that the company faced a potentially difficult situation - what would happen if military spending dropped sharply? One way IBM addressed that concern was to accelerate its international growth in the years after the war, culminating with the formation of the World Trade Corporation in 1949 to manage and grow its foreign operations. Under the leadership of Watson's youngest son, Arthur K. 'Dick' Watson, the WTC would eventually produce half of IBM's bottom line by the 1970s.

A new IBM emerged in the 1950s. With the death of Founding Father Thomas J. Watson, Sr. on June 19, 1956 at age 82, IBM experienced its first leadership change in more than four decades. The mantle of chief executive fell to his eldest son, Thomas J. Watson, Jr., IBM's president since 1952.

The new chief executive faced a daunting task. The company was in the midst of a period of rapid technological change, with nascent computer technologies - electronic computers, magnetic tape storage, disk drives, programming - creating new competitors and market uncertainties. Internally, the company was growing by leaps and bounds, creating organizational pressures and significant management challenges. Lacking the force of personality that Watson Sr. had long used to bind IBM together, Watson Jr. and his senior executives privately wondered if the new generation of leadership was up to challenge of managing a company through this tumultuous period. "We are," wrote one longtime IBM executive in 1956, "in grave danger of losing our "eternal" values that are as valid in electronic days as in mechanical counter days."

Watson Jr. responded by drastically restructuring the organization mere months after his father died, creating a modern management structure that enabled him to more effectively oversee the fast moving company. He codified well known but unwritten IBM practices and philosophy into formal corporate policies and programs - such as IBM's Three Basic Beliefs, and Open Door and Speak Up! Perhaps the most significant of which was his shepherding of the company's first equal opportunity policy letter into existence in 1953, one year before the U.S. Supreme Court decision in Brown vs. Board of Education and 11 years before the Civil Rights Act of 1964. He continued to expand the company's physical capabilities - in 1952 IBM San Jose launched a storage development laboratory which pioneered disk drives. Major facilities would later follow in Rochester, Minnesota; Greencastle, Indiana; Kingston, New York; and Lexington, Kentucky. Concerned that IBM was too slow in adapting transistor technology Watson requested a corporate policy regarding their use, resulting in this unambiguous 1957 product development policy statement: "It shall be the policy of IBM to use solid-state circuitry in all machine developments. Furthermore, no new commercial machines or devices shall be announced which make primary use of tube circuitry."

Watson Jr. also continued to partner with the United States government to drive computational innovation. The emergence of the Cold War accelerated the government's growing awareness of the significance of digital computing, and drove major Department of Defense supported computer development projects in the 1950s. Of these, none was more important than the SAGE interceptor early detection air defense system.

In 1952, IBM began working with MIT's Lincoln Laboratories to finalize the design of an air defense computer. The merger of academic and business engineering cultures proved troublesome, but the two organizations finally hammered out a design by the summer of 1953, and IBM was awarded the contract to build two prototypes in September. In 1954, IBM was named as the primary computer hardware contractor for developing SAGE for the United States Air Force. Working on this massive computing and communications system, IBM gained access to pioneering research being done at Massachusetts Institute of Technology on the first real-time, digital computer. This included working on many other computer technology advancements such as magnetic core memory, a large real-time operating system, an integrated video display, light guns, the first effective algebraic computer language, analog-to-digital and digital-to-analog conversion techniques, digital data transmission over telephone lines, duplexing, multiprocessing, and geographically distributed networks). IBM built fifty-six SAGE computers at the price of US$30 million each, and at the peak of the project devoted more than 7,000 employees (20% of its then workforce) to the project. SAGE had the largest computer footprint ever, and continued in service until 1984.

More valuable to IBM in the long run than the profits from governmental projects, however, was the access to cutting-edge research into digital computers being done under military auspices. IBM neglected, however, to gain an even more dominant role in the nascent industry by allowing the RAND Corporation to take over the job of programming the new computers, because, according to one project participant, Robert P. Crago, "we couldn't imagine where we could absorb two thousand programmers at IBM when this job would be over some day, which shows how well we were understanding the future at that time." IBM would use its experience designing massive, integrated real-time networks with SAGE to design its SABRE airline reservation system, which met with much success.

These government partnerships, combined with pioneering computer technology research and a series of commercially successful products (IBM's 700 series of computer systems, the IBM 650, the IBM 305 RAMAC (with disk drive memory), and the IBM 1401) enabled IBM to emerge from the 1950s as the world's leading technology firm. Watson Jr. had answered his self-doubt. In the five years since the passing of Watson Sr., IBM was two and a half times bigger, its stock had quintupled, and of the 6000 computers in operation in the United States, more than 4000 were IBM machines.

Key events

1960-1968: The System/360 era

On April 7, 1964, IBM introduced the revolutionary System/360, the first large "family" of computers to use interchangeable software and peripheral equipment, a departure from IBM's existing product line of incompatible machines, each of which was designed to solve specific customer requirements. The idea of a general-purpose machine was considered a gamble at the time.

Within two years, the System/360 became the dominant mainframe computer in the marketplace and its architecture became a de facto industry standard. During this time, IBM transformed from a medium-sized maker of tabulating equipment and typewriters into the world's largest computer company.

The company began four decades of Olympic sponsorship with the 1960 Winter Games in Squaw Valley, California. It became a recognized leader in corporate social responsibility, joining federal equal opportunity programs in 1962, opening an inner city manufacturing plant in 1968, and creating a minority supplier program. It led efforts to improve data security and protect privacy. It set environmental air/water emissions standards that exceeded those dictated by law, and brought all its facilities into compliance with those standards. It opened one of the world's most advanced research centers in Yorktown, New York. Its international operations grew rapidly, producing more than half of IBM's revenues by the early 1970s and through technology transfer shaping the way governments and businesses operated around the world. Its personnel and technology played an integral role in the space program and landing the first men on the moon in 1969. In that same year it changed the way it marketed its technology to customers, unbundling hardware from software and services, effectively launching today's multibillion-dollar software and services industry. See unbundling of software and services, below. It was massively profitable, with a nearly fivefold increase in revenues and earnings during the 1960s.

Key events

1969: Antitrust, the Unbundling of software and services

IBM's dominant market share in the mid-1960s led to antitrust inquiries by the U.S. Department of Justice, which filed a complaint for the case U.S. v. IBM in the United States District Court for the Southern District of New York, on January 17, 1969. The suit alleged that IBM violated the Section 2 of the Sherman Act by monopolizing or attempting to monopolize the general purpose electronic digital computer system market, specifically computers designed primarily for business. The case dragged out for 13 years, turning into a resource-sapping war of attrition. In 1982, the Justice Department finally concluded that the case was "without merit" and dropped it, but having to operate under the pall of antitrust litigation significantly impacted IBM's business decisions and operations during all of the 1970s and a good portion of the 1980s.

In 1969 IBM "unbundled" software and services from hardware sales. Until this time customers did not pay for software or services separately from the very high price for leasing the hardware. Software was provided at no additional charge, generally in source code form. Services (systems engineering, education and training, system installation) were provided free of charge at the discretion of the IBM Branch office. This practice existed throughout the industry. Quoting from the abstract to a widely read IEEE paper on the topic:

At the time, the unbundling of services was perhaps the most contentious point, involving antitrust issues that had recently been widely debated in the press and the courts. However, IBM's unbundling of software had long-term impact. After the unbundling, IBM software was divided into two main categories: System Control Programming (SCP), which remained free to customers, and Program Products (PP), which were charged for. This transformed the customer's value proposition for computer solutions, giving a significant monetary value to something that had hitherto essentially been free. This helped enable the creation of a software industry.

Similarly, IBM services were divided into two categories: general information, which remained free and provided at the discretion of IBM, and on-the-job assistance and training of customer personnel, which were subject to a separate charge and were open to non-IBM customers. This decision vastly expanded the market for independent computing services companies.

Key events

1970-1974: The challenges of success

The Golden Decade of the 1960s was a hard act to follow, and the 1970s got off to a troubling start when CEO Thomas J. Watson Jr. suffered a heart attack and retired in 1971. For the first time since 1914 - nearly six decades - IBM would not have a Watson at the helm. Moreover, after just one leadership change over those nearly 60 years, IBM would endure two in two years. T. Vincent Learson, an IBM executive, succeeded Watson as CEO, then quickly retired upon reaching the mandatory retirement age of 60 in 1973. Following Learson in the CEO office was Frank T. Cary, a 25-year IBMer who had earned his stripes running the fabulously successful data processing division in the 1960s.

During Cary's tenure as CEO, the company continued to dominate in hardware. The IBM System/370 was introduced in 1970 as IBM's new mainframe. The S/370 did not prove as technologically revolutionary as its predecessor, the System/360. From a revenue perspective, it more than sustained the cash cow status of the 360. A less successful effort to replicate the 360 mainframe revolution was the Future Systems project. Between 1971 and 1975, IBM investigated the feasibility of a new revolutionary line of products designed to make obsolete all existing products in order to re-establish its technical supremacy. This effort was terminated by IBM's top management in 1975. But by then it had consumed most of the high-level technical planning and design resources, thus jeopardizing progress of the existing product lines (although some elements of FS were later incorporated into actual products). Other IBM innovations during the early 1970s included the IBM 3340 disk unit - introduced in 1973 and known as "Winchester" after IBM's internal project name -- was an advanced storage technology which more than doubled the information density on disk surfaces. Winchester technology was adopted by the industry and used for the next two decades.

Some 1970s-era IBM technologies emerged to become familiar facets of everyday life. IBM developed magnetic stripe technology in the 1960s, and it became a credit card industry standard in 1971. The IBM-invented floppy disk, also introduced in 1971, became the standard for storing personal computer data during the first decades of the PC era. IBM Research scientist Edgar 'Ted' Codd wrote a seminal paper describing the relational database - an invention that Forbes magazine described as one of the most important innovations of the 20th century. The IBM Portable Computer, 50 lbs. and $9000 of personal mobility, was introduced in 1975 and presaged - at least in function if not size or price or units sold - the Personal Computer of the 1980s. IBM's 3660 supermarket checkout station, introduced in 1973, used holographic technology to scan product prices from the now-ubiquitous UPC bar code, which itself was based a 1952 IBM patent that became a grocery industry standard. Also in 1973, bank customers began making withdrawals, transfers and other account inquiries via the IBM 3614 Consumer Transaction Facility, an early form of today's Automatic Teller Machines.

IBM had an innovator's role in pervasive technologies that were less visible as well. In 1974, IBM announced Systems Network Architecture (SNA), a networking protocol for computing systems. SNA is a uniform set of rules and procedures for computer communications to free computer users from the technical complexities of communicating through local, national, and international computer networks. SNA became the most widely used system for data processing until more open architecture standards were approved in the 1990s. In 1975, IBM researcher Benoit Mandelbrot conceived fractal geometry--a new geometrical concept that made it possible to describe mathematically the kinds of irregularities existing in nature. Fractals had a great impact on engineering, economics, metallurgy, art and health sciences, and are integral to the field of computer graphics and animation.

A less successful business endeavor for IBM was its entry into the office copier market in 1970. The company was immediately sued by Xerox Corporation for patent infringement. Although Xerox held the patents for the use of selenium as a photoconductor, IBM researchers perfected the use of organic photoconductors which avoided the Xerox patents. The litigation lasted until the late 1970s and was ultimately settled. Despite this victory, IBM never gained traction in the copier market, and withdrew from the marketplace in the 1980s. Organic photoconductors are now widely used in copiers.

Throughout this period, IBM was litigating the massive anti-trust suit filed by the Justice Department in 1969. But in a related bit of case law, the landmark Honeywell v. Sperry Rand U.S. federal court case was concluded in April 1973. The 1964 patent for the ENIAC, the world's first general-purpose electronic digital computer, was found both invalid and unenforceable for a variety of reasons thus putting the invention of the electronic digital computer into the public domain. Further, IBM was ruled to have created a monopoly via its 1956 patent-sharing agreement with Sperry-Rand.

Key events

1975-1992: Information revolution, rise of software and PC industries

By the end of the 1970s, IBM had met and exceeded the legacy of the Golden Decade, and the appointment of John R. Opel as CEO in 1981 coincided with the beginning of a new era in computing - the age of personal computing.

The company hired Don Estridge at the IBM Entry Systems Division in Boca Raton, Florida. With a team known as "Project Chess," they built the IBM PC, launched on August 12, 1981. IBM immediately became more of a presence in the consumer marketplace, thanks to the memorable Little Tramp advertising campaign. Though not a spectacular machine by technological standards of the day, the IBM PC brought together all of the most desirable features of a computer into one small machine. It had 128 kilobytes of memory (expandable to 256 kilobytes), one or two floppy disks and an optional color monitor. And it had the prestige of the IBM brand. It was not cheap, but with a base price of US$1,565 it was affordable for businesses - and many businesses purchased PCs. Reassured by the IBM name, they began buying microcomputers on their own budgets aimed at numerous applications that corporate computer departments did not, and in many cases could not, accommodate. Typically, these purchases were not by corporate computer departments, as the PC was not seen as a "proper" computer. Purchases were often instigated by middle managers and senior staff who saw the potential - once the revolutionary VisiCalc spreadsheet, the killer app, had been surpassed by a far more powerful and stable product, Lotus 1-2-3.

By 1985 IBM was so dominant that competitors and analysts speculated that it would again be sued for antitrust. Gartner Group estimated that of the 100 largest data-processing companies, IBM had 41% of all revenue and 69% of profit. Its computer revenue was about nine times that of second-place DEC, and larger than that of IBM's six largest Japanese competitors combined. Its profit margin of 22% was three times the 6.7% average for the other 99 companies. Some companies complained to Congress, ADAPSO discussed the company with the Justice Department, and European governments worried about IBM's influence but feared affecting its more than 100,000 employees there at 19 facilities. However, the company soon lost its lead in both PC hardware and software, thanks in part to its unprecedented (for IBM) decision to contract PC components to outside companies like Microsoft and Intel. Up to this point in its history, IBM relied on a vertically integrated strategy, building most key components of its systems itself, including processors, operating systems, peripherals, databases and the like. In an attempt to accelerate the time-to-market for the PC, IBM chose not to build a proprietary operating system and microprocessor. Instead, it sourced these vital components from Microsoft and Intel respectively. Ironically, in a decade which marked the end of IBM's monopoly, it was this fateful decision by IBM that passed the sources of its monopolistic power (operating system and processor architecture) to Microsoft and Intel, paving the way for rise of PC compatibles and the creation of hundreds of billions of dollars of market value outside of IBM.

John Akers became IBM's CEO in 1985. During the 1980s, IBM's significant investment in building a world class research organization produced four Nobel Prize winners in physics, achieved breakthroughs in mathematics, memory storage and telecommunications, and made great strides in expanding computing capabilities. In 1980, IBM Research legend John Cocke introduced Reduced Instruction Set Technology (RISC). Cocke received both the National Medal of Technology and the National Medal of Science for his innovation, but IBM itself failed to recognize the importance of RISC, and lost the lead in RISC technology to Sun. In 1984 the company partnered with Sears to develop a pioneering online home banking and shopping service for home PCs that launched in 1988 as Prodigy. Despite a strong reputation and anticipating many of the features, functions, and technology that characterize the online experience of today, the venture was plagued by extremely conservative management decisions, and was eventually sold in the mid-1990s. The IBM token-ring local area network, introduced in 1985, permitted personal computer users to exchange information and share printers and files within a building or complex. In 1988, IBM partnered with the University of Michigan and MCI Communications to create the National Science Foundation Network (NSFNet), an important step in the creation of the Internet. But within five years the company backed away from this early lead in Internet protocols and router technologies in order to support its existing SNA cash cow, thereby missing a boom market of the 1990s. Still, IBM investments and advances in microprocessors, disk drives, network technologies, software applications, and online commerce in the 1980s set the stage for the emergence of the connected world in the 1990s.

But by the end of the decade, IBM was clearly in trouble. It was a bloated organization of some 400,000 employees that was heavily invested in low margin, transactional, commodity businesses. Technologies IBM invented and or commercialized - DRAM, hard disk drives, the PC, electric typewriters - were starting to erode. The company had a massive international organization characterized by redundant processes and functions - its cost structure couldn't compete with smaller, less diversified competitors. And then the back-to-back revolutions - the PC and the client server - did the unthinkable. They combined to dramatically undermine IBM's core mainframe business. The PC revolution placed computers directly in the hands of millions of people. It was followed by the client/server revolution, which sought to link all of those PCs (the "clients") with larger computers that labored in the background (the "servers" that served data and applications to client machines). Both revolutions transformed the way customers viewed, used and bought technology. And both fundamentally rocked IBM. Businesses' purchasing decisions were put in the hands of individuals and departments - not the places where IBM had long-standing customer relationships. Piece-part technologies took precedence over integrated solutions. The focus was on the desktop and personal productivity, not on business applications across the enterprise. As a result, earnings - which had been at or above US$5 billion since the early 1980s, dropped by more than a third to US$3 billion in 1989. A brief spike in earnings in 1990 proved illusory as corporate spending continued to shift from high profit margin mainframes to lower margin microprocessor-based systems. In addition, corporate downsizing was in full swing.

Akers tried to stop the bleeding - desperate moves and radical changes were considered and implemented. As IBM assessed the situation, it was clear that competition and innovation in the computer industry was now taking place along segmented, versus vertically integrated lines, where leaders emerged in their respective domains. Examples included Intel in microprocessors, Microsoft in desktop software, Novell in networking, HP in printers, Seagate in disk drives and Oracle Corporation in database software. IBM's dominance in personal computers was challenged by the likes of Compaq and later Dell. Recognizing this trend, management, with the support of the Board of Directors, began to implement a plan to split IBM into increasingly autonomous business units (e.g. processors, storage, software, services, printers, etc.) to compete more effectively with competitors that were more focused and nimble and had lower cost structures.

IBM also began shedding businesses that it felt were no longer core. It sold its typewriter, keyboard, and printer business - the organization that created the popular "Selectric" typewriter with its floating "golf ball" type element in the 1960s - to the investment firm of Clayton, Dubilier & Rice Inc. and became an independent company, Lexmark Inc..

These efforts failed to halt the slide. A decade of steady acceptance and widening corporate growth of local area networking technology, a trend headed by Novell Inc. and other vendors, and its logical counterpart, the ensuing decline of mainframe sales, brought about a wake-up call for IBM. After two consecutive years of reporting losses in excess of $1 billion, on January 19, 1993, IBM announced a US$8.10 billion loss for the 1992 financial year, which was then the largest single-year corporate loss in U.S. history. All told, between 1991 and 1993, the company posted net losses of nearly $16 billion. IBM's three-decade long Golden Age, triggered by Watson Jr. in the 1950s, was over. The computer industry now viewed IBM as no longer relevant, an organizational dinosaur. And hundreds of thousands of IBMers lost their jobs, including CEO John Akers.

Key events

1993-present: IBM's near disaster and rebirth

In April 1993, IBM hired Louis V. Gerstner, Jr. as its new CEO. For the first time since 1914 IBM had recruited a leader from outside its ranks. Gerstner had been chairman and CEO of RJR Nabisco for four years, and had previously spent 11 years as a top executive at American Express. Gerstner brought with him a customer-oriented sensibility and the strategic-thinking expertise that he had honed through years as a management consultant at McKinsey & Co.. Recognizing that his first priority was to stabilize the company, he adopted a triage mindset and took quick, dramatic action. His early decisions included recommitting to the mainframe, selling the Federal Systems Division to Loral in order to replenish the company's cash coffers, continuing to shrink the workforce (reaching a low of 220,000 employees in 1994), and driving significant cost reductions within the company. Most importantly, Gerstner decided to reverse the move to spin off IBM business units into separate companies. He recognized that one of IBM's enduring strengths was its ability to provide integrated solutions for customers - someone who could represent more than piece parts or components. Splitting the company would have destroyed that unique IBM advantage.

These initial steps worked. IBM was in the black by 1994, turning a profit of $3 billion. Stabilization was not Gerstner's endgame - the restoration of IBM's once great reputation was. To do that, he needed to devise a winning business strategy. Over the next decade, Gerstner crafted a business model that shed commodity businesses and focused on high-margin opportunities. IBM divested itself of low margin industries (DRAM, IBM Network, personal printers, and hard drives). The company regained the business initiative by building upon the decision to keep the company whole - it unleashed a global services business that rapidly rose to become a leading technology integrator. Crucial to this success was the decision to become brand agnostic - IBM integrated whatever technologies the client required, even if they were from an IBM competitor. IBM augmented this services business with the 2002 acquisition of the consultancy division of PricewaterhouseCoopers for $3.5 billion US.

Another high margin opportunity IBM invested heavily in was software, a strategic move that proved equally visionary. Starting in 1995 with its acquisition of Lotus Development Corp., IBM built up its software portfolio from one brand, DB2, to five: DB2, Lotus, WebSphere, Tivoli, and Rational. Content to leave the consumer applications business to other firms, IBM's software strategy focused on middleware - the vital software that connects operating systems to applications. The middleware business played to IBM's strengths, and its higher margins improved the company's bottom line significantly as the century came to an end.

Not all software that IBM developed was successful. While OS/2 was arguably technically superior to Microsoft Windows 95, OS/2 sales were largely concentrated in networked computing used by corporate professionals. OS/2 failed to develop much penetration in the consumer and stand-alone desktop PC segments. There were reports that it could not be installed properly on IBM's own Aptiva series of home PCs. Microsoft made an offer in 1994 where if IBM ended development of OS/2 completely, then it would receive the same terms as Compaq for a license of Windows 95. IBM refused and instead went with an "IBM First" strategy of promoting OS/2 Warp and disparaging Windows, as IBM aimed to drive sales of its own software and hardware. By 1995, Windows 95 negotiations between IBM and Microsoft, which were difficult, stalled when IBM purchased Lotus Development whose Lotus SmartSuite would have directly competed with Microsoft Office. As a result, IBM received their license later than their competitors which hurt sales of IBM PCs. IBM officials later conceded that OS/2 would not have been a viable operating system to keep them in the PC business.

While IBM hardware and technologies were relatively de-emphasized in Gerstner's three-legged business model, they were not relegated to secondary status. The company brought its world-class research organization to bear more closely on its existing product lines and development processes. While Internet applications and deep computing overtook client servers as key business technology priorities, mainframes returned to relevance. IBM reinvigorated their mainframe line with CMOS technologies, which made them among the most powerful and cost efficient in the marketplace. Investments in microelectronics research and manufacturing made IBM a world leader in specialized, high margin chip production - it developed 200 mm wafer processes in 1992, and 300 mm wafers within the decade. IBM-designed chips are currently used in PlayStation 3, Xbox 360, and Wii game consoles. IBM also regained the lead in supercomputing with high-end machines based upon scalable parallel processor technology.

Equally significant in IBM's revival was its successful reentry into the popular mindset. Part of this revival was based on IBM technology. On October 5, 1992, at the COMDEX computer expo, IBM announced the first ThinkPad laptop computer, the 700c. The ThinkPad, a premium machine which then cost US$4350, included a 25 MHz Intel 80486SL processor, a 10.4-inch active matrix display, removable 120 MB hard drive, 4 MB RAM (expandable to 16 MB) and a TrackPoint II pointing device. The striking black design by noted designer Richard Sapper made the ThinkPad an immediate hit with the digerati, and the cool factor of the ThinkPad brought back some of the cachet to the IBM brand that was lost in the PC wars of the 1980s. Instrumental to this popular resurgence was the 1997 chess match between IBM's chess-playing computer system Deep Blue and reigning world chess champion Garry Kasparov. Deep Blue's victory was a historic first for a computer over a reigning world champion. Also helping the company reclaim its position as a technology leader was its annual domination of supercomputer rankings and patent leadership statistics. Ironically, a serendipitous contributor in reviving the company's reputation was the Dot-com bubble collapse in 2000, where many of the edgy technology high flyers of the 1990s failed to survive the downturn. These collapses discredited some of the more fashionable Internet-driven business models that stodgy IBM was previously compared against.

Another part of the successful reentry into the popular mindset was the company's revival of the IBM brand. The company's marketing during the economic downturn was chaotic, presenting many different, sometimes discordant voices in the marketplace. This brand chaos was attributable in part to the company having 70 different advertising agencies in its employ. In 1994, IBM eliminated this chaos by consolidating its advertising in one agency. The result was a coherent, consistent message to the marketplace.

As IBM recovered its financial footing and its industry leadership position, the company remained aggressive in preaching to the industry that it was not the Old IBM, that it had learned from its near death experiences, and that it had been fundamentally changed by them. It sought to redefine the Internet age in ways that played to traditional IBM strengths, couching the discussion in business-centric manners with initiatives like ecommerce and On Demand. And it supported open source initiatives, forming collaborative ventures with partners and competitors alike.

Change was manifested in IBM in other ways as well. The company revamped its varied philanthropic practices to bring a sharp focus on improving K-12 education. It ended its 40-year technology partnership with the International Olympic Committee after a successful engagement at the 2000 Olympic Games in Sydney, Australia. On the human resources front, IBM's adoption and integration of diversity principles and practices was cutting edge. It added sexual orientation to its non-discrimination practices in 1984, in 1995 created executive diversity task forces, and in 1996 offered domestic partner benefits to its employees. The company is routinely listed as among the best places for employees, employees of color, and women to work. And in 1996, the Women in Technology International Hall of Fame inducted three IBMers as part of its inaugural class of 10 women: Ruth Leach Amonette, the first woman to hold an executive position at IBM; Barbara Grant, PhD, first woman to be named an IBM site general manager; and Linda Sanford, the highest - placed technical woman in IBM. Fran Allen - an early software pioneer and another IBM hero for her innovative work in compilers over the decades - was inducted in 1997.

Gerstner retired at the end of 2002, and was replaced by long-time IBMer Samuel J. Palmisano.

Key events

Ibm Vision Statement Video

Products and technologies

Evolution of IBM's computer hardware

The story of IBM's hardware is intertwined with the story of the computer industry - from vacuum tubes, to transistors, to integrated circuits, to microprocessors and beyond. The following systems and series represent key steps:

• IBM mainframe - overview
• IBM SSEC - 1948, the first operational machine able to treat its instructions as data
• IBM Card Programmed Calculator - 1949
• IBM 700 series - 1952-1958
• IBM NORC - 1954, the first supercomputer
• IBM 650 - 1954, the world's first mass-produced computer
• SAGE AN/FSQ-7 - 1958, half an acre of floor space, 275 tons, up to three megawatts, ... the largest computers ever built
• IBM 7000 series - 1959-1964, transistorized evolution of IBM 700 series
• IBM 1400 series - 1959, "... by the mid-1960s nearly half of all computer systems in the world were 1401-type systems."
• IBM System/360 - 1964, the first family of computers designed to cover the complete range of applications, small to large, commercial and scientific
• IBM System/3
• IBM System/370
• IBM System/38
• IBM Series/1
• IBM 801 RISC processor
• IBM PC
• PowerPC
• IBM System i was earlier IBM AS/400 then IBM eServer iSeries
• IBM RS/6000
• IBM zSeries was earlier IBM System/390
• Cell processor
• IBM Watson (computer)

Components

• History of IBM magnetic disk drives
• Magnetic tape data storage#IBM formats

Evolution of IBM's operating systems

IBM operating systems have paralleled hardware development. On early systems, operating systems represented a relatively modest level of investment, and were essentially viewed as an adjunct to the hardware. By the time of the System/360, however, operating systems had assumed a much larger role, in terms of cost, complexity, importance, and risk.

Mainframe operating systems include:

• OS family, including: OS/360, OS/MFT, OS/MVT, OS/VS1, OS/VS2, MVS, OS/390, z/OS
• DOS family, including: DOS/360, DOS/VS, DOS/VSE, z/VSE
• VM family, including: CP/CMS (See: History of CP/CMS), VM/370, VM/XA, VM/ESA, z/VM
• Special purpose systems, including: TPF, z/TPF

Other platforms with important operating systems include:

• AIX family, including: AIX
• Linux family, including: Linux for pSeries
• OS/400 family, including: OS/400, IBM i5/OS and IBM i

High-level languages

Early IBM computer systems, like those from many other vendors, were programmed using assembly language. Computer science efforts through the 1950s and early 1960s led to the development of many new high-level languages (HLL) for programming. IBM played a complicated role in this process. Hardware vendors were naturally concerned about the implications of portable languages that would allow customers to pick and choose among vendors without compatibility problems. IBM, in particular, helped create barriers that tended to lock customers into a single platform.

IBM had a significant role in the following major computer languages:

• FORTRAN - for years, the dominant language for mathematics and scientific programming
• PL/I - an attempt to create a "be all and end all" language
• COBOL - eventually the ubiquitous, standard language for business applications
• APL - an early interactive language with a mathematical notation
• PL/S - an internal systems programming language proprietary to IBM
• RPG - an acronym for 'Report Program Generator', developed on the IBM 1401 to produce reports from data files. General Systems Division enhanced the language to HLL status on its midrange systems to rival with COBOL.
• SQL - a relational query language developed for IBM's System R; now the standard RDBMS query language
• Rexx - a macro and scripting language based on PL/I syntax originally developed for Conversational Monitor System (CMS) and authored by IBM Fellow Mike Cowlishaw

IBM and AIX/UNIX/Linux/SCO

IBM developed a schizophrenic relationship with the UNIX and Linux worlds. The importance of IBM's large computer business placed strange pressures on all of IBM's attempts to develop other lines of business. All IBM projects faced the risk of being seen as competing against company priorities. This was because, if a customer decided to build an application on an RS/6000 platform, this also meant that a decision had been made against a mainframe platform. So despite having some excellent technology, IBM often placed itself in a compromised position.

A case in point is IBM's GFIS products for infrastructure management and GIS applications. Despite long having a dominant position in such industries as electric, gas, and water utilities, IBM stumbled badly in the 1990s trying to build workstation-based solutions to replace its old mainframe-based products. Customers were forced to move on to new technologies from other vendors; many felt betrayed by IBM.

IBM embraced open source technologies in the 1990s. It later became embroiled in a complex litigation with SCO group over intellectual property rights related to the UNIX and Linux platforms.

BICARSA (Billing, Inventory Control, Accounts Receivable, & Sales Analysis)

1983 saw the announcement of the System/36, the replacement for the System/34. And in 1988, IBM announced the AS/400, intended to represent a point of convergence for both System/36 customers and System/38 customers. The 1970s had seen IBM develop a range of Billing, Inventory Control, Accounts Receivable, & Sales Analysis (BICARSA ) applications for specific industries: construction (CMAS), distribution (DMAS) and manufacturing (MMAS), all written in the RPG II language. By the end of the 1980s, IBM had almost completely withdrawn from the BICARSA applications marketplace. Because of developments in the antitrust cases against IBM brought by the US government and European Union, IBM sales representatives were now able to work openly with application software houses as partners. (For a period in the early 1980s, a 'rule of three' operated, which obliged IBM sales representatives, if they were to propose a third-party application to a customer, to also list at least two other third-party vendors in the IBM proposal. This caused some amusement to the customer, who would typically have engaged in intense negotiations with one of the third parties and probably not have heard of the other two vendors.)

Non-computer lines of business

IBM has largely been known for its overtaking UNIVAC's early 1950s public fame, then leading in the computer industry for much of the latter part of the century. However it has also had roles, some significant, in other industries, including:

• IBM was the largest supplier of unit record equipment (punched cards, keypunches, accounting machines, ...) in the first part of the 20th century.
• Food services (meat and coffee grinders, computing cheese slicers, computing scales) - founding to 1934, sold to Hobart Manufacturing Co.
• Time recorders (punch clocks, school and factory clocks) - founding to 1958, sold to Simplex Time Recorder Company. See IBM: History of the Time Equipment Division and its Products and this 1935 catalog - International Time Recording Catalog
• Typewriters, personal printers. See IBM Electric typewriter, IBM Selectric typewriter. IBM divested in 1991, now part of Lexmark.
• Copiers - 1970 to 1988. Sold to Eastman Kodak in 1988.
• Other office products such as dictation machines, word processors.
• Military products (Browning Automatic Rifle, bombsights) - IBM's World War II production
• Digital telephone switches - partnership (1983), acquisition (1984), and sale (1989-1992) of ROLM to Siemens AG
• Stadium scoreboards
• Real estate (at one time owning vast tracts of undeveloped land on the U.S. east coast)
• Medical instruments: heart lung machine, prostheses, IBM 2991 Blood Cell Washer, IBM 2997 Blood Cell Separator, IBM 5880 Electrocardiograph System

photo src: theirturn.net

Organization

CEOs, Notable IBMers

• List of IBM CEOs
• IBM Fellow

For IBM's corporate biographies of former CEOs and many others see: IBM Archives Biographies Builders reference room

IBM Global Services

IBM Research

See also History of IBM research in Israel

IBM Federal Systems Division (FSD)

A significant part of IBM's operations were FSD's contracts with the U.S. Federal Government for a wide range of projects ranging from the Department of Defense to the National Security Agency. These projects spanned mundane administrative processing to top secret supercomputing. In NASA's Apollo Program, the "brains" of each Saturn rocket was the Instrument Unit built by the IBM Space Systems Center in Huntsville, Alabama. Founded in 1957, FSD was sold to Loral in 1994.

International subsidiaries growth

IBM had subsidiaries and operations in 70 countries in its early years. They included Austria, Belgium, Bulgaria, Czechoslovakia, France, Germany, Italy, Japan, the Netherlands, Norway, Poland, Romania, the Soviet Union, Sweden, Switzerland, Yugoslavia, and others.

IBM service organizations

IBM's early dominance of the computer industry was in part due to its strong professional services activities. IBM's advantage in building software for its own computers eventually was seen as monopolistic, leading to antitrust proceedings. As a result, a complex, artificial "arms-length" relationship was created separating IBM's computer business from its service organizations. This situation persisted for decades. An example was IBM Global Services, a huge services firm that competed with the likes of Electronic Data Systems or Computer Sciences Corporation.

Source of the article : Wikipedia