History of IBM
Encyclopedia
International Business Machines, abbreviated IBM and 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 computer
s to nanotechnology
. Samuel J Palmisano is the 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 388,000 employees worldwide, IBM is one of the largest and most profitable information technology employers in the world. IBM holds more patents than any other U.S. based technology company and has eight research laboratories worldwide. The company has scientists, engineers, consultants, and sales professionals in over 170 countries. IBM employees have earned Five Nobel Prizes, four Turing Awards, five National Medals of Technology
, and five National Medals of Science
.
The roots of IBM date back the 1880s, decades before the development of electronic computers. The company was formed through a merger of four different companies: the Tabulating Machine Company (with origins in Washington, D.C. in the 1880s), the International Time Recording Company
(founded 1900 in Endicott), the Computing Scale Corporation (founded 1901 in Dayton
, Ohio, USA), and the Bundy Manufacturing Company
(founded in 1889). The merger was engineered by noted financier Charles Flint
, and the new company was called the Computing Tabulating Recording (CTR) Corporation. CTR was incorporated on June 16, 1911 in Endicott
, New York, U.S.A.. Flint remained a member of the board of CTR until his retirement in 1930.
The companies that merged to form CTR manufactured a wide range of products, including employee time-keeping systems, weighing scale
s, automatic meat slicers, coffee grinders, and most importantly for the development of the computer, punched card equipment
. The product lines were very different; Flint stated that the consolidation
Based in New York City, the new company 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 merged 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 with amazing speed, Hollerith was faced with the challenge of sustaining the company in non-Census years. He returned to targeting private businesses both 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 created 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, 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, custom-built 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 collectively 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 a 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.
Given the company's geographic growth (including the completion of three manufacturing facilities in Europe), and his own expansive vision, Watson found the CTR name too limiting,. A name of a publication from CTR's Canadian operation caught his eye, and on February 14, 1924, the CTR name was formally changed to International Business Machines Corporation, later to be abbreviated IBM.
The newly minted IBM continued to develop its core cultural attributes during the 1920s. It launched a flagship 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.
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 has not only safely negotiated the Depression, it had 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.
Despite Watson's efforts on behalf of world peace, the interests of international commerce failed to prevent the breakout of war. When the Second World War began – well before the United States was formally engaged in the conflict – Watson placed all IBM facilities at the disposal of the U.S. government. 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
.
Many international subsidiaries of IBM in Axis territory were legally cut off from IBM starting in Dec 1941 after Pearl Harbor
. Several were involved in the holocaust, both before Dec 1941 and after. After the war these subsidiaries were fused back into IBM. A book published in 2001, IBM and the Holocaust
, as well as a dismissed lawsuit against the company treats the use of Hollerith equipment by the Nazi government and IBM's role. In a "IBM Statement on Nazi-era Book and Lawsuit," IBM responded in February 2001 that
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 passing 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. And he ended a raging internal debate about computer architecture with 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 gun
s, 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 the 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.
Just as his father saw the company's future in tabulators rather than scales and clocks, Thomas J. Watson, Jr., foresaw the role computers would play in business, and in less than twenty years he led IBM's transformation from a medium-sized maker of tabulating equipment and typewriters into a corporate giant that was the world's leading computer company. IBM was the largest of the eight major computer companies (with UNIVAC
, Burroughs, NCR
, Control Data Corporation
, General Electric
, RCA
and Honeywell
) through most of the 1960s. People in this business would talk jokingly of "Snow White and the Seven Dwarfs", given the much smaller size of the other companies' computer divisions (IBM produced approximately 70% of all computers in 1964).
Moreover, under Watson, Jr.'s leadership, IBM became one of the world's most admired companies, a legitimate business icon. 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 multi-billion 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. It might not have turned out that way, if Watson hadn’t taken the biggest risk of his career.
On April 7, 1964, IBM introduced the revolutionary System/360, the first large “family” of computers to use interchangeable software and peripheral equipment. It was a bold departure from IBM's current product line of incompatible machines, each machine “designed as an economical solution to a limited class of customer requirements”.– extensive (819 pp.) treatment of IBM's offerings during this period But Fortune magazine dubbed it “I.B.M.'s $5,000,000,000 Gamble” because there was no guarantee the concept of computer compatibility was going to succeed in the marketplace. If the S/360 failed, IBM's existing computer product line would be rapidly outpaced by competitors. But in order for it to succeed, it would have to cannibalize IBM's existing, revenue-producing computer product lines – current customers would have to be convinced to migrate from their current IBM systems to this new, unproven system. Both scenarios were fraught with risk. So, when he committed to developing the System/360, Watson, Jr., like his father 30 years before, was literally betting the company. And, like it did for his father, Watson Jr.'s bet paid off, and then some. Within two years, the System/360 became the dominant mainframe computer in the marketplace, so dominant that its architecture became a de facto industry standard, even to the present day. The IBM mainframe
that seized market share in the 1960s is the direct ancestor of today's IBM System z10.
Riding the crest of the S/360 compatibility wave, IBM cemented its leadership position in the computer industry throughout the 1960s. By the end of the decade, the Seven Dwarfs were forced to reconsider their place in the computer industry. Most of those companies are now long gone as IBM competitors, except for Unisys
, which is the result of multiple mergers that included Sperry Rand, UNIVAC and Burroughs, and General Electric
, which has re-entered the business in recent years. In 1970, GE sold most of its computer business to Honeywell and in 1971, RCA sold its computing division to Sperry Rand
. With only Burroughs, UNIVAC, NCR
, Control Data, and Honeywell producing mainframes, people then talked of IBM and the BUNCH
. NCR and Honeywell later dropped out of the general mainframe and mini sector and concentrated on lucrative specialized markets.
, 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.
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 suffer two in two years. T. Vincent Learson, a hard-driving IBM executive, succeeded Watson as CEO and then quickly retired himself upon reaching the mandatory retirement age of 60 in 1973. Following Learson in the CEO office was Frank T. Cary, a 26-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. But 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 the 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, however, are now widely-used in office 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. IBM was ruled to have created a monopoly via its 1956 patent-sharing agreement with Sperry-Rand, a decision that invalidated the 1964 patent for the ENIAC, the world's first general-purpose electronic digital computer, thus putting the invention of the electronic digital computer into the public domain.
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
.
However, IBM soon lost this early 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 speed 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 of 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 that 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. By the late 1980s 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..
But these efforts failed to halt the slide. A decade of steady acceptance and widening corporate growth of local area network
ing 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.
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 profits of $3 billion. But stabilization was not Gerstner's endgame – the restoration of IBM's once great reputation was. To do that, he needed to come up with 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 became 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.
While IBM hardware and technologies were relatively de-emphasized in Gerstner's three-legged business model, they were not relegated to stepchild status. The company brought its world class research organization to bear more closely on its existing product lines and development processes. As 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. But it was the striking black design by noted designer Richard Sapper
that 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 had been lost in the PC wars of the 1980s. Instrumental too 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 an 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 ride out 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 scattershot 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, Ph.D., 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 – is inducted the next year.
Gerstner retired at the end of 2002, and was replaced by long-time IBMer Samuel J. Palmisano
.
, 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.)
, however, operating systems had assumed a much larger role, in terms of cost, complexity, importance, and risk.
Mainframe operating systems include:
Other platforms with important operating systems include:
. 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:
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.
(punched cards, keypunches, accounting machines, ...) in the first part of the 20th century and then, overtaking UNIVAC
's early 1950s public fame, 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:
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. FSD was sold to Loral
in 1994.
, a huge services firm that competed with the likes of Electronic Data Systems
or Computer Sciences Corporation
.
IBM organization
IBM people
... more
Index of IBM articles
Related topics
Armonk, New York
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, United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
. 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 computer
Mainframe computer
Mainframes are powerful computers used primarily by corporate and governmental organizations for critical applications, bulk data processing such as census, industry and consumer statistics, enterprise resource planning, and financial transaction processing.The term originally referred to the...
s to nanotechnology
Nanotechnology
Nanotechnology is the study of manipulating matter on an atomic and molecular scale. Generally, nanotechnology deals with developing materials, devices, or other structures possessing at least one dimension sized from 1 to 100 nanometres...
. Samuel J Palmisano is the 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 388,000 employees worldwide, IBM is one of the largest and most profitable information technology employers in the world. IBM holds more patents than any other U.S. based technology company and has eight research laboratories worldwide. The company has scientists, engineers, consultants, and sales professionals in over 170 countries. IBM employees have earned Five Nobel Prizes, four Turing Awards, five National Medals of Technology
National Medal of Technology
The National Medal of Technology and Innovation is an honor granted by the President of the United States to American inventors and innovators who have made significant contributions to the development of new and important technology...
, and five National Medals of Science
National Medal of Science
The National Medal of Science is an honor bestowed by the President of the United States to individuals in science and engineering who have made important contributions to the advancement of knowledge in the fields of behavioral and social sciences, biology, chemistry, engineering, mathematics and...
.
1880s–1924: The origin of IBM
| Year | Gross income (in $m) | Employees |
|---|---|---|
| 1890 | ||
| 1895 | ||
| 1900 | ||
| 1905 | ||
| 1910 | ||
| 1915 | 4 | 1,672 |
| 1920 | 14 | 2,731 |
| 1925 | 13 | 3,698 |
Time clock
A time clock, sometimes known as a clock card machine or punch clock or time recorder, is a mechanical timepiece used to assist in tracking the hours an employee of a company worked. In regards to mechanical time clocks this was accomplished by inserting a heavy paper card, called a timesheet,...
(founded 1900 in Endicott), the Computing Scale Corporation (founded 1901 in Dayton
Dayton, Ohio
Dayton is the 6th largest city in the U.S. state of Ohio and the county seat of Montgomery County, the fifth most populous county in the state. The population was 141,527 at the 2010 census. The Dayton Metropolitan Statistical Area had a population of 841,502 in the 2010 census...
, Ohio, USA), and the Bundy Manufacturing Company
Bundy Manufacturing Company
The Bundy Manufacturing Company was a 19th-century American manufacturer of timekeeping devices that went through a series of mergers, eventually becoming part of International Business Machines. The company was founded by the Bundy brothers....
(founded in 1889). The merger was engineered by noted financier Charles Flint
Charles Ranlett Flint
-Further reading:**...
, and the new company was called the Computing Tabulating Recording (CTR) Corporation. CTR was incorporated on June 16, 1911 in Endicott
Endicott, New York
Endicott is a village in Broome County, New York, United States. The population was 13,038 at the 2000 census. It is part of the Binghamton Metropolitan Statistical Area. The village is named after Henry B...
, New York, U.S.A.. Flint remained a member of the board of CTR until his retirement in 1930.
The companies that merged to form CTR manufactured a wide range of products, including employee time-keeping systems, weighing scale
Weighing scale
A weighing scale is a measuring instrument for determining the weight or mass of an object. A spring scale measures weight by the distance a spring deflects under its load...
s, automatic meat slicers, coffee grinders, and most importantly for the development of the computer, punched card equipment
History of computing hardware
The history of computing hardware is the record of the ongoing effort to make computer hardware faster, cheaper, and capable of storing more data....
. The product lines were very different; Flint stated that the 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.
Based in New York City, the new company 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 merged to form CTR, the most technologically significant was the Tabulating Machine Company, founded by Herman Hollerith
Herman Hollerith
Herman Hollerith was an American statistician who developed a mechanical tabulator based on punched cards to rapidly tabulate statistics from millions of pieces of data. He was the founder of one of the companies that later merged and became IBM.-Personal life:Hollerith was born in Buffalo, New...
, and specialized in the development of punched card
Punched card
A punched card, punch card, IBM card, or Hollerith card is a piece of stiff paper that contains digital information represented by the presence or absence of holes in predefined positions...
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 with amazing speed, Hollerith was faced with the challenge of sustaining the company in non-Census years. He returned to targeting private businesses both 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
Charles Ranlett Flint
-Further reading:**...
for $2.3 million (of which Hollerith got $1.2 million), who then created 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, Thomas J. Watson, Sr.
Thomas J. Watson
Thomas John Watson, Sr. was president of International Business Machines , who oversaw that company's growth into an international force from 1914 to 1956...
. 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, custom-built 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 collectively 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 a 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.
Given the company's geographic growth (including the completion of three manufacturing facilities in Europe), and his own expansive vision, Watson found the CTR name too limiting,. A name of a publication from CTR's Canadian operation caught his eye, and on February 14, 1924, the CTR name was formally changed to International Business Machines Corporation, later to be abbreviated IBM.
Key events
- 1890: Hollerith's punched cards used for 1890 Census
- The U.S. Census Bureau contracts to use Herman HollerithHerman HollerithHerman Hollerith was an American statistician who developed a mechanical tabulator based on punched cards to rapidly tabulate statistics from millions of pieces of data. He was the founder of one of the companies that later merged and became IBM.-Personal life:Hollerith was born in Buffalo, New...
's punched card tabulating technologyUnit record equipmentBefore the advent of electronic computers, data processing was performed using electromechanical devices called unit record equipment, electric accounting machines or tabulating machines. Unit record machines were as ubiquitous in industry and government in the first half of the twentieth century...
on the 1890 United States Census, reducing a 10-year process to two years and saving the government $5 million. Hollerith's punched cards become the tabulating industry standard for input for the next 70 years. Hollerith's Tabulating Machine Company is later merged into what becomes IBM. - 1906: Hollerith Type I Tabulator
- The first tabulator with an automatic card feed and control panel.
- 1911: Formation
- Charles FlintCharles Ranlett Flint-Further reading:**...
, a noted trust organizer, engineers the merger of four companies: the Tabulating Machine Company, the International Time Recording CompanyTime clockA time clock, sometimes known as a clock card machine or punch clock or time recorder, is a mechanical timepiece used to assist in tracking the hours an employee of a company worked. In regards to mechanical time clocks this was accomplished by inserting a heavy paper card, called a timesheet,...
, the Computing Scale Corporation, and the Bundy Manufacturing CompanyBundy Manufacturing CompanyThe Bundy Manufacturing Company was a 19th-century American manufacturer of timekeeping devices that went through a series of mergers, eventually becoming part of International Business Machines. The company was founded by the Bundy brothers....
. The combined Computing Tabulating Recording Corporation (CTR) manufactures and sells machinery ranging from commercial scales and industrial time recorders to meat and cheese slicers, along with tabulators and punched cards. Based in New York City, the new company had 1,300 employees and offices and plants in Endicott and Binghamton, New York; Dayton, Ohio; Detroit, Michigan; Washington, D.C.; and Toronto, Ontario. - 1914: Thomas J. WatsonThomas J. WatsonThomas John Watson, Sr. was president of International Business Machines , who oversaw that company's growth into an international force from 1914 to 1956...
arrives - Thomas J. Watson Sr., a one year jail sentence pending – see NCR – is made general manager of CTR. Less than a year later, the jail sentence having been overturned, he becomes president of the firm.
- 1914: First disabled employee
- CTR hires its first disabled employee.
- 1915: "THINK" signs
- "THINK" signs, based on the slogan coined by Thomas J. Watson, Sr., and are used in the company for the first time.
- 1916: Employee education
- CTR invests in its employees and creates an education program. Over the next two decades the program would expand to include management education, volunteer study clubs, and the construction of the IBM Schoolhouse in 1933.
- 1917: CTR in Brazil
- Premiered in Brazil in 1917, invited by the Brazilian Government to conduct the census, CTR opened an office in Brazil
- 1920: First CTR printing tabulator.
- With prior tabulators the results were displayed and had to be copied by hand.
- 1923: CTR Germany
- CTR acquires majority ownership of the German tabulating firm Deutsche Hollerith Maschinen Groupe (DehomagDehomagDehomag was a German subsidiary of IBM with monopoly in the German market before and during World War II. The word was an acronym for Deutsche Hollerith-Maschinen Gesellschaft mbH . Hollerith refers to the German-American inventor of the technology of punched cards, Herman Hollerith.Under Nazi...
). - 1924: International Business Machines Corporation
- On February 14, 1924, CTR's name was formally changed to International Business Machines Corporation (IBM), to more accurately reflect the company's aspirations and mission. The name was first used by the company's Canadian subsidiary in 1917.
1925–1938: IBM's early growth, the Great Depression
| Year | Gross income (in $m) | Employees |
|---|---|---|
| 1925 | 13 | 3,698 |
| 1930 | 19 | 6,346 |
| 1935 | 21 | 8,654 |
The newly minted IBM continued to develop its core cultural attributes during the 1920s. It launched a flagship 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.
SimplexGrinnell
SimplexGrinnell, a subsidiary of Tyco International, is an American company specializing in active fire protection systems, communication systems and testing, inspection and maintenance services...
, 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
James W. Bryce
James Wares Bryce was an American engineer and inventor. In 1936, on the centenary of the United States Patent Office, he was honored as one of the country’s 10 greatest living inventors....
, 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
Punched card
A punched card, punch card, IBM card, or Hollerith card is a piece of stiff paper that contains digital information represented by the presence or absence of holes in predefined positions...
in 1928, which doubled its information capacity. This new format, soon dubbed the "IBM Card", became and remained an industry standard until the 1970s.
The Great Depression
Great Depression
The Great Depression was a severe worldwide economic depression in the decade preceding World War II. The timing of the Great Depression varied across nations, but in most countries it started in about 1929 and lasted until the late 1930s or early 1940s...
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 has not only safely negotiated the Depression, it had 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
- 1927: IBM Italy
- IBM opens its first office in Italy in Milan, and starts selling and operating with National Insurance and Banks.
- 1928: A Tabulator that can subtract, Columbia University, 80-column card
- The first IBM tabulator that could subtract, the IBM Type IV tabulator. IBM begins its collaboration with Benjamin Wood, Wallace John EckertWallace John EckertWallace John Eckert was an American astronomer, who directed the Thomas J. Watson Astronomical Computing Bureau at Columbia University which evolved into the research division of IBM.-Life:...
and the Statistical Bureau at Columbia University. The IBM 80-column punched card is introduced. Its rectangular holes are patented, ending vendor compatibility (of the prior 45 column card; Remington Rand would soon introduce a 90 column card). - 1931: The first IBM punched card machine that could multiply, IBMs first alphabetical accounting machine
- The IBM 600 Multiplying Punch. IBMs first alphabetical accounting machine - although not a complete alphabet, the Alphabetic Tabulator Model B was quickly followed by the full alphabet ATC.
- 1931: Super Computing Machine
- The term Super Computing Machine is used by the New York WorldNew York WorldThe New York World was a newspaper published in New York City from 1860 until 1931. The paper played a major role in the history of American newspapers...
newspaper to describe the Columbia Difference Tabulator, a one-of-a-kind special purpose tabulator-based machine made for the Columbia Statistical Bureau, a machine so massive it was nicknamed PackardPackardPackard was an American luxury-type automobile marque built by the Packard Motor Car Company of Detroit, Michigan, and later by the Studebaker-Packard Corporation of South Bend, Indiana...
. The Packard attracted users from across the country: “the Carnegie Foundation, Yale, Pittsburgh, Chicago, Ohio State, Harvard, California and Princeton.” - 1933: 40-hour week
- IBM introduces the 40-hour week for both manufacturing and office locations.
- 1933: Electromatic Typewriter Co.IBM Electromatic typewriterThe IBM Electromatic typewriter was the first electric typewriter to enjoy long-term commercial success. Unlike the later IBM Selectric typewriter, this typewriter model used a conventional moving carriage and typebar mechanism....
purchased - Purchased primarily to get important patents safely into IBM hands, electric typewriters would become one of IBM's most widely known products. By 1958 IBM was deriving 8% of its revenue from the sale of electric typewriters.
- 1934 – Group life insurance
- IBM creates a group life insuranceLife insuranceLife insurance is a contract between an insurance policy holder and an insurer, where the insurer promises to pay a designated beneficiary a sum of money upon the death of the insured person. Depending on the contract, other events such as terminal illness or critical illness may also trigger...
plan for all employees with at least one year of service. - 1934: Elimination of piece workPiece workPiece work is any type of employment in which a worker is paid a fixed "piece rate" for each unit produced or action performed regardless of time...
- Watson, Sr., places IBM's factory employees on salary, eliminating piece work and providing employees and their families with an added degree of economic stability.
- 1934: IBM 801
- The IBM 801IBM 801The 801 was an experimental minicomputer designed by IBM. The resulting architecture was used in various roles in IBM until the 1980s. The 801 was started as a pure research project led by John Cocke in October 1975 at the Thomas J. Watson Research Center. The name 801 comes from the building the...
Bank Proof machine to clear bank checks is introduced. A new type of proof machine, the 801 lists and separates checks, endorses them, and records totals. It dramatically improves the efficiency of the check clearing process. - 1935: Social Security Administration
- During the Great Depression, IBM keeps its factories producing new machines even while demand is slack. When Congress passes the Social Security Act in 1935, IBM – with its overstocked inventory – is consequently positioned to win the landmark government contract, which is called "the biggest accounting operation of all time.
- 1937: Scientific computing
- The tabulating machine data center established at Columbia University, dedicated to scientific research, is named the Thomas J. Watson Astronomical Computing Bureau.
- 1937: The first collator, the IBM 077 Collator
- 1937: IBM produces 5 to 10 million punched cards every day
- By 1937... IBM had 32 presses at work in Endicott, N.Y., printing, cutting and stacking five to 10 million punched cards every day.
- 1937: IBM 805 test scoring machine
- IBM's Rey Johnson designs the IBM 805 Test Scoring MachineIBM 805 Test Scoring MachineThe IBM 805 Test Scoring Machine was a machine sold by IBM beginning in 1937. The device scored answer sheets marked with special "mark sense" pencils. The machine was developed from a prototype developed by Reynold Johnson, a school teacher who later became an IBM engineer...
to greatly speed the process of test scoring. The 805's innovative pencil-mark sensingMark senseElectrographic is a term used for punched card and page scanning technology that allowed cards or pages marked with a pencil to be processed or converted into punched cards. That technology was sold by IBM, its developer, under the term mark sense...
technology gives rise to the ubiquitous phrase, “Please completely fill in the oval”. - 1937: Berlin conference
- As president of the International Chamber of CommerceInternational Chamber of CommerceThe International Chamber of Commerce is the largest, most representative business organization in the world. Its hundreds of thousands of member companies in over 130 countries have interests spanning every sector of private enterprise....
, Watson Sr., presides over the ICCInternational Chamber of CommerceThe International Chamber of Commerce is the largest, most representative business organization in the world. Its hundreds of thousands of member companies in over 130 countries have interests spanning every sector of private enterprise....
's 9th Congress in Berlin. While there he accepts a Merit Cross of the German Eagle with StarOrder of the German EagleThe Order of the German Eagle was an award of the German Nazi regime, predominantly to foreign diplomats. The Order was instituted on 1 May 1937 by Adolf Hitler.It ceased to be awarded following the collapse of the Nazi Government at the end of World War II....
medal from the Nazi government honoring his activities on behalf of world peace and international trade. (he later returned it)
- 1937: Paid holidays, paid vacation
- “IBM announces a policy of paying employees for six annual holidays and becomes one of the first U.S. companies to grant holiday pay. Paid vacations also begin.”
- 1938: New headquarters
- When IBM dedicates its new World Headquarters on 590 Madison Avenue, New York, New York, in January 1938, the company has operations in 79 countries.
1939-1945: World War II
| Year | Gross income (in $m) | Employees |
|---|---|---|
| 1940 | 45 | 12,656 |
| 1945 | 138 | 18,257 |
M1 Carbine
The M1 carbine is a lightweight, easy to use semi-automatic carbine that became a standard firearm for the U.S. military during World War II, the Korean War and the Vietnam War, and was produced in several variants. It was widely used by U.S...
, 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
Los Alamos National Laboratory
Los Alamos National Laboratory is a United States Department of Energy national laboratory, managed and operated by Los Alamos National Security , located in Los Alamos, New Mexico...
during the Manhattan Project
Manhattan Project
The Manhattan Project was a research and development program, led by the United States with participation from the United Kingdom and Canada, that produced the first atomic bomb during World War II. From 1942 to 1946, the project was under the direction of Major General Leslie Groves of the US Army...
for developing the first atomic bombs
Nuclear weapon
A nuclear weapon is an explosive device that derives its destructive force from nuclear reactions, either fission or a combination of fission and fusion. Both reactions release vast quantities of energy from relatively small amounts of matter. The first fission bomb test released the same amount...
. During the War, IBM also built the Automatic Sequence Controlled Calculator, also known as the Harvard Mark I
Harvard Mark I
The IBM Automatic Sequence Controlled Calculator , called the Mark I by Harvard University, was an electro-mechanical computer....
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
Endicott, New York
Endicott is a village in Broome County, New York, United States. The population was 13,038 at the 2000 census. It is part of the Binghamton Metropolitan Statistical Area. The village is named after Henry B...
, 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
Silicon Valley
Silicon Valley is a term which refers to the southern part of the San Francisco Bay Area in Northern California in the United States. The region is home to many of the world's largest technology corporations...
.
Many international subsidiaries of IBM in Axis territory were legally cut off from IBM starting in Dec 1941 after Pearl Harbor
Pearl Harbor
Pearl Harbor, known to Hawaiians as Puuloa, is a lagoon harbor on the island of Oahu, Hawaii, west of Honolulu. Much of the harbor and surrounding lands is a United States Navy deep-water naval base. It is also the headquarters of the U.S. Pacific Fleet...
. Several were involved in the holocaust, both before Dec 1941 and after. After the war these subsidiaries were fused back into IBM. A book published in 2001, IBM and the Holocaust
IBM and the Holocaust
IBM and the Holocaust is a book by investigative journalist Edwin Black which details the business dealings of the American-based multinational corporation International Business Machines and its German and other European subsidiaries with the government of Adolf Hitler during the 1930s and the...
, as well as a dismissed lawsuit against the company treats the use of Hollerith equipment by the Nazi government and IBM's role. In a "IBM Statement on Nazi-era Book and Lawsuit," IBM responded in February 2001 that
It has been known for decades that the Nazis used Hollerith equipment and that IBM's German subsidiary during the 1930s – Deutsche Hollerith Maschinen GmbH (Dehomag) – supplied Hollerith equipment. 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. It is also widely known that Thomas J. Watson, Sr., received and subsequently repudiated and returned a medal presented to him by the German government for his role in global economic relations. These well-known facts appear to be the primary underpinning for these recent allegations.
Key events
- 1942: Training for the disabled
- IBM launches a program to train and employ disabled people in TopekaTopeka, KansasTopeka |Kansa]]: Tó Pee Kuh) is the capital city of the U.S. state of Kansas and the county seat of Shawnee County. It is situated along the Kansas River in the central part of Shawnee County, located in northeast Kansas, in the Central United States. As of the 2010 census, the city population was...
, Kansas. The next year classes begin in New York City, and soon the company is asked to join the President's Committee for Employment of the Handicapped. - 1943: Equal opportunity
- IBM appoints its first female vice president.
- 1944: ASCC
- IBM introduces the world's first large-scale calculating computer, the Automatic Sequence Control Calculator (ASCCHarvard Mark IThe IBM Automatic Sequence Controlled Calculator , called the Mark I by Harvard University, was an electro-mechanical computer....
). Designed in collaboration with Harvard University, the ASCC, also known as the Mark I, uses electromechanical relays to solve addition problems in less than a second, multiplication in six seconds, and division in 12 seconds. - 1944: United Negro College Fund
- IBM President Thomas J. Watson, Sr., joins the Advisory Committee of the United Negro College FundUnited Negro College FundThe United Negro College Fund is an American philanthropic organization that fundraises college tuition money for black students and general scholarship funds for 39 private historically black colleges and universities. The UNCF was incorporated on April 25, 1944 by Frederick D. Patterson , Mary...
(UNCF), and IBM contributes to the UNCF's fund-raising efforts. - 1945: IBM's first research lab
- IBM's first research facility, the Watson Scientific Computing Laboratory, opens in a renovated fraternity house near Columbia University in Manhattan. In 1961, IBM moves its research headquarters to the T.J. Watson Research Center in Yorktown Heights, New York.
1946–1960: Postwar recovery, rise of business computing, space exploration, the Cold War
| Year | Gross income (in $m) | Employees |
|---|---|---|
| 1950 | 266 | 30,261 |
| 1955 | 696 | 56,297 |
| 1960 | 1,810 | 104,241 |
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 passing 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
Civil Rights Act of 1964
The Civil Rights Act of 1964 was a landmark piece of legislation in the United States that outlawed major forms of discrimination against African Americans and women, including racial segregation...
.
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. And he ended a raging internal debate about computer architecture with 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
Semi Automatic Ground Environment
The Semi-Automatic Ground Environment was an automated control system for tracking and intercepting enemy bomber aircraft used by NORAD from the late 1950s into the 1980s...
interceptor
Interceptor aircraft
An interceptor aircraft is a type of fighter aircraft designed specifically to prevent missions of enemy aircraft, particularly bombers and reconnaissance aircraft. Interceptors generally rely on high speed and powerful armament in order to complete their mission as quickly as possible and set up...
early detection air defense system.
Massachusetts Institute of Technology
The Massachusetts Institute of Technology is a private research university located in Cambridge, Massachusetts. MIT has five schools and one college, containing a total of 32 academic departments, with a strong emphasis on scientific and technological education and research.Founded in 1861 in...
on the first real-time, digital computer. This included working on many other computer technology advancements such as magnetic core memory
Magnetic core memory
Magnetic-core memory was the predominant form of random-access computer memory for 20 years . It uses tiny magnetic toroids , the cores, through which wires are threaded to write and read information. Each core represents one bit of information...
, a large real-time operating system, an integrated video display, light gun
Light gun
A light gun is a pointing device for computers and a control device for arcade and video games.Modern screen-based light guns work by building a sensor into the gun itself, and the on-screen target emit light rather than the gun...
s, the first effective algebraic computer language, analog-to-digital and digital-to-analog conversion techniques, digital data transmission over telephone lines
Modem
A modem is a device that modulates an analog carrier signal to encode digital information, and also demodulates such a carrier signal to decode the transmitted information. The goal is to produce a signal that can be transmitted easily and decoded to reproduce the original digital data...
, duplexing, multiprocessing
Multiprocessing
Multiprocessing is the use of two or more central processing units within a single computer system. The term also refers to the ability of a system to support more than one processor and/or the ability to allocate tasks between them...
, and geographically distributed networks
Computer network
A computer network, often simply referred to as a network, is a collection of hardware components and computers interconnected by communication channels that allow sharing of resources and information....
). 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 the 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
RAND
RAND Corporation is a nonprofit global policy think tank first formed to offer research and analysis to the United States armed forces by Douglas Aircraft Company. It is currently financed by the U.S. government and private endowment, corporations including the healthcare industry, universities...
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
- 1946: IBM 603IBM 603The IBM 603 Electronic Multiplier was the first mass-produced commercial electronic calculating device; it used vacuum tubes to perform multiplication and addition. The IBM 603 was adapted as the arithmetic unit in the IBM Selective Sequence Electronic Calculator. It was designed by James W. Bryce,...
- IBM announces the IBM 603 Electronic Multiplier, the first commercial product to incorporate electronic arithmetic circuits. The 603 used vacuum tubes to perform multiplication far more rapidly than earlier electromechanical devices. It had begun its development as part of a program to make a "super calculator" that would perform faster than 1944's IBM ASCC by using electronics.
- 1946: Chinese character typewriter
- IBM introduces an electric Chinese ideographic character typewriter, which allowed an experienced user to type at a rate of 40 to 45 Chinese words a minute. The machine utilizes a cylinder on which 5,400 ideographic type faces are engraved.
- 1946: First black salesman
- IBM hires its first Black salesman, 18 years before the Civil Rights Act of 1964Civil Rights Act of 1964The Civil Rights Act of 1964 was a landmark piece of legislation in the United States that outlawed major forms of discrimination against African Americans and women, including racial segregation...
. - 1948: IBM SSEC
- IBM's first large-scale digital calculating machine, the Selective Sequence Electronic Calculator, is announced. The SSEC is the first computer that can modify a stored program, and featured 12,000 vacuum tubeVacuum tubeIn electronics, a vacuum tube, electron tube , or thermionic valve , reduced to simply "tube" or "valve" in everyday parlance, is a device that relies on the flow of electric current through a vacuum...
s and 21,000 electromechanical relays. - 1950s: Space exploration
- From developing ballistics tables during World War II to the design and development of intercontinental missiles to the launching and tracking of satellites to manned lunar and shuttle space flights, IBM has been a contractor to NASA and the aerospace industry.
- 1952: IBM 701IBM 701The IBM 701, known as the Defense Calculator while in development, was announced to the public on April 29, 1952, and was IBM’s first commercial scientific computer...
- IBM throws its hat into the computer business ring by introducing the 701, its first large-scale electronic computer to be manufactured in quantity. The 701, IBM President Thomas J. Watson, Jr., later recalled, is "the machine that carried us into the electronics business."
- 1952: Magnetic tape vacuum column
- IBM introduces the magnetic tape drive vacuum column, making it possible for fragile magnetic tape to become a viable data storage medium. The use of the vacuum column in the IBM 701 system signals the beginning of the era of magnetic storage, as the technology becomes widely adopted throughout the industry.
- 1952: First California research lab
- IBM opens its first West Coast lab in San Jose, California: the area that decades later will come to be known as "Silicon ValleySilicon ValleySilicon Valley is a term which refers to the southern part of the San Francisco Bay Area in Northern California in the United States. The region is home to many of the world's largest technology corporations...
." Within four years, the lab begins to make its mark by inventing the hard disk drive. - 1953: Equal opportunity policy letter
- Thomas J. Watson, Jr., publishes the company's first written equal opportunity policy letter: one year before the U.S. Supreme Court decision in Brown vs. Board of Education and 11 years before the Civil Rights Act of 1964Civil Rights Act of 1964The Civil Rights Act of 1964 was a landmark piece of legislation in the United States that outlawed major forms of discrimination against African Americans and women, including racial segregation...
. - 1953: IBM 650IBM 650The IBM 650 was one of IBM’s early computers, and the world’s first mass-produced computer. It was announced in 1953, and over 2000 systems were produced between the first shipment in 1954 and its final manufacture in 1962...
- IBM announces the IBM 650 Magnetic Drum Calculator, an intermediate size electronic computer, to handle both business and scientific computations. A hit with both universities and businesses, nearly 2,000 IBM 650s are leased by 1962, making it the most popular computer of the 1950s.
- 1954: NORCIBM NORCThe IBM Naval Ordnance Research Calculator was a one-of-a-kind first-generation electronic computer built by IBM for the United States Navy's Bureau of Ordnance. It went into service in December 1954 and was likely the most powerful computer at the time...
- IBM develops and builds the fastest, most powerful electronic computer of its time: the Naval Ordnance Research Computer (NORC): for the U.S. Navy Bureau of OrdnanceBureau of OrdnanceThe Bureau of Ordnance was the U.S. Navy's organization responsible for the procurement, storage, and deployment of all naval ordnance, between the years 1862 and 1959.-History:...
. - 1956: First magnetic Hard disk drive
- IBM introduces the world's first magnetic hard disk for data storage. The IBM 305 RAMAC (Random Access Method of Accounting and Control) offers unprecedented performance by permitting random access to any of the million characters distributed over both sides of 50 two-foot-diameter disks. Produced in California, IBM's first hard disk stored about 2,000 bits of data per square inch and cost about $10,000 per megabyte. By 1997, the cost of storing a megabyte had dropped to around ten cents.
- 1956: Consent decree
- The United States Justice Department enters a consent decree against IBM in 1956 to prevent the company from becoming a monopoly in the market for punched-card tabulating and, later, electronic data-processing machines. The decree requires IBM to sell its computers as well as lease them and to service and sell parts for computers that IBM no longer owned.
- 1956: Corporate design
- In the mid-1950s, Thomas J. Watson, Jr., was struck by how poorly IBM was handling corporate design. He hired design consultant Eliot NoyesEliot NoyesEliot Fette Noyes was a Harvard-trained American architect and industrial designer, who worked on projects for IBM, most famously the IBM Selectric typewriter and the IBM Aerospace Research Center in Los Angeles, California...
to oversee the creation of a formal Corporate Design Program, and charged Noyes with creating a consistent, world class look and feel at IBM. Over the next two decades Noyes hired a host of influential architects, designers, and artists to design IBM products, structures, exhibits and graphics. The list of Noyes contacts includes such iconic figures as Eero SaarinenEero SaarinenEero Saarinen was a Finnish American architect and industrial designer of the 20th century famous for varying his style according to the demands of the project: simple, sweeping, arching structural curves or machine-like rationalism.-Biography:Eero Saarinen shared the same birthday as his father,...
, Marcel BreuerMarcel BreuerMarcel Lajos Breuer , was a Hungarian-born modernist, architect and furniture designer of Jewish descent. One of the masters of Modernism, Breuer displayed interest in modular construction and simple forms.- Life and work :Known to his friends and associates as Lajkó, Breuer studied and taught at...
, Mies van der Rohe, John BollesJohn Savage BollesJohn Savage Bolles was an American architect.-Golden Gate International Exposition:John worked with his father, Edward Grosvenor Bolles on the Temple of Religion and The Christian Science Monitor building.-IBM:...
, Paul RandPaul RandPaul Rand Paul Rand Paul Rand (born Peretz Rosenbaum, (August 15, 1914 — November 26, 1996) was an American graphic designer, best known for his corporate logo designs, including the logos for IBM, UPS, Enron, Westinghouse, ABC, and Steve Jobs’ NeXT...
, Isamu NoguchiIsamu Noguchiwas a prominent Japanese American artist and landscape architect whose artistic career spanned six decades, from the 1920s onward. Known for his sculpture and public works, Noguchi also designed stage sets for various Martha Graham productions, and several mass-produced lamps and furniture pieces,...
and Alexander CalderAlexander CalderAlexander Calder was an American sculptor and artist most famous for inventing mobile sculptures. In addition to mobile and stable sculpture, Alexander Calder also created paintings, lithographs, toys, tapestry, jewelry and household objects.-Childhood:Alexander "Sandy" Calder was born in Lawnton,...
. - 1956: First European research lab
- IBM opens its first research lab outside the United States, in the Swiss city of ZurichZürichZurich is the largest city in Switzerland and the capital of the canton of Zurich. It is located in central Switzerland at the northwestern tip of Lake Zurich...
.
- 1956: Changing hands
- Watson Sr., retires and hands IBM to his son, Watson Jr.. Senior passes away soon after.
- 1956: Williamsburg conference
- Watson Jr., gathered some 100 senior IBM executives together for a special three-day meeting in Williamsburg, Virginia. The meeting resulted in a new organizational structure that featured a six-member corporate management committee and delegated more authority to business unit leadership. It was the first major meeting IBM had ever held without Thomas J. Watson Sr., and it marked the emergence of a second generation of IBM leadership.
- 1956: Artificial intelligenceArtificial intelligenceArtificial intelligence is the intelligence of machines and the branch of computer science that aims to create it. AI textbooks define the field as "the study and design of intelligent agents" where an intelligent agent is a system that perceives its environment and takes actions that maximize its...
- Arthur L. SamuelArthur SamuelArthur Lee Samuel was an American pioneer in the field of computer gaming and artificial intelligence. The Samuel Checkers-playing Program appears to be the world's first self-learning program, and as such a very early demonstration of the fundamental concept of artificial intelligence...
of IBM's Poughkeepsie, New York, laboratory programs an IBM 704IBM 704The IBM 704, the first mass-produced computer with floating point arithmetic hardware, was introduced by IBM in 1954. The 704 was significantly improved over the IBM 701 in terms of architecture as well as implementations which were not compatible with its predecessor.Changes from the 701 included...
to play checkers (English draughts) using a method in which the machine can “learn” from its own experience. It is believed to be the first “self-learning” program, a demonstration of the concept of artificial intelligence. - 1957: FORTRAN
- IBM revolutionizes programming with the introduction of FORTRANFortranFortran is a general-purpose, procedural, imperative programming language that is especially suited to numeric computation and scientific computing...
(Formula Translator), which soon becomes the most widely used computer programming language for technical work. FORTRAN is still the basis for many important numerical analysis programs. - 1958: SAGESemi Automatic Ground EnvironmentThe Semi-Automatic Ground Environment was an automated control system for tracking and intercepting enemy bomber aircraft used by NORAD from the late 1950s into the 1980s...
AN/FSQ-7AN/FSQ-7The AN/FSQ-7 was a computer model developed and built in the 1950s by IBM in partnership with the US Air Force. Fifty-two were built and used for command and control functions for the Semi Automatic Ground Environment air-defense system... - The SAGE (Semi-Automatic Ground Environment) AN/FSQ-7 computer is built under contract to MIT's Lincoln Laboratories for the North American Air Defense System.
- 1958: Open Door program
- First implemented by Watson, Sr., in the 1910s, the Open Door was a traditional company practice that granted employees with complaints hearings with senior executives, up to and including Watson, Sr., himself. IBM formalized this practice into policy in 1958 with the creation of the Open Door Program.
- 1959: Speak up!
- A further example of IBM's willingness to solicit and act upon employee feedback, the Speak Up! Program was first created in San Jose.
- 1959: IBM 1401IBM 1401The IBM 1401 was a variable wordlength decimal computer that was announced by IBM on October 5, 1959. The first member of the highly successful IBM 1400 series, it was aimed at replacing electromechanical unit record equipment for processing data stored on punched cards...
- IBM introduces the 1401, the first high-volume, stored-program, core-memory, transistorized computer. Its versatility in running enterprise applications of all kinds helps it become the most popular computer model in the world in the early 1960s.
- 1959: IBM 1403IBM 1403The IBM 1403 line printer was introduced as part of the IBM 1401 computer in 1959 and had an especially long life in the IBM product line. The original model could print 600 lines of text per minute and could skip blank lines at up to 75 inches/second. The standard model had 120 print...
- IBM introduces the 1403 chain printer, which launches the era of high-speed, high-volume impact printing. The 1403 will not be surpassed for print quality until the advent of laser printing in the 1970s.
1960–1968: The System/360 era
| Year | Gross income (in $m) | Employees |
|---|---|---|
| 1955 | 696 | 56,297 |
| 1960 | 1,810 | 104,241 |
| 1965 | 3,750 | 172,445 |
| 1970 | 7,500 | 269,291 |
Just as his father saw the company's future in tabulators rather than scales and clocks, Thomas J. Watson, Jr., foresaw the role computers would play in business, and in less than twenty years he led IBM's transformation from a medium-sized maker of tabulating equipment and typewriters into a corporate giant that was the world's leading computer company. IBM was the largest of the eight major computer companies (with UNIVAC
UNIVAC
UNIVAC is the name of a business unit and division of the Remington Rand company formed by the 1950 purchase of the Eckert-Mauchly Computer Corporation, founded four years earlier by ENIAC inventors J. Presper Eckert and John Mauchly, and the associated line of computers which continues to this day...
, Burroughs, NCR
NCR Corporation
NCR Corporation is an American technology company specializing in kiosk products for the retail, financial, travel, healthcare, food service, entertainment, gaming and public sector industries. Its main products are self-service kiosks, point-of-sale terminals, automated teller machines, check...
, Control Data Corporation
Control Data Corporation
Control Data Corporation was a supercomputer firm. For most of the 1960s, it built the fastest computers in the world by far, only losing that crown in the 1970s after Seymour Cray left the company to found Cray Research, Inc....
, General Electric
General Electric
General Electric Company , or GE, is an American multinational conglomerate corporation incorporated in Schenectady, New York and headquartered in Fairfield, Connecticut, United States...
, RCA
RCA
RCA Corporation, founded as the Radio Corporation of America, was an American electronics company in existence from 1919 to 1986. The RCA trademark is currently owned by the French conglomerate Technicolor SA through RCA Trademark Management S.A., a company owned by Technicolor...
and Honeywell
Honeywell
Honeywell International, Inc. is a major conglomerate company that produces a variety of consumer products, engineering services, and aerospace systems for a wide variety of customers, from private consumers to major corporations and governments....
) through most of the 1960s. People in this business would talk jokingly of "Snow White and the Seven Dwarfs", given the much smaller size of the other companies' computer divisions (IBM produced approximately 70% of all computers in 1964).
Moreover, under Watson, Jr.'s leadership, IBM became one of the world's most admired companies, a legitimate business icon. 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 multi-billion 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. It might not have turned out that way, if Watson hadn’t taken the biggest risk of his career.
On April 7, 1964, IBM introduced the revolutionary System/360, the first large “family” of computers to use interchangeable software and peripheral equipment. It was a bold departure from IBM's current product line of incompatible machines, each machine “designed as an economical solution to a limited class of customer requirements”.– extensive (819 pp.) treatment of IBM's offerings during this period But Fortune magazine dubbed it “I.B.M.'s $5,000,000,000 Gamble” because there was no guarantee the concept of computer compatibility was going to succeed in the marketplace. If the S/360 failed, IBM's existing computer product line would be rapidly outpaced by competitors. But in order for it to succeed, it would have to cannibalize IBM's existing, revenue-producing computer product lines – current customers would have to be convinced to migrate from their current IBM systems to this new, unproven system. Both scenarios were fraught with risk. So, when he committed to developing the System/360, Watson, Jr., like his father 30 years before, was literally betting the company. And, like it did for his father, Watson Jr.'s bet paid off, and then some. Within two years, the System/360 became the dominant mainframe computer in the marketplace, so dominant that its architecture became a de facto industry standard, even to the present day. The IBM mainframe
IBM mainframe
IBM mainframes are large computer systems produced by IBM from 1952 to the present. During the 1960s and 1970s, the term mainframe computer was almost synonymous with IBM products due to their marketshare...
that seized market share in the 1960s is the direct ancestor of today's IBM System z10.
Riding the crest of the S/360 compatibility wave, IBM cemented its leadership position in the computer industry throughout the 1960s. By the end of the decade, the Seven Dwarfs were forced to reconsider their place in the computer industry. Most of those companies are now long gone as IBM competitors, except for Unisys
Unisys
Unisys Corporation , headquartered in Blue Bell, Pennsylvania, United States, and incorporated in Delaware, is a long established business whose core products now involves computing and networking.-History:...
, which is the result of multiple mergers that included Sperry Rand, UNIVAC and Burroughs, and General Electric
General Electric
General Electric Company , or GE, is an American multinational conglomerate corporation incorporated in Schenectady, New York and headquartered in Fairfield, Connecticut, United States...
, which has re-entered the business in recent years. In 1970, GE sold most of its computer business to Honeywell and in 1971, RCA sold its computing division to Sperry Rand
Sperry Corporation
Sperry Corporation was a major American equipment and electronics company whose existence spanned more than seven decades of the twentieth century...
. With only Burroughs, UNIVAC, NCR
NCR Corporation
NCR Corporation is an American technology company specializing in kiosk products for the retail, financial, travel, healthcare, food service, entertainment, gaming and public sector industries. Its main products are self-service kiosks, point-of-sale terminals, automated teller machines, check...
, Control Data, and Honeywell producing mainframes, people then talked of IBM and the BUNCH
BUNCH
The group of mainframe computer competitors to IBM in the 1970s became known as the BUNCH: Burroughs, UNIVAC, NCR, Control Data Corporation, and Honeywell...
. NCR and Honeywell later dropped out of the general mainframe and mini sector and concentrated on lucrative specialized markets.
Key events
- 1961: IBM 7030 Stretch
IBM delivers its first 7030 Stretch supercomputer. Stretch falls short of its original design objectives, and is not a commercial success. But it is a visionary product that pioneers numerous revolutionary computing technologies which are soon widely adopted by the computer industry.- 1961: Thomas J. Watson Research CenterThomas J. Watson Research CenterThe Thomas J. Watson Research Center is the headquarters for the IBM Research Division.The center is on three sites, with the main laboratory in Yorktown Heights, New York, 38 miles north of New York City, a building in Hawthorne, New York, and offices in Cambridge, Massachusetts.- Overview :The...
IBM moves its research headquarters from Manhattan to Westchester County, NY, opening the Thomas J. Watson Research Center which remains IBM's largest research facility, centering on semiconductors, computer science, physical science and mathematics.- 1961: IBM Selectric typewriterIBM Selectric typewriterThe IBM Selectric typewriter was a highly successful model line of electric typewriters introduced by IBM on July 31, 1961.Instead of the "basket" of individual typebars that swung up to strike the ribbon and page in a traditional typewriter, the Selectric had a type element that rotated and...
IBM introduces the Selectric typewriter product line. Later Selectric models feature memory, giving rise to the concepts of word processing and desktop publishing. The machine won numerous awards for its design and functionality. Selectrics and their descendants eventually captured 75 percent of the United States market for electric typewriters used in business. IBM replaced the Selectric line with the IBM Wheelwriter in 1984 and transferred its typewriter business to the newly-formed LexmarkLexmarkLexmark International, Inc. is an American corporation which develops and manufactures printing and imaging products, including laser and inkjet printers, multifunction products, printing supplies, and services for business and individual consumers...
in 1991.- 1961: Report Program Generator
IBM offers its Report Program Generator, an application that allows IBM 1401 users to produce reports. This capability was widely adopted throughout the industry, becoming a feature offered in subsequent generations of computers. It played an important role in the successful introduction of computers into small businesses.- 1962: Basic beliefs
Drawing on established IBM policies, Thomas J. Watson, Jr., codifies three IBM basic beliefs: respect for the individual, customer service, and excellence.- 1962: SABRESabre (computer system)Sabre Global Distribution System , owned by Sabre Holdings, is used by more than 55,000 travel agencies around the world with more than 400 airlines, 88,000 hotels, 24 car rental brands, and 13 cruise lines...
Two IBM 7090IBM 7090The IBM 7090 was a second-generation transistorized version of the earlier IBM 709 vacuum tube mainframe computers and was designed for "large-scale scientific and technological applications". The 7090 was the third member of the IBM 700/7000 series scientific computers. The first 7090 installation...
mainframes formed the backbone of the SABRE reservation system for American Airlines. As the first airline reservation system to work live over phone lines, SABRE linked high speed computers and data communications to handle seat inventory and passenger records.- 1964: IBM System/360
In the most important product announcement in company history to date, IBM introduces the IBM System/360: a new concept in computers which creates a "family" of small to large computers, incorporating IBM Solid Logic Technology (SLT) microelectronics and using the same programming instructions. The concept of a compatible "family" of computers transforms the industry.- 1964: Word processing
IBM introduces the IBM Magnetic Tape Selectric TypewriterIBM Selectric typewriterThe IBM Selectric typewriter was a highly successful model line of electric typewriters introduced by IBM on July 31, 1961.Instead of the "basket" of individual typebars that swung up to strike the ribbon and page in a traditional typewriter, the Selectric had a type element that rotated and...
, a product which pioneered the application of magnetic recording devices to typewriting, and gave rise to desktop word processing. Referred to then as "power typing," the feature of revising stored text improved office efficiency by allowing typists to type at "rough draft" speed without the pressure of worrying about mistakes.- 1964: New corporate headquarters
IBM moves its corporate headquarters from New York City to Armonk, New York.- 1965: Gemini space flights
A 59-pound onboard IBM guidance computer is used on all Gemini space flights, including the first spaceship rendezvous. IBM scientists complete the most precise computation of the Moon's orbit and develop a fabrication technique to connect hundreds of circuits on a silicon wafer.- 1965: New York World's Fair1964 New York World's FairThe 1964/1965 New York World's Fair was the third major world's fair to be held in New York City. Hailing itself as a "universal and international" exposition, the fair's theme was "Peace Through Understanding," dedicated to "Man's Achievement on a Shrinking Globe in an Expanding Universe";...
The IBM Pavilion at the New York World's Fair closes, having hosted more than 10 million visitors during its two-year existence.- 1966: Dynamic Random-Access MemoryDramDram or DRAM may refer to:As a unit of measure:* Dram , an imperial unit of mass and volume* Armenian dram, a monetary unit* Dirham, a unit of currency in several Arab nationsOther uses:...
(DRAM)
IBM invents one-transistor DRAM cells which permit major increases in memory capacity. DRAM chips become the mainstay of modern computer memory systems: the “crude oil” of the information age is born.- 1966: IBM System/4 Pi
- IBM ships its first System/4Pi computer, designed to meet U.S. Department of DefenseUnited States Department of DefenseThe United States Department of Defense is the U.S...
and NASA requirements. More than 9000 units of the 4Pi systems are delivered by the 1980s for use in the air, sea, and space. - 1967: Fractal geometry
IBM researcher Benoit MandelbrotBenoît MandelbrotBenoît B. Mandelbrot was a French American mathematician. Born in Poland, he moved to France with his family when he was a child...
conceives fractal geometry — the concept that seemingly irregular shapes can have identical structure at all scales. This new geometry makes it possible to mathematically describe the kinds of irregularities existing in nature. The concept greatly impacts the fields of engineering, economics, metallurgy, art, health sciences, and computer graphics and animation.- 1968: IBM Customer Information Control SystemCICSCustomer Information Control System is a transaction server that runs primarily on IBM mainframe systems under z/OS and z/VSE.CICS is a transaction manager designed for rapid, high-volume online processing. This processing is mostly interactive , but background transactions are possible...
(CICS)
IBM introduces the CICS transaction monitor. CICS remains to this day the industry's most popular transactions monitor.
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 JusticeUnited States Department of Justice
The United States Department of Justice , is the United States federal executive department responsible for the enforcement of the law and administration of justice, equivalent to the justice or interior ministries of other countries.The Department is led by the Attorney General, who is nominated...
, which filed a complaint for the case U.S. v. IBM in the United States District Court for the Southern District of New York
United States District Court for the Southern District of New York
The United States District Court for the Southern District of New York is a federal district court. Appeals from the Southern District of New York are taken to the United States Court of Appeals for the Second Circuit The United States District Court for the Southern District of New York (in case...
, on January 17, 1969. The suit alleged that IBM violated the Section 2 of the Sherman Act by monopolizing
Monopoly
A monopoly exists when a specific person or enterprise is the only supplier of a particular commodity...
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
Value proposition
A value proposition is a promise of value to be delivered and a belief from the customer of value that will be experienced. A value proposition can apply to an entire organization, or parts thereof, or customer accounts, or products or services....
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
- 1969: Antitrust
The United States government launches what would become a 13-year-long antitrustAntitrustThe United States antitrust law is a body of laws that prohibits anti-competitive behavior and unfair business practices. Antitrust laws are intended to encourage competition in the marketplace. These competition laws make illegal certain practices deemed to hurt businesses or consumers or both,...
suit against IBM. The suit becomes a draining war of attrition, and is eventually dropped in 1982.- 1969: Unbundling
IBM adopts a new marketing policy that charges separately for most systems engineering activities, future computer programs, and customer education courses. This "unbundling" gives rise to a multibillion-dollar software and services industry.- 1969: Magnetic stripe cards
- The American National Standards InstituteAmerican National Standards InstituteThe American National Standards Institute is a private non-profit organization that oversees the development of voluntary consensus standards for products, services, processes, systems, and personnel in the United States. The organization also coordinates U.S. standards with international...
makes the IBM-developed magnetic stripe technology a national standard, jump starting the credit cardCredit cardA credit card is a small plastic card issued to users as a system of payment. It allows its holder to buy goods and services based on the holder's promise to pay for these goods and services...
industry. Two years later, the International Organization for StandardizationInternational Organization for StandardizationThe International Organization for Standardization , widely known as ISO, is an international standard-setting body composed of representatives from various national standards organizations. Founded on February 23, 1947, the organization promulgates worldwide proprietary, industrial and commercial...
adopts the IBM design, making it a world standard. - 1969: First moon landing
- IBM personnel and computers help NASA land the first men on the Moon.
1970–1974: The challenges of success
| Year | Gross income (in $m) | Employees |
|---|---|---|
| 1965 | 3,750 | 172,445 |
| 1970 | 7,500 | 269,291 |
| 1975 | 14,430 | 288,647 |
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 suffer two in two years. T. Vincent Learson, a hard-driving IBM executive, succeeded Watson as CEO and then quickly retired himself upon reaching the mandatory retirement age of 60 in 1973. Following Learson in the CEO office was Frank T. Cary, a 26-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. But 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
IBM Future Systems project
The Future Systems project was a research and development project undertaken in IBM in the early '70s, aiming to develop a revolutionary line of computer products, including new software models which would simplify software development by exploiting modern powerful hardware.- Background and goals...
. 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
Floppy disk
A floppy disk is a disk storage medium composed of a disk of thin and flexible magnetic storage medium, sealed in a rectangular plastic carrier lined with fabric that removes dust particles...
, 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
IBM 5100
The IBM 5100 Portable Computer was a portable computer introduced in September 1975, six years before the IBM PC. It was the evolution of a prototype called the SCAMP that was developed at the IBM Palo Alto Scientific Center in 1973. In January 1978 IBM announced the IBM 5110, its larger cousin,...
, 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 the 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
Systems Network Architecture
Systems Network Architecture is IBM's proprietary networking architecture created in 1974. It is a complete protocol stack for interconnecting computers and their resources. SNA describes the protocol and is, in itself, not actually a program...
(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
Selenium
Selenium is a chemical element with atomic number 34, chemical symbol Se, and an atomic mass of 78.96. It is a nonmetal, whose properties are intermediate between those of adjacent chalcogen elements sulfur and tellurium...
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, however, are now widely-used in office 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
Honeywell v. Sperry Rand
Honeywell, Inc. v. Mc'Donalds., et al. 180 USPQ 673 was a landmark U.S. federal court case that in April 1973 invalidated the 1964 patent for the ENIAC, the world's first general-purpose electronic digital computer, thus putting the invention of the electronic digital computer into the public...
U.S. federal court case was concluded in April 1973. IBM was ruled to have created a monopoly via its 1956 patent-sharing agreement with Sperry-Rand, a decision that invalidated the 1964 patent for the ENIAC, the world's first general-purpose electronic digital computer, thus putting the invention of the electronic digital computer into the public domain.
Key events
- 1970: Relational databases
IBM introduces relational databaseRelational databaseA relational database is a database that conforms to relational model theory. The software used in a relational database is called a relational database management system . Colloquial use of the term "relational database" may refer to the RDBMS software, or the relational database itself...
s which call for information stored within a computer to be arranged in easy-to-interpret tables to access and manage large amounts of data. Today, nearly all database structures are based on the IBM concept of relational databases.- 1970: Office copiers
IBM introduces its first of three models of xerographic copiers. These machines mark the first commercial use of organic photoconductors which since grew to become the dominant technology.- 1971: Speech recognition
IBM achieves its first operational application of speech recognitionSpeech recognitionSpeech recognition converts spoken words to text. The term "voice recognition" is sometimes used to refer to recognition systems that must be trained to a particular speaker—as is the case for most desktop recognition software...
, which enables engineers servicing equipment to talk to and receive spoken answers from a computer that can recognize about 5,000 words. Today, IBM's ViaVoiceViaVoiceIBM ViaVoice is a range of language-specific continuous speech recognition software products offered by IBM. The current version is designed primarily for use in embedded devices.-Editions:...
recognition technology has a vocabulary of 64,000 words and a 260,000-word back-up dictionary.- 1971: Floppy disk
IBM introduces the floppy diskFloppy diskA floppy disk is a disk storage medium composed of a disk of thin and flexible magnetic storage medium, sealed in a rectangular plastic carrier lined with fabric that removes dust particles...
. Convenient and highly portable, the floppy becomes a personal computer industry standard for storing data.- 1973: Winchester storage technology
- The IBM 3340 disk unit—known as “Winchester” after IBM's internal project name—is introduced, an advanced technology which more than doubled the information density on disk surfaces. It featured a smaller, lighter read/write head that was designed to ride on an air film only 18 millionths of an inch thick. Winchester technology was adopted by the industry and used for the next two decades.
- 1973: Nobel Prize
- Dr. Leo Esaki, an IBM Fellow who joined the company in 1960, shares the 1973 Nobel PrizeNobel PrizeThe Nobel Prizes are annual international awards bestowed by Scandinavian committees in recognition of cultural and scientific advances. The will of the Swedish chemist Alfred Nobel, the inventor of dynamite, established the prizes in 1895...
in physics for his 1958 discovery of the phenomenon of electron tunneling. His discovery of the semiconductor junction called the Esaki diode finds wide use in electronics applications. More importantly, his work in the field of semiconductors lays a foundation for further exploration in the electronic transport of solids. - 1974: SNA
- IBM announces Systems Network ArchitectureSystems Network ArchitectureSystems Network Architecture is IBM's proprietary networking architecture created in 1974. It is a complete protocol stack for interconnecting computers and their resources. SNA describes the protocol and is, in itself, not actually a program...
(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 becomes the most widely used system for data processing until more open architecture standards were approved in the 1990s.
1975–1992: Information revolution, rise of software and PC industries
| Year | Gross income (in $m) | Employees |
|---|---|---|
| 1975 | 14,430 | 288,647 |
| 1980 | 26,210 | 341,279 |
| 1985 | 50,050 | 405,535 |
| 1990 | 69,010 | 373,816 |
| 1995 | 71,940 | 225,347 |
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.
Philip Don Estridge
Philip Donald Estridge , known as Don Estridge,led development of the original IBM Personal Computer , and thus is known as "father of the IBM PC"...
at the IBM Entry Systems Division in Boca Raton
Boca Raton, Florida
Boca Raton is a city in Palm Beach County, Florida, USA, incorporated in May 1925. In the 2000 census, the city had a total population of 74,764; the 2006 population recorded by the U.S. Census Bureau was 86,396. However, the majority of the people under the postal address of Boca Raton, about...
, Florida. With a team known as "Project Chess," they built the IBM PC
IBM PC
The IBM Personal Computer, commonly known as the IBM PC, is the original version and progenitor of the IBM PC compatible hardware platform. It is IBM model number 5150, and was introduced on August 12, 1981...
, 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
VisiCalc
VisiCalc was the first spreadsheet program available for personal computers. It is often considered the application that turned the microcomputer from a hobby for computer enthusiasts into a serious business tool...
spreadsheet, the killer app
Killer application
A killer application , in the jargon of marketing teams, has been used to refer to any computer program that is so necessary or desirable that it proves the core value of some larger technology, such as computer hardware, gaming console, software, or an operating system...
, had been surpassed by a far more powerful and stable product, Lotus 1-2-3
Lotus 1-2-3
Lotus 1-2-3 is a spreadsheet program from Lotus Software . It was the IBM PC's first "killer application"; its huge popularity in the mid-1980s contributed significantly to the success of the IBM PC in the corporate environment.-Beginnings:...
.
Microsoft
Microsoft Corporation is an American public multinational corporation headquartered in Redmond, Washington, USA that develops, manufactures, licenses, and supports a wide range of products and services predominantly related to computing through its various product divisions...
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 of 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 that 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. By the late 1980s 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
Novell
Novell, Inc. is a multinational software and services company. It is a wholly owned subsidiary of The Attachmate Group. It specializes in network operating systems, such as Novell NetWare; systems management solutions, such as Novell ZENworks; and collaboration solutions, such as Novell Groupwise...
in networking, HP in printers, Seagate
Seagate Technology
Seagate Technology is one of the world's largest manufacturers of hard disk drives. Incorporated in 1978 as Shugart Technology, Seagate is currently incorporated in Dublin, Ireland and has its principal executive offices in Scotts Valley, California, United States.-1970s:On November 1, 1979...
in disk drives and Oracle Corporation
Oracle Corporation
Oracle Corporation is an American multinational computer technology corporation that specializes in developing and marketing hardware systems and enterprise software products – particularly database management systems...
in database software. IBM's dominance in personal computers was challenged by the likes of Compaq
Compaq
Compaq Computer Corporation is a personal computer company founded in 1982. Once the largest supplier of personal computing systems in the world, Compaq existed as an independent corporation until 2002, when it was acquired for US$25 billion by Hewlett-Packard....
and later Dell
Dell
Dell, Inc. is an American multinational information technology corporation based in 1 Dell Way, Round Rock, Texas, United States, that develops, sells and supports computers and related products and services. Bearing the name of its founder, Michael Dell, the company is one of the largest...
. 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..
But these efforts failed to halt the slide. A decade of steady acceptance and widening corporate growth of local area network
Local area network
A local area network is a computer network that interconnects computers in a limited area such as a home, school, computer laboratory, or office building...
ing technology, a trend headed by Novell
Novell
Novell, Inc. is a multinational software and services company. It is a wholly owned subsidiary of The Attachmate Group. It specializes in network operating systems, such as Novell NetWare; systems management solutions, such as Novell ZENworks; and collaboration solutions, such as Novell Groupwise...
Inc. and other vendors, and its logical counterpart, the ensuing decline of mainframe sales, brought about a wake-up call
Wake-up call (service)
A wake-up call is a service provided by most lodging establishments to provide a service similar to alarm clocks via a telephone....
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
- mid 1970s: IBM VNET
- VNET was an international computer networking system deployed in the mid 1970s, providing email and file-transfer for IBM. By September 1979, the network had grown to include 285 mainframe nodes in Europe, Asia and North America.
- 1975: FractalFractalA fractal has been defined as "a rough or fragmented geometric shape that can be split into parts, each of which is a reduced-size copy of the whole," a property called self-similarity...
s - IBM researcher Benoit MandelbrotBenoît MandelbrotBenoît B. Mandelbrot was a French American mathematician. Born in Poland, he moved to France with his family when he was a child...
conceives fractal geometry—the concept that seemingly irregular shapes can have identical structure at all scales. This new geometry makes it possible to describe mathematically the kinds of irregularities existing in nature. Fractals later make a great impact on engineering, economics, metallurgy, art and health sciences, and are also applied in the field of computer graphics and animation. - 1975: IBM 5100IBM 5100The IBM 5100 Portable Computer was a portable computer introduced in September 1975, six years before the IBM PC. It was the evolution of a prototype called the SCAMP that was developed at the IBM Palo Alto Scientific Center in 1973. In January 1978 IBM announced the IBM 5110, its larger cousin,...
Portable computer - IBM introduces the 5100 Portable Computer, a 50 lb. desktop machine that put computer capabilities at the fingertips of engineers, analysts, statisticians, and other problem-solvers. More “luggable” than portable, the 5100 can serve as a terminal for the System/370 and costs from $9000 to $20,000.
- 1976: Space ShuttleSpace ShuttleThe Space Shuttle was a manned orbital rocket and spacecraft system operated by NASA on 135 missions from 1981 to 2011. The system combined rocket launch, orbital spacecraft, and re-entry spaceplane with modular add-ons...
- The Enterprise, the first vehicle in the U.S. Space Shuttle program, makes its debut at Palmdale, California, carrying IBM AP-101IBM AP-101The IBM AP-101 is an avionics computer, used most notably in the U.S. Space Shuttle, but since also in the B-52 and B-1B bombers and the F-15 fighter, among others. When it was designed, it was a high-performance pipelined processor with core memory...
flight computers and special hardware built by IBM. - 1976: Laser printerLaser printerA laser printer is a common type of computer printer that rapidly produces high quality text and graphics on plain paper. As with digital photocopiers and multifunction printers , laser printers employ a xerographic printing process, but differ from analog photocopiers in that the image is produced...
- The first IBM 3800 printer is installed. The 3800 is the first commercial printer to combine laser technology and electrophotography. The technology speeds the printing of bank statements, premium notices, and other high-volume documents, and remains a workhorse for billing and accounts receivable departments.
- 1977: Data Encryption StandardData Encryption StandardThe Data Encryption Standard is a block cipher that uses shared secret encryption. It was selected by the National Bureau of Standards as an official Federal Information Processing Standard for the United States in 1976 and which has subsequently enjoyed widespread use internationally. It is...
- IBM-developed Data Encryption Standard (DES), a cryptographic algorithm, is adopted by the U.S. National Bureau of Standards as a national standard.
- 1979: Retail checkoutPoint of salePoint of sale or checkout is the location where a transaction occurs...
- IBM develops the Universal Product CodeUniversal Product CodeThe Universal Product Code is a barcode symbology , that is widely used in North America, and in countries including the UK, Australia, and New Zealand for tracking trade items in stores. Its most common form, the UPC-A, consists of 12 numerical digits, which are uniquely assigned to each trade item...
(UPC) in the 1970s as a method for embedding pricing and identification information on individual retail items. In 1979, IBM applies holographic scanner technology in IBM's supermarket checkout station to read the UPC stripes on merchandise, one of the first major commercial uses of holography. IBM's support of the UPC concept helps lead to its widespread acceptance by retail and other industries around the world. - 1979: Thin film recording heads
- Instead of using hand-wound wire structures as coils for inductive elements, IBM researchers substitute thin film "wires" patterned by optical lithography. This leads to higher performance recording heads at reduced cost, and establishes IBM's leadership in "areal density": storing the most data in the least space. The result is higher-capacity and higher-performance disk drives.
- 1979: Overcoming barriers to technology use
- Since 1946, with its announcement of Chinese and Arabic ideographic character typewriters, IBM has worked to overcome cultural and physical barriers to the use of technology. As part of these ongoing efforts, IBM introduces the 3270 Kanji Display TerminalIBM Kanji SystemIBM Kanji System was announced in 1971 to support Japanese language processing on the IBM System/360 computers. It was later enhanced by the support of IBM System/34, IBM 5550 and DOS/V.-General:...
; the System/34 Kanji SystemIBM Kanji SystemIBM Kanji System was announced in 1971 to support Japanese language processing on the IBM System/360 computers. It was later enhanced by the support of IBM System/34, IBM 5550 and DOS/V.-General:...
with an ideographic feature, which processes more than 11,000 Japanese and Chinese characters; and the Audio Typing Unit for sight-impaired typists. - 1980: Thermal conduction modules
- IBM introduces the 3081IBM 3081The IBM Model 3081 Processor Complex was a mainframe computer which was announced November 12, 1980 and withdrawn August 4, 1987. It introduced the System/370 Extended Architecture. It consisted of a 3081 Processor Unit and supporting units; the 3083 and 3084 were in the same family...
processor, the company's most powerful to date, which features Thermal Conduction Modules. In 1990, the Institute of Electrical and Electronics Engineers, Inc., awards its 1990 Corporate Innovation Recognition to IBM for the development of the Multilayer Ceramic Thermal Conduction Module for high performance computers. - 1980: Reduced instruction set computing (RISC) architecture
- IBM successfully builds the first prototype computer employing IBM Fellow John CockeJohn CockeJohn Cocke was an American computer scientist recognized for his large contribution to computer architecture and optimizing compiler design. He is considered by many to be "the father of RISC architecture."...
's RISC architecture. RISC simplified the instructions given to computers, making them faster and more powerful. Today, RISC architecture is the basis of most workstations and widely viewed as the dominant computing architecture. - 1981: IBM PC
- The IBM Personal Computer goes mass market and helps revolutionize the way the world does business. A year later, Time MagazineTime (magazine)Time is an American news magazine. A European edition is published from London. Time Europe covers the Middle East, Africa and, since 2003, Latin America. An Asian edition is based in Hong Kong...
gives its “Person of the YearPerson of the YearPerson of the Year is an annual issue of the United States newsmagazine Time that features and profiles a person, couple, group, idea, place, or machine that "for better or for worse, ...has done the most to influence the events of the year."- History :The tradition of selecting a Man of the Year...
” award to the Personal Computer. - 1981: LASIKLASIKLASIK or Lasik , commonly referred to simply as laser eye surgery, is a type of refractive surgery for correcting myopia, hyperopia, and astigmatism...
surgery - Three IBM scientists invent the ExcimerExcimerAn excimer is a short-lived dimeric or heterodimeric molecule formed from two species, at least one of which is in an electronic excited state. Excimers are often diatomic and are composed of two atoms or molecules that would not bond if both were in the ground state. The lifetime of an excimer is...
laser surgical procedure that later forms the basis of LASIK and PRKPhotorefractive keratectomyPhotorefractive keratectomy and Laser-Assisted Sub-Epithelial Keratectomy are laser eye surgery procedures intended to correct a person's vision, reducing dependency on glasses or contact lenses. The first PRK procedure was performed in 1987 by Dr. Theo Seiler, then at the Free University...
corrective eye surgeries. - 1982: Antitrust suit
- The United States antitrust suit against IBM, filed in 1969, is dismissed as being "without merit."
- 1982: Trellis-coded modulationTrellis modulationIn telecommunication, trellis modulation is a modulation scheme which allows highly efficient transmission of information over band-limited channels such as telephone lines...
- Trellis-coded modulation (TCM) is first used in voice-band modems to send data at higher rates over telephone channels. Today, TCM is applied in a large variety of terrestrial and satellite-based transmission systems as a key technique for achieving faster and more reliable digital transmission.
- 1983: IBM PCjrIBM PCjrThe IBM PCjr was IBM's first attempt to enter the home computer market. The PCjr, IBM model number 4860, retained the IBM PC's 8088 CPU and BIOS interface for compatibility, but various design and implementation decisions led the PCjr to be a commercial failure.- Features :Announced November 1,...
- IBM announces the widely anticipated PCjr., IBM's attempt to enter the home computing marketplace. The product, however, fails to capture the fancy of consumers due to its lack of compatibility with IBM PC software, its higher price point, and its unfortunate ‘chiclet’ keyboard design. IBM terminates the product after 18 months of disappointing sales.
- 1984: IBM 3480 magnetic tape systemIBM 3480 FamilyThe 3480 tape format is a magnetic tape data storage format developed by IBM. The tape is one half inch wide and is packaged in a 4"x5"x1" cartridge. The cartridge contains a single reel; the takeup reel is inside the tape drive....
- The industry's most advanced magnetic tape system, the IBM 3480, introduces a new generation of tape drives that replace the familiar reel of tape with an easy-to-handle cartridge. The 3480 was the industry's first tape system to use “thin-film” recording head technology.
- 1984: Sexual discrimination
- IBM adds sexual orientation to the company's non-discrimination policy. IBM becomes one of the first major companies to make this change.
- 1984: ROLMROLM-Products:The company first produced rugged mil-spec computers which used Data General software. The company divisionalized in 1978 becoming Rolm Mil-Spec Computers and Rolm Telecom...
partnership/acquisition - In 1984 IBM partnered with ROLM Communications based in Santa Clara, CA to develop digital telephone switches to compete directly with Northern Telecom and AT&T. Two of the most popular systems were the large scale PABX coined ROLM CBX and the smaller PABX coined ROLM Redwood. ROLM was later acquired by Siemens AGSiemens AGSiemens AG is a German multinational conglomerate company headquartered in Munich, Germany. It is the largest Europe-based electronics and electrical engineering company....
in 1990-1993. - 1985: RP3
- Sparked in part by national concerns over losing its technology leadership crown in the early 1980s, IBM re-enters the supercomputing field with the RP3 (IBM Research Parallel Processor Prototype). IBM researchers worked with scientists from the New York University's Courant Institute of Mathematical Science to design RP3, an experimental computer consisting of up to 512 processors, linked in parallel and connected to as many as two billion characters of main memory. Over the next five years, IBM provides more than $30 million in products and support to a supercomputer facility established at Cornell University in Ithaca, New York.
- 1985: Token Ring Network
- IBM's Token Ring technology brings a new level of control to local area networks and quickly becomes an industry standard for networks that connect printers, workstations and servers.
- 1986: IBM Almaden Research Center
- IBM Research dedicates the Almaden Research Center in California. Today, Almaden is IBM's second-largest laboratory focused on storage systems, technology and computer science.
- 1986: Nobel Prize: Scanning tunneling microscopyScanning tunneling microscopeA scanning tunneling microscope is an instrument for imaging surfaces at the atomic level. Its development in 1981 earned its inventors, Gerd Binnig and Heinrich Rohrer , the Nobel Prize in Physics in 1986. For an STM, good resolution is considered to be 0.1 nm lateral resolution and...
- IBM FellowIBM FellowAn IBM Fellow is an appointed position at IBM made by IBM’s CEO. Typically only 4 to 9 IBM Fellows are appointed each year, at the annual Corporate Technical Recognition Event in May or June. It is the highest honor a scientist, engineer, or programmer at IBM can achieve.The IBM Fellows program...
s Gerd K. BinnigGerd BinnigGerd Binnig is a German physicist, and a Nobel laureate.He was born in Frankfurt am Main and played in the ruins of the city during his childhood. His family lived partly in Frankfurt and partly in Offenbach am Main, and he attended school in both cities. At the age of 10, he decided to become a...
and Heinrich RohrerHeinrich RohrerHeinrich Rohrer is a Swiss physicist who shared half of the 1986 Nobel Prize in Physics with Gerd Binnig for the design of the scanning tunneling microscope .-Biography:...
of the IBM Zurich Research LaboratoryIBM Zurich Research LaboratoryIBM Research - Zurich is the European branch of IBM Research and has been located in Rüschlikon, near Zurich, Switzerland since 1962.-Overview and history:...
win the 1986 Nobel Prize in physics for their work in scanning tunneling microscopy. Drs. Binnig and Rohrer are recognized for developing a powerful microscopy technique which permits scientists to make images of surfaces so detailed that individual atoms may be seen. - 1987: Nobel Prize: High-Temperature SuperconductivityHigh-temperature superconductivityHigh-temperature superconductors are materials that have a superconducting transition temperature above . From 1960 to 1980, 30 K was thought to be the highest theoretically possible Tc...
- J. Georg BednorzJohannes Georg BednorzJohannes Georg Bednorz is a physicist at the IBM Zürich Research Laboratory. He is best known for his role in the discovery of high-temperature superconductivity, for which he shared the 1987 Nobel Prize in Physics.-Life and work:...
and IBM FellowIBM FellowAn IBM Fellow is an appointed position at IBM made by IBM’s CEO. Typically only 4 to 9 IBM Fellows are appointed each year, at the annual Corporate Technical Recognition Event in May or June. It is the highest honor a scientist, engineer, or programmer at IBM can achieve.The IBM Fellows program...
K. Alex MüllerAlex MüllerAlexander Müller is a German racing driver currently competing in the FIA GT1 World Championship for Mad-Croc Racing.-Career:...
of the IBM Zurich Research LaboratoryIBM Zurich Research LaboratoryIBM Research - Zurich is the European branch of IBM Research and has been located in Rüschlikon, near Zurich, Switzerland since 1962.-Overview and history:...
receive the 1987 Nobel Prize for physics for their breakthrough discovery of high-temperature superconductivity in a new class of materials. They discover superconductivity in ceramic oxides that carry electricity without loss of energy at much higher temperatures than any other superconductor. - 1987: Antivirus toolsAntivirus softwareAntivirus or anti-virus software is used to prevent, detect, and remove malware, including but not limited to computer viruses, computer worm, trojan horses, spyware and adware...
- As personal computers become vulnerable to attack from viruses, a small research group at IBM develops, practically overnight, a suite of antivirus tools. The effort leads to the establishment of the High Integrity Computing Laboratory (HICL) at IBM. HICL goes on to pioneer the science of theoretical and observational computer virus epidemiology.
- 1987: Special needs access
- IBM Researchers demonstrate the feasibility for blind computer users to read information directly from computer screens with the aid of an experimental mouse. And in 1988 the IBM Personal System/2 Screen Reader is announced, permitting blind or visually impaired people to hear the text as it is displayed on the screen in the same way a sighted person would see it. This is the first in the IBM Independence Series of products for computer users with special needs.
- 1988: IBM AS/400IBM System iThe IBM System i is IBM's previous generation of midrange computer systems for IBM i users, and was subsequently replaced by the IBM Power Systems in April 2008....
- IBM introduces the IBM Application System/400 (AS/400), a new family of easy-to-use computers designed for small and intermediate-sized companies. As part of the introduction, IBM and IBM Business Partners worldwide announce more than 1,000 software packages in the biggest simultaneous applications announcement in computer history. The AS/400 quickly becomes one of the world's most popular business computing systems.
- 1988: National Science Foundation NetworkNational Science Foundation NetworkThe National Science Foundation Network was a program of coordinated, evolving projects sponsored by the National Science Foundation beginning in 1985 to promote advanced research and education networking in the United States...
(NSFNET) - IBM collaborates with the Merit NetworkMerit NetworkMerit Network, Inc., is a nonprofit member-governed organization providing high-performance computer networking and related services to educational, government, health care, and nonprofit organizations, primarily in Michigan...
, MCI CommunicationsMCI CommunicationsMCI Communications Corp. was an American telecommunications company that was instrumental in legal and regulatory changes that led to the breakup of the AT&T monopoly of American telephony and ushered in the competitive long-distance telephone industry. It was headquartered in Washington,...
, the State of Michigan, and the National Science FoundationNational Science FoundationThe National Science Foundation is a United States government agency that supports fundamental research and education in all the non-medical fields of science and engineering. Its medical counterpart is the National Institutes of Health...
to upgrade and expand the 56K bit per second NSFNET to 1.5M bps (T1Digital Signal 1Digital signal 1 is a T-carrier signaling scheme devised by Bell Labs. DS1 is a widely used standard in telecommunications in North America and Japan to transmit voice and data between devices. E1 is used in place of T1 outside North America, Japan, and South Korea...
) and later 45M bps (T3Digital Signal 3A Digital Signal 3 is a digital signal level 3 T-carrier. It may also be referred to as a T3 line.*The data rate for this type of signal is 44.736 Mbit/s.*This level of carrier can transport 28 DS1 level signals within its payload....
). This partnership provides the network infrastructure and lays the groundwork for the explosive growth of the Internet in the 1990s. The NSFNET upgrade boosts network capacity, not only making it faster, but also allowing more intensive forms of data, such as the graphics now common on the World Wide Web, to travel across the Internet. - 1989: Silicon germanium transistors
- The replacing of expensive and exotic materials like gallium arsenide with silicon germanium (known as SiGe), championed by IBM FellowIBM FellowAn IBM Fellow is an appointed position at IBM made by IBM’s CEO. Typically only 4 to 9 IBM Fellows are appointed each year, at the annual Corporate Technical Recognition Event in May or June. It is the highest honor a scientist, engineer, or programmer at IBM can achieve.The IBM Fellows program...
Bernie Meyerson, creates faster chips at lower costs. Introducing germanium into the base layer of an otherwise all-silicon bipolar transistor allows for significant improvements in operating frequency, current, noise and power capabilities. - 1990: System/390
- IBM makes its most comprehensive product announcement in 25 years by introducing the System/390 family. IBM incorporates complementary metal oxide siliconCMOSComplementary metal–oxide–semiconductor is a technology for constructing integrated circuits. CMOS technology is used in microprocessors, microcontrollers, static RAM, and other digital logic circuits...
(CMOS) based processors into System/390 Parallel Enterprise Server in 1995, and in 1998 the System/390 G5 Parallel Enterprise Server 10-way Turbo model smashed the 1,000 MIPS barrier, making it the world's most powerful mainframe. - 1990: RISC System/6000IBM System pThe System p, formerly known as RS/6000, was IBM's RISC/UNIX-based server and workstation product line.In April 2008, IBM announced a rebranding of the System p and its unification with the System i platform. The resulting product line is called IBM Power Systems.-History:It was originally a line...
- IBM announces the RISC System/6000, a family of nine workstations that are among the fastest and most powerful in the industry. The RISC System/6000 uses Reduced instruction set computing technology, an innovative computer design pioneered by IBM that simplifies processing steps to speed the execution of commands.
- 1990: Moving individual atomsDonald EiglerDonald M. Eigler is a physicist and IBM Fellow at the IBM Almaden Research Center. On September 28, 1989 he achieved a landmark in humankind’s ability to build small structures by demonstrating the ability to manipulate individual atoms with atomic-scale precision...
- Donald M. EiglerDonald EiglerDonald M. Eigler is a physicist and IBM Fellow at the IBM Almaden Research Center. On September 28, 1989 he achieved a landmark in humankind’s ability to build small structures by demonstrating the ability to manipulate individual atoms with atomic-scale precision...
, a physicist and IBM FellowIBM FellowAn IBM Fellow is an appointed position at IBM made by IBM’s CEO. Typically only 4 to 9 IBM Fellows are appointed each year, at the annual Corporate Technical Recognition Event in May or June. It is the highest honor a scientist, engineer, or programmer at IBM can achieve.The IBM Fellows program...
at the IBM Almaden Research Center demonstrated the ability to manipulate individual atoms using a scanning tunneling microscopeScanning tunneling microscopeA scanning tunneling microscope is an instrument for imaging surfaces at the atomic level. Its development in 1981 earned its inventors, Gerd Binnig and Heinrich Rohrer , the Nobel Prize in Physics in 1986. For an STM, good resolution is considered to be 0.1 nm lateral resolution and...
, writing I-B-M using 35 individual xenon atoms. - 1990: Environmental programs
- IBM joins 14 other leading U.S. corporations in April to establish a worldwide program designed to achieve environmental, health and safety goals by continuously improving environmental management practices and performance. IBM has invested more than $1 billion since 1973 to provide environmental protection for the communities in which IBM facilities are located.
- 1991: Services businessIBM Global ServicesIBM Global Services is the world's largest business and technology services provider. It has over 190,000 workers across more than 160 countries...
- IBM reenters the computer services business through the formation of the Integrated Systems Solution Corporation. Still in compliance with the provisions of the 1956 Consent Decree, in just four ISSC becomes the second largest provider of computer services. The new business becomes one of IBM's primary revenue streams.
- 1992: ThinkpadThinkPadThinkPad is line of laptop computers originally sold by IBM but now produced by Lenovo. They are known for their boxy black design, which was modeled after a traditional Japanese lunchbox...
- IBM introduces a new line of notebook computers. Housed in a distinctive black case and featuring the innovative TrackPoint device nestled in the middle of the keyboard, the ThinkPad is an immediate hit and goes on to collect more than 300 awards for design and quality.
1993–present: IBM's near disaster and rebirth
| Year | Gross income (in $m) | Employees |
|---|---|---|
| 1985 | 50,050 | 405,535 |
| 1990 | 69,010 | 373,816 |
| 1995 | 71,940 | 225,347 |
| 2000 | 85,090 | 316,303 |
| 2005 | 91,400 | 398,455 |
In April 1993, IBM hired Louis V. Gerstner, Jr.
Louis V. Gerstner, Jr.
Louis V. Gerstner, Jr. KBE was chairman of the board and chief executive officer of IBM from April 1993 until 2002 when he retired as CEO in March and chairman in December. He is largely credited with turning around IBM's fortunes.He was formerly CEO of RJR Nabisco, and also held senior positions...
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
RJR Nabisco
RJR Nabisco, Inc., was an American conglomerate formed in 1985 by the merger of Nabisco Brands and R.J. Reynolds Tobacco Company. RJR Nabisco was purchased in 1988 by Kohlberg Kravis Roberts & Co...
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 profits of $3 billion. But stabilization was not Gerstner's endgame – the restoration of IBM's once great reputation was. To do that, he needed to come up with 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 became 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
PricewaterhouseCoopers
PricewaterhouseCoopers is a global professional services firm headquartered in London, United Kingdom. It is the world's largest professional services firm measured by revenues and one of the "Big Four" accountancy firms....
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
IBM DB2
The IBM DB2 Enterprise Server Edition is a relational model database server developed by IBM. It primarily runs on Unix , Linux, IBM i , z/OS and Windows servers. DB2 also powers the different IBM InfoSphere Warehouse editions...
, to five: DB2, Lotus, WebSphere
WebSphere
IBM WebSphere refers to a brand of computer software products in the genre of enterprise software known as "application and integration middleware". These software products are used by end-users to create applications and integrate applications with other applications...
, Tivoli
IBM Tivoli Framework
IBM Tivoli Management Framework is a systems management platform from IBM...
, and Rational
Rational Software
Rational Machines was founded by Paul Levy and Mike Devlin in 1981 to provide tools to expand the use of modern software engineering practices, particularly explicit modular architecture and iterative development...
. 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.
While IBM hardware and technologies were relatively de-emphasized in Gerstner's three-legged business model, they were not relegated to stepchild status. The company brought its world class research organization to bear more closely on its existing product lines and development processes. As 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
COMDEX
COMDEX was a computer expo held in Las Vegas, Nevada, each November from 1979 to 2003. It was one of the largest computer trade shows in the world, usually second only to the German CeBIT, and by many accounts one of the largest trade shows in any industry sector...
computer expo
Computer expo
A computer expo or computer show is a trade fair or exposition for computers and electronics. Expos usually include company or organization booths where products and technologies are demonstrated; talks and lectures; and general mixing of people with common interests.- Notable Computer...
, IBM announced the first ThinkPad
ThinkPad
ThinkPad is line of laptop computers originally sold by IBM but now produced by Lenovo. They are known for their boxy black design, which was modeled after a traditional Japanese lunchbox...
laptop computer, the 700c. The ThinkPad
ThinkPad
ThinkPad is line of laptop computers originally sold by IBM but now produced by Lenovo. They are known for their boxy black design, which was modeled after a traditional Japanese lunchbox...
, a premium machine which then cost US$4350, included a 25 MHz Intel 80486SL
Intel 80486SL
The Intel's i486SL is the power-saving variant of the i486DX microprocessor. The SL was designed for use in mobile computers. It was produced between November 1992 and June 1993. Clock speeds available were 20, 25 and 33 MHz...
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. But it was the striking black design by noted designer Richard Sapper
Richard Sapper
Richard Sapper, born 1932 in Munich, is a German industrial designer based in Milan, Italy. He is considered one of the most iconic designers of his generation, his products typically featuring a combination of technical innovation, simplicity of form and an element of wit and surprise...
that made the ThinkPad an immediate hit with the digerati
Digerati
The digerati are the elite of the computer industry and online communities. The word is a portmanteau, derived from "digital" and "literati", and reminiscent of the earlier coinage glitterati...
, and the cool factor of the ThinkPad brought back some of the cachet to the IBM brand that had been lost in the PC wars of the 1980s. Instrumental too 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
Garry Kasparov
Garry Kimovich Kasparov is a Russian chess grandmaster, a former World Chess Champion, writer, political activist, and one of the greatest chess players of all time....
. Deep Blue's victory was an 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
Dot-com bubble
The dot-com bubble was a speculative bubble covering roughly 1995–2000 during which stock markets in industrialized nations saw their equity value rise rapidly from growth in the more...
collapse in 2000, where many of the edgy technology high flyers of the 1990s failed to ride out 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 scattershot 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, Ph.D., 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 – is inducted the next year.
Gerstner retired at the end of 2002, and was replaced by long-time IBMer Samuel J. Palmisano
Samuel J. Palmisano
Samuel J. Palmisano was president and chief executive officer of IBM, which as of 2009 was the largest IT company in the world and 45th largest company overall. He was elected chairman in October 2002, effective January 1, 2003, and has served as CEO since March 2002. Before he became CEO,...
.
Key events
- 1993: Billion dollar losses
- IBM misreads two significant trends in the computer industry: personal computerPersonal computerA personal computer is any general-purpose computer whose size, capabilities, and original sales price make it useful for individuals, and which is intended to be operated directly by an end-user with no intervening computer operator...
s and client-server computing: and as a result is poorly positioned in the marketplace. The misreads hit the bottom line hard: IBM loses more than $8 billion in 1993, its third straight year of billion dollar losses. Since 1991, the company has lost $16 billion, and many feel IBM is no longer a viable player in the industry. - 1993: Louis V. Gerstner, Jr.Louis V. Gerstner, Jr.Louis V. Gerstner, Jr. KBE was chairman of the board and chief executive officer of IBM from April 1993 until 2002 when he retired as CEO in March and chairman in December. He is largely credited with turning around IBM's fortunes.He was formerly CEO of RJR Nabisco, and also held senior positions...
- Gerstner arrives as IBM's chairman and CEO on April 1, 1993. For the first time since the arrival of Thomas J. Watson, Sr., in 1914, IBM has a leader pulled 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.
- 1993: IBM Scalable POWERparallel system
- IBM introduces the Scalable POWERparallel System, the first in a family of microprocessor-based supercomputers using RISC System/6000RS/6000RISC System/6000, or RS/6000 for short, is a family of RISC and UNIX based servers, workstations and supercomputers made by IBM in the 1990s. The RS/6000 family replaced the IBM RT computer platform in February 1990 and was the first computer line to see the use of IBM's POWER and PowerPC based...
technology. IBM pioneers the breakthrough scalable parallel system technology of joining smaller, mass-produced computer processors rather than relying on one larger, custom-designed processor. Complex queries could then be broken down into a series of smaller jobs than are run concurrently (“in parallel”) to speed their completion. - 1994: Turnaround
- IBM reports a profit for the year, its first since 1990. Over the next few years the company successfully charts a new business course, one that focuses less on its traditional strengths in hardware, and more on services, software, and its ability to craft technology solutions.
- 1994: IBM RAMAC Array Storage Family
- The IBM RAMAC Array Family is announced. With features like highly parallel processing, multi-level cache, RAID 5 and redundant components, RAMAC represents a major advance in information storage technology. Consisting of the RAMAC Array Direct Access Storage Device (DASD) and the RAMAC Array Subsystem, the products become one of IBM's most successful storage product launches ever, with almost 2,000 systems shipped to customers in its first three months of availability.
- 1994: Speech recognition
- IBM releases the IBM Personal Dictation System (IPDS), the first wave of speech recognition products for the personal computer. It is later renamed VoiceType, and its capabilities are expanded to include control of computer applications and desktops simply by talking to them, without touching a keyboard. In 1997 IBM announces ViaVoice Gold, software that gives people a hands-free way to dictate text and navigate the desktop with the power of natural, continuous speech.
- 1994: Reinventing education
- As part of IBM's reinvention of its corporate philanthropy function, the first of 10 grants is selected from 200 proposals for IBM's Reinventing Education Program, a project focusing on public school reform. Grant-winners receive the services of a project manager, consultants and researchers to create customized solutions designed to break down barriers to academic achievement.
- 1995: Lotus Development Corporation acquisition
- IBM acquires all of the outstanding shares of the Lotus Development Corporation, whose pioneering Notes software enables greater collaboration across an enterprise and whose acquisition makes IBM the world's largest software company.
- 1995: GlueballGlueballIn particle physics, a glueball is a hypothetical composite particle. It consists solely of gluon particles, without valence quarks. Such a state is possible because gluons carry color charge and experience the strong interaction...
calculation - IBM scientists complete a two-year calculation — the largest single numerical calculation in the history of computing — to pin down the properties of an elusive elementary particle called a “glueball.” The calculation was carried out on GF11, a massively parallel computer at the IBM Thomas J. Watson Research Center.
- 1996: IBM Austin Research Laboratory opens
- Based in Austin, Texas, the lab is focused on advanced circuit design as well as new design techniques and tools for very high performance microprocessors.
- 1996: Atlanta Olympics
- IBM suffers a highly public embarrassment when its IT support of the Olympic Games in Atlanta experiences technical difficulties.
- 1996: Domestic partner benefits
- IBM announces Domestic Partner Benefits for gay and lesbian employees.
- 1997: Deep Blue
- The 32-node IBM RS/6000 SPRS/6000RISC System/6000, or RS/6000 for short, is a family of RISC and UNIX based servers, workstations and supercomputers made by IBM in the 1990s. The RS/6000 family replaced the IBM RT computer platform in February 1990 and was the first computer line to see the use of IBM's POWER and PowerPC based...
supercomputer, Deep Blue, defeats World Chess Champion Garry KasparovGarry KasparovGarry Kimovich Kasparov is a Russian chess grandmaster, a former World Chess Champion, writer, political activist, and one of the greatest chess players of all time....
in the first known instance of a computer vanquishing a reigning world champion chess player in tournament-style competition. - 1997: eBusinessElectronic businessElectronic business, commonly referred to as "eBusiness" or "e-business", or an internet business, may be defined as the application of information and communication technologies in support of all the activities of business...
- IBM coins the term and defined an enormous new industry by using the Internet as a medium for real business and institutional transformation. e-business becomes synonymous with doing business in the Internet age.
- 1998: CMOS Gigaprocessor
- IBM unveils the first microprocessor that runs at 1 billion cycles per second. IBM scientists develop new Silicon on insulatorSilicon on insulatorSilicon on insulator technology refers to the use of a layered silicon-insulator-silicon substrate in place of conventional silicon substrates in semiconductor manufacturing, especially microelectronics, to reduce parasitic device capacitance and thereby improving performance...
chips to be used in the construction of a mainstream processor. The breakthrough ushers in new circuit designs and product groups. - 1999: Blue GeneBlue GeneBlue Gene is a computer architecture project to produce several supercomputers, designed to reach operating speeds in the PFLOPS range, and currently reaching sustained speeds of nearly 500 TFLOPS . It is a cooperative project among IBM Blue Gene is a computer architecture project to produce...
- IBM Research starts a computer architecture cooperative project with the Lawrence Livermore National Laboratory, the United States Department of Energy (which is partially funding the project), and academia to build new supercomputers (4) capable of more than one quadrillion operations per second (one petaflop). Nicknamed "Blue Gene," the new supercomputers perform 500 times faster than other powerful supercomputers and can simulate folding complex proteins.
- 2000: Quantum mirageQuantum mirageIn physics, a quantum mirage is a peculiar result in quantum chaos. Every system of quantum dynamical billiards will exhibit an effect called scarring, where the quantum probability density shows traces of the paths a classical billiard ball would take...
nanotechnology - IBM scientists discover a way to transport information on the atomic scale that uses electrons instead of conventional wiring. This new phenomenon, called the Quantum mirage effect, enables data transfer within future nanoscale electronic circuits too small to use wires. The quantum mirage technique is a unique way of sending information through solid forms and could do away with wiring that connects nanocircuit components.
- 2000: IBM ASCI WhiteASCI WhiteASCI White was a supercomputer at the Lawrence Livermore Laboratory in California.It was a computer cluster based on IBM's commercial RS/6000 SP computer. 512 of these machines were connected together for ASCI White, with 16 processors per node and 8,192 processors in total with 6 terabytes of...
– Fastest supercomputer - IBM delivers the world's most powerful computer to the US Department of Energy, powerful enough to process an Internet transaction for every person on Earth in less than a minute. IBM built the supercomputer to accurately test the safety and effectiveness of the nation's aging nuclear weapons stockpile. This computer is 1,000 times more powerful than Deep Blue, the supercomputer that beat Garry KasparovGarry KasparovGarry Kimovich Kasparov is a Russian chess grandmaster, a former World Chess Champion, writer, political activist, and one of the greatest chess players of all time....
in chess in 1997. - 2000: Flexible transistorsTransistorA transistor is a semiconductor device used to amplify and switch electronic signals and power. It is composed of a semiconductor material with at least three terminals for connection to an external circuit. A voltage or current applied to one pair of the transistor's terminals changes the current...
- IBM created flexible transistors, combining organic and inorganic materials as a medium for semiconductors. This technology enables things like an "electronic newspaper", so lightweight and inexpensive that leaving one behind on the airplane or in a hotel lobby is no big deal. By eliminating the limitations of etching computer circuits in silicon, flexible transistors make it possible to create a new generation of inexpensive computer displays that can be embedded into curved plastic or other materials.
- 2000: Sydney Olympics
- After a successful engagement at the 2000 Olympic games in Sydney, IBM ends its 40-year technology partnership with the International Olympic Committee.
- 2001: Holocaust controversyIBM during World War IIIn both the United States and Germany concentration or internment camps were established during World War II, both countries utilizing the available IBM punched card technology for their operation.United States=...
- A controversial book, IBM and the Holocaust: The Strategic Alliance Between Nazi Germany and America's Most Powerful Corporation by Edwin Black, accuses IBM of having knowingly assisted Nazi authorities in the perpetuation of the Holocaust through the provision of tabulating products and services. Several lawsuits are filed against IBM by Holocaust victims seeking restitution for their suffering and losses.
- 2001: Carbon nanotubeCarbon nanotubeCarbon nanotubes are allotropes of carbon with a cylindrical nanostructure. Nanotubes have been constructed with length-to-diameter ratio of up to 132,000,000:1, significantly larger than for any other material...
transistors - IBM researchers build the world's first transistors out of carbon nanotubes – tiny cylinders of carbon atoms that are 500 times smaller than silicon-based transistors and 1,000 times stronger than steel. The breakthrough is an important step in finding materials that can be used to build computer chips when silicon-based chips can’t be made any smaller.
- 2001: Molecular computer circuit
- IBM researchers create the world's first logic-performing computer circuit within a single molecule, which may lead to a new class of smaller and faster computers that consume less power than today's machines.
- 2001: Low power initiative
- IBM launches its low-power initiative to improve the energy efficiency of IT and accelerates the development of ultra-low power components and power-efficient servers, storage systems, personal computers and ThinkPad notebook computers.
- 2001: Greater density & chip speeds
- IBM is first to mass-produce computer hard disk drives using a revolutionary new type of magnetic coating – "pixie dust" – that eventually quadruples data density of current hard disk drive products. IBM also unveils “strained siliconStrained siliconStrained silicon is a layer of silicon in which the silicon atoms are stretched beyond their normal interatomic distance. This can be accomplished by putting the layer of silicon over a substrate of silicon germanium...
," a breakthrough that alters silicon to boost chip speeds by up to 35 percent. - 2003: Blue GeneBlue GeneBlue Gene is a computer architecture project to produce several supercomputers, designed to reach operating speeds in the PFLOPS range, and currently reaching sustained speeds of nearly 500 TFLOPS . It is a cooperative project among IBM Blue Gene is a computer architecture project to produce...
/L - The BLUE GENE team unveils a proto-type of its Blue Gene/L computer roughly the size of a standard dishwasher that ranks as the 73rd most powerful supercomputer in the world. This one cubic meter machine is small scale model of the full Blue Gene/L built for the Lawrence Livermore National Laboratory in California, which will be 128 times larger when it's unveiled two years later.
- 2005: Crusade Against Cancer
- IBM joins forces with Memorial Sloan-Kettering Cancer CenterMemorial Sloan-Kettering Cancer CenterMemorial Sloan–Kettering Cancer Center is a cancer treatment and research institution founded in 1884 as the New York Cancer Hospital...
(MSKCC), the Molecular Profiling Institute and the CHU Sainte-Justine Research Center to collaborate on cancer research by building state-of-the-art integrated information management systems. - 2005: The PC division is sold
- The PC division (including ThinkpadThinkPadThinkPad is line of laptop computers originally sold by IBM but now produced by Lenovo. They are known for their boxy black design, which was modeled after a traditional Japanese lunchbox...
s) is sold to Chinese manufacturer, Lenovo. - 2006: Translation software
- IBM delivers an advanced speech-to-speech translation system to U.S. forces in Iraq using bidirectional English to Arabic translation software that improves communication between military personnel and Iraqi forces and citizens. The breakthrough software offsets the current shortage of military linguists.
- 2007: Renewable energy
- IBM is recognized by the US EPA for its leading green power purchases in the US and for its support and participation in EPA's Fortune 500 Green Power Challenge. IBM ranked 12th on the EPA's list of Green Power Partners for 2007. IBM purchased enough renewable energy in 2007 to meet 4% of its US electricity use and 9% of its global electricity purchases. IBM's commitment to green power helps cut greenhouse gas emissions.
- 2007: River watch using IBM Stream ComputingStream processingStream processing is a computer programming paradigm, related to SIMD , that allows some applications to more easily exploit a limited form of parallel processing...
- In a unique collaboration, The Beacon Institute and IBM created the first technology-based river monitoring network. The River and Estuary Observatory Network (REON) allows for minute-to-minute monitoring of New York's Hudson River via an integrated network of sensors, robotics and computational technology. This first-of-its-kind project is made possible by IBM's "Stream Computing," a fundamentally new computer architecture that can examine thousands of information sources to help scientists better understand what is happening as it happens.
- 2007: Patent power
- IBM has been granted more US patents than any other company. From 1993 to 2007, IBM was awarded over 38,000 US patents and has invested about $5 billion a year in research, development and engineering since 1996. IBM's current active portfolio is about 26,000 patents in the US and over 40,000 patents worldwide is a direct result of that investment.
- 2008: IBM Roadrunner No.1 Supercomputer
- For a record-setting ninth consecutive time, IBM takes the No.1 spot in the ranking of the world's most powerful supercomputers. The IBM computer built for the Roadrunner project at Los Alamos National LaboratoryLos Alamos National LaboratoryLos Alamos National Laboratory is a United States Department of Energy national laboratory, managed and operated by Los Alamos National Security , located in Los Alamos, New Mexico...
: the first in the world to operate at speeds faster than one quadrillion calculations per second: remains the world speed champion. The Los Alamos system is twice as energy efficient as the No. 2 computer, using about half the electricity to maintain the same level of computing power. - 2008: Green power
- IBM opens its "greenest" data center in Boulder, Colorado. The energy efficient facility is part of a $350 million investment by IBM in Boulder to help meet customer demand for reducing energy costs. The new data center features leading-edge technologies and services, including high density computing systems with virtualization technology. Green Power centers allow IBM and its customers to cut their carbon footprint.
- 2011: Watson
- IBM's supercomputer Watson competed on the TV show Jeopardy against Ken JenningsKen JenningsKenneth Wayne "Ken" Jennings III is an American game show contestant and author. Jennings is noted for holding the record for the longest winning streak on the U.S. syndicated game show Jeopardy! and as being the all-time leading money winner on American game shows...
and Brad RutterBrad RutterBradford Gates "Brad" Rutter is the biggest all-time money winner on the U.S. syndicated game show Jeopardy! and the second biggest all-time money winner on a game show....
. The competition was presented by PBS. - June 16, 2011: IBM founded 100 years ago
- Mark Krantz and Jon Swartz in USA Today state It has remained at the forefront through the decades... the fifth-most-valuable U.S. company [today] ... demonstrated a strength shared by most 100-year-old companies: the ability to change. ... survived not only the Depression and several recessions, but technological shifts and intense competition as well.
BICARSA (Billing, Inventory Control, Accounts Receivable, & Sales Analysis)
1983 saw the announcement of the System/36System/36
The IBM System/36 was a minicomputer marketed by IBM from 1983 to 2000. It was a multi-user, multi-tasking successor to the System/34. Like the System/34 and the older System/32, the System/36 was primarily programmed in the RPG II language...
, 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.)
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 SSEC – 1948, the first operational machine able to treat its instructions as data
- IBM Card Programmed CalculatorIBM CPCThe IBM Card-Programmed Electronic Calculator or CPC was announced by IBM in May 1949. Later that year an improved machine, the CPC-II was also announced.The original CPC Calculator had the following machines interconnected by cables:...
– 1949 - IBM 700 seriesIBM 700/7000 seriesThe IBM 700/7000 series was a series of large-scale computer systems made by IBM through the 1950s and early 1960s. The series included several different, incompatible processor architectures. The 700s used vacuum tube logic and were made obsolete by the introduction of the transistorized 7000s...
– 1952-1958 - IBM NORCIBM NORCThe IBM Naval Ordnance Research Calculator was a one-of-a-kind first-generation electronic computer built by IBM for the United States Navy's Bureau of Ordnance. It went into service in December 1954 and was likely the most powerful computer at the time...
– 1954, the first supercomputerSupercomputerA supercomputer is a computer at the frontline of current processing capacity, particularly speed of calculation.Supercomputers are used for highly calculation-intensive tasks such as problems including quantum physics, weather forecasting, climate research, molecular modeling A supercomputer is a... - IBM 650IBM 650The IBM 650 was one of IBM’s early computers, and the world’s first mass-produced computer. It was announced in 1953, and over 2000 systems were produced between the first shipment in 1954 and its final manufacture in 1962...
– 1954, the world’s first mass-produced computer - SAGE AN/FSQ-7AN/FSQ-7The AN/FSQ-7 was a computer model developed and built in the 1950s by IBM in partnership with the US Air Force. Fifty-two were built and used for command and control functions for the Semi Automatic Ground Environment air-defense system...
– 1958, half an acre of floor space, 275 tons, up to three megawatts, ... the largest computers ever built - IBM 7000 seriesIBM 700/7000 seriesThe IBM 700/7000 series was a series of large-scale computer systems made by IBM through the 1950s and early 1960s. The series included several different, incompatible processor architectures. The 700s used vacuum tube logic and were made obsolete by the introduction of the transistorized 7000s...
– 1959-1964, transistorized evolution of IBM 700 series - IBM 1400 seriesIBM 1400 seriesThe IBM 1400 series were second generation mid-range business decimal computers that IBM sold in the early 1960s. They could be operated as an independent system, in conjunction with IBM punched card equipment, or as auxiliary equipment to other computer systems.1400-series machines stored...
– 1959, "... by the mid-1960s nearly half of all computer systems in the world were 1401-type systems." - System/360System/360The IBM System/360 was a mainframe computer system family first announced by IBM on April 7, 1964, and sold between 1964 and 1978. It was the first family of computers designed to cover the complete range of applications, from small to large, both commercial and scientific...
– 1964, the first family of computers designed to cover the complete range of applications, small to large, commercial and scientific - System/3System/3The IBM System/3 was a low-end business computer aimed at new customers and organizations that still used IBM 1400 series computers or unit record equipment...
- System/370System/370The IBM System/370 was a model range of IBM mainframes announced on June 30, 1970 as the successors to the System/360 family. The series maintained backward compatibility with the S/360, allowing an easy migration path for customers; this, plus improved performance, were the dominant themes of the...
- System/38System/38The System/38 was a midrange computer server platform manufactured and sold by the IBM Corporation. The system offered a number of innovative features, and was the brainchild of IBM engineer Dr. Frank Soltis...
- IBM Series/1IBM Series/1The IBM Series/1 computer is a 16-bit minicomputer, introduced in 1976, that in many respects competed with other minicomputers of the time, such as the PDP-11 from Digital Equipment Corporation and similar offerings from Data General and HP...
- IBM 801IBM 801The 801 was an experimental minicomputer designed by IBM. The resulting architecture was used in various roles in IBM until the 1980s. The 801 was started as a pure research project led by John Cocke in October 1975 at the Thomas J. Watson Research Center. The name 801 comes from the building the...
RISC processor - IBM PCIBM PCThe IBM Personal Computer, commonly known as the IBM PC, is the original version and progenitor of the IBM PC compatible hardware platform. It is IBM model number 5150, and was introduced on August 12, 1981...
- PowerPCPowerPCPowerPC is a RISC architecture created by the 1991 Apple–IBM–Motorola alliance, known as AIM...
- System/390
- AS/400
- RS/6000RS/6000RISC System/6000, or RS/6000 for short, is a family of RISC and UNIX based servers, workstations and supercomputers made by IBM in the 1990s. The RS/6000 family replaced the IBM RT computer platform in February 1990 and was the first computer line to see the use of IBM's POWER and PowerPC based...
- zSeriesZSeriesIBM System z, or earlier IBM eServer zSeries, is a brand name designated by IBM to all its mainframe computers.In 2000, IBM rebranded the existing System/390 to IBM eServer zSeries with the e depicted in IBM's red trademarked symbol, but because no specific machine names were changed for...
- Cell processor
- Watson
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/360System/360
The IBM System/360 was a mainframe computer system family first announced by IBM on April 7, 1964, and sold between 1964 and 1978. It was the first family of computers designed to cover the complete range of applications, from small to large, both commercial and scientific...
, 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/VS1OS/VS1Operating System/Virtual Storage 1, or OS/VS1,was an IBM mainframe computer operating system designed to be run on IBM System/370 hardware....
, OS/VS2OS/VS2 (SVS)Single Virtual Storage refers to Release 1 of Operating System/Virtual Storage 2 ; it is the successor system to the MVTBut not 65MP option of Operating System/360...
, MVSMVSMultiple Virtual Storage, more commonly called MVS, was the most commonly used operating system on the System/370 and System/390 IBM mainframe computers...
, OS/390OS/390OS/390 is an IBM operating system for the System/390 IBM mainframe computers.OS/390 was introduced in late 1995 in an effort, led by the late Randy Stelman, to simplify the packaging and ordering for the key, entitled elements needed to complete a fully functional MVS operating system package...
, z/OSZ/OSz/OS is a 64-bit operating system for mainframe computers, produced by IBM. It derives from and is the successor to OS/390, which in turn followed a string of MVS versions.Starting with earliest:*OS/VS2 Release 2 through Release 3.8... - DOS family, including: DOS/360DOS/360Disk Operating System/360, also DOS/360, or simply DOS, was an operating system for IBM mainframes. It was announced by IBM on the last day of 1964, and it was first delivered in June 1966....
, DOS/VS, DOS/VSE, z/VSE - VM family, including: CP/CMSCP/CMSCP/CMS was a time-sharing operating system of the late 60s and early 70s, known for its excellent performance and advanced features...
, VM/370VM (operating system)VM refers to a family of IBM virtual machine operating systems used on IBM mainframes System/370, System/390, zSeries, System z and compatible systems, including the Hercules emulator for personal computers. The first version, released in 1972, was VM/370, or officially Virtual Machine Facility/370...
, VM/XA, VM/ESA, z/VMZ/VMz/VM is the current version in IBM's VM family of virtual machine operating systems. z/VM was first released in October 2000 and remains in active use and development . It is directly based on technology and concepts dating back to the 1960s, with IBM's CP/CMS on the IBM System/360-67... - Special purpose systems, including: TPFTransaction Processing FacilityTPF is an IBM real-time operating system for mainframes descended from the IBM System/360 family, including zSeries and System z9. The name is an initialism for Transaction Processing Facility....
, z/TPF
Other platforms with important operating systems include:
- AIX family, including: AIX
- Linux family, including: Linux for pSeriesIBM System pThe System p, formerly known as RS/6000, was IBM's RISC/UNIX-based server and workstation product line.In April 2008, IBM announced a rebranding of the System p and its unification with the System i platform. The resulting product line is called IBM Power Systems.-History:It was originally a line...
- 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 languageAssembly language
An assembly language is a low-level programming language for computers, microprocessors, microcontrollers, and other programmable devices. It implements a symbolic representation of the machine codes and other constants needed to program a given CPU architecture...
. Computer science efforts through the 1950s and early 1960s led to the development of many new high-level languages (HLL)
High-level programming language
A high-level programming language is a programming language with strong abstraction from the details of the computer. In comparison to low-level programming languages, it may use natural language elements, be easier to use, or be from the specification of the program, making the process of...
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:
- FORTRANFortranFortran is a general-purpose, procedural, imperative programming language that is especially suited to numeric computation and scientific computing...
– for years, the dominant language for mathematics and scientific programming - PL/IPL/IPL/I is a procedural, imperative computer programming language designed for scientific, engineering, business and systems programming applications...
– an attempt to create a "be all and end all" language - COBOLCOBOLCOBOL is one of the oldest programming languages. Its name is an acronym for COmmon Business-Oriented Language, defining its primary domain in business, finance, and administrative systems for companies and governments....
– eventually the ubiquitous, standard language for business applications - PL/S – an internal systems programming language proprietary to IBM
- RPG – originally an acronym for 'Report Program Generator' on the mainframes to produce reports from data files. General Systems Division enhanced the language to HLLHigh-level programming languageA high-level programming language is a programming language with strong abstraction from the details of the computer. In comparison to low-level programming languages, it may use natural language elements, be easier to use, or be from the specification of the program, making the process of...
status on its midrange systems to rival with COBOL. - SQLSQLSQL is a programming language designed for managing data in relational database management systems ....
– a relational query language developed for IBM's System R; now the standard RDBMS query language - RexxREXXREXX is an interpreted programming language that was developed at IBM. It is a structured high-level programming language that was designed to be both easy to learn and easy to read...
– 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 UNIXUnix
Unix is a multitasking, multi-user computer operating system originally developed in 1969 by a group of AT&T employees at Bell Labs, including Ken Thompson, Dennis Ritchie, Brian Kernighan, Douglas McIlroy, and Joe Ossanna...
and Linux
Linux
Linux is a Unix-like computer operating system assembled under the model of free and open source software development and distribution. The defining component of any Linux system is the Linux kernel, an operating system kernel first released October 5, 1991 by Linus Torvalds...
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
RS/6000
RISC System/6000, or RS/6000 for short, is a family of RISC and UNIX based servers, workstations and supercomputers made by IBM in the 1990s. The RS/6000 family replaced the IBM RT computer platform in February 1990 and was the first computer line to see the use of IBM's POWER and PowerPC based...
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
Open source
The term open source describes practices in production and development that promote access to the end product's source materials. Some consider open source a philosophy, others consider it a pragmatic methodology...
technologies in the 1990s. It later became embroiled in a complex litigation
SCO v. IBM
SCO v. IBM is a civil lawsuit in the United States District Court of Utah. The SCO Group asserted that there are legal uncertainties regarding the use of the Linux operating system due to alleged violations of IBM's Unix licenses in the development of Linux code at IBM.-Summary:On March 6, 2003,...
with SCO group
SCO Group
TSG Group, Inc. is a software company formerly called The SCO Group, Caldera Systems, and Caldera International. After acquiring the Santa Cruz Operation's Server Software and Services divisions, as well as UnixWare and OpenServer technologies, the company changed its focus to UNIX...
over intellectual property rights related to the UNIX
Unix
Unix is a multitasking, multi-user computer operating system originally developed in 1969 by a group of AT&T employees at Bell Labs, including Ken Thompson, Dennis Ritchie, Brian Kernighan, Douglas McIlroy, and Joe Ossanna...
and Linux
Linux
Linux is a Unix-like computer operating system assembled under the model of free and open source software development and distribution. The defining component of any Linux system is the Linux kernel, an operating system kernel first released October 5, 1991 by Linus Torvalds...
platforms.
Midrange systems
In the midrange arena, IBM consolidated the market position its General Systems Division had built in the 1970s with the System/3, System/32 and System/34. The System/38, with its radical architecture, had experienced delays to its first customer shipment since announcement in 1978. In 1982, IBM disbanded the organization that had meant the Data Processing Division sold only mainframes to large customers while the General Systems Division sold only S/3x machines to small and medium-sized customers. Instead, the new ISM (for small and medium customers) and ISAM divisions (large customers) could sell from the entire IBM portfolio.Non-computer lines of business
IBM has largely been known for its dominance of the unit record equipmentUnit record equipment
Before the advent of electronic computers, data processing was performed using electromechanical devices called unit record equipment, electric accounting machines or tabulating machines. Unit record machines were as ubiquitous in industry and government in the first half of the twentieth century...
(punched cards, keypunches, accounting machines, ...) in the first part of the 20th century and then, overtaking UNIVAC
UNIVAC
UNIVAC is the name of a business unit and division of the Remington Rand company formed by the 1950 purchase of the Eckert-Mauchly Computer Corporation, founded four years earlier by ENIAC inventors J. Presper Eckert and John Mauchly, and the associated line of computers which continues to this day...
's early 1950s public fame, 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:
- 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.
- Typewriters and other office products (dictation machines, copiers, word processors, printers) – 1933 to 1991, then part of LexmarkLexmarkLexmark International, Inc. is an American corporation which develops and manufactures printing and imaging products, including laser and inkjet printers, multifunction products, printing supplies, and services for business and individual consumers...
- Military products (Browning Automatic Rifle, bombsights) – IBM's World War II production
- Digital telephone switches – 1984 to 1990-1993, ROLMROLM-Products:The company first produced rugged mil-spec computers which used Data General software. The company divisionalized in 1978 becoming Rolm Mil-Spec Computers and Rolm Telecom...
sold to Siemens AGSiemens AGSiemens AG is a German multinational conglomerate company headquartered in Munich, Germany. It is the largest Europe-based electronics and electrical engineering company.... - 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, blood cell separators)
International subsidiaries growth
IBM had subsidiaries and operations in 70 countries in its early years. They included Austria, Belgium, Bulgaria, Czechoslovakia, France, Germany, Holland / Netherlands , Italy, Japan, Norway, Poland, Romania, the Soviet Union, Sweden, Switzerland, Yugoslavia, and others.Federal Systems Division
A significant part of IBM's operations were contracts with the U.S. Federal Government for a wide range of projects ranging from the U.S. Census Bureau to the Department of DefenseUnited States Department of Defense
The United States Department of Defense is the U.S...
to the National Security Agency
National Security Agency
The National Security Agency/Central Security Service is a cryptologic intelligence agency of the United States Department of Defense responsible for the collection and analysis of foreign communications and foreign signals intelligence, as well as protecting U.S...
. These projects spanned mundane administrative processing to top secret supercomputing. In NASA
NASA
The National Aeronautics and Space Administration is the agency of the United States government that is responsible for the nation's civilian space program and for aeronautics and aerospace research...
's Apollo Program, the "brains" of each Saturn rocket
Saturn (rocket family)
The Saturn family of American rocket boosters was developed by a team of mostly German rocket scientists led by Wernher von Braun to launch heavy payloads to Earth orbit and beyond. Originally proposed as a military satellite launcher, they were adopted as the launch vehicles for the Apollo moon...
was the Instrument Unit
Saturn V Instrument Unit
The Saturn V Instrument Unit is a ring-shaped structure fitted to the top of the Saturn V rocket's third stage and the Saturn IB's second stage . It was immediately below the SLA panels that contained the Lunar Module. The Instrument Unit contains the guidance system for the Saturn V rocket...
built by the IBM Space Systems Center in Huntsville, Alabama. FSD was sold to Loral
Loral Corporation
Loral Corporation was a defense contractor founded in 1948 in New York by William Lorenz and Leon Alpert as Loral Electronics Corporation. The company's name was taken from the first letters of each founder's surname....
in 1994.
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 ServicesIBM Global Services
IBM Global Services is the world's largest business and technology services provider. It has over 190,000 workers across more than 160 countries...
, a huge services firm that competed with the likes of Electronic Data Systems
Electronic Data Systems
HP Enterprise Services is the global business and technology services division of Hewlett Packard's HP Enterprise Business strategic business unit. It was formed by the combination of HP's legacy services consulting and outsourcing business and the integration of acquired Electronic Data Systems,...
or Computer Sciences Corporation
Computer Sciences Corporation
Computer Sciences Corporation is an American information technology and business services company headquartered in Falls Church, Virginia, USA...
.
See also
IBM products and technologies- List of IBM products
- Unit record equipmentUnit record equipmentBefore the advent of electronic computers, data processing was performed using electromechanical devices called unit record equipment, electric accounting machines or tabulating machines. Unit record machines were as ubiquitous in industry and government in the first half of the twentieth century...
- IBM magnetic disk drives
- IBM Personal Computer
- IBM Selectric typewriterIBM Selectric typewriterThe IBM Selectric typewriter was a highly successful model line of electric typewriters introduced by IBM on July 31, 1961.Instead of the "basket" of individual typebars that swung up to strike the ribbon and page in a traditional typewriter, the Selectric had a type element that rotated and...
- IBM System/360
IBM organization
- List of mergers and acquisitions by IBM
- IBM Global ServicesIBM Global ServicesIBM Global Services is the world's largest business and technology services provider. It has over 190,000 workers across more than 160 countries...
- IBM ResearchIBM ResearchIBM Research, a division of IBM, is a research and advanced development organization and currently consists of eight locations throughout the world and hundreds of projects....
IBM people
- Thomas J. WatsonThomas J. WatsonThomas John Watson, Sr. was president of International Business Machines , who oversaw that company's growth into an international force from 1914 to 1956...
- Thomas Watson, Jr.
- List of IBM CEOs
- IBM FellowIBM FellowAn IBM Fellow is an appointed position at IBM made by IBM’s CEO. Typically only 4 to 9 IBM Fellows are appointed each year, at the annual Corporate Technical Recognition Event in May or June. It is the highest honor a scientist, engineer, or programmer at IBM can achieve.The IBM Fellows program...
... more
Index of IBM articles
Related topics
- BUNCHBUNCHThe group of mainframe computer competitors to IBM in the 1970s became known as the BUNCH: Burroughs, UNIVAC, NCR, Control Data Corporation, and Honeywell...
- Charles Ranlett FlintCharles Ranlett Flint-Further reading:**...
- John Henry Patterson (NCR owner)John Henry Patterson (NCR owner)John Henry Patterson was an industrialist and founder of the National Cash Register Company. He was a businessperson and salesperson.-Early years:Patterson was born in 1844 on the family farm near Dayton, Ohio...
- Mainframe computerMainframe computerMainframes are powerful computers used primarily by corporate and governmental organizations for critical applications, bulk data processing such as census, industry and consumer statistics, enterprise resource planning, and financial transaction processing.The term originally referred to the...
Further reading
See also Further Reading for IBM, Herman Hollerith, Thomas J. Watson and Unit record equipment-
- 1890s – 1950s Hollerith, Watson Sr., Unit record equipment
- Amonette, Ruth Leach (1999). Among Equals, A Memoir: The Rise of IBM's First Woman Vice President. Creative Arts Book Company. ISBN 088739-219-9.
- Black, EdwinEdwin BlackEdwin Black is an American Jewish syndicated columnist, and journalist specializing in the historical interplay between economics and politics in the Middle East, petroleum policy, the abuses practiced by corporations, and the financial underpinnings of Nazi Germany, among other topics...
(2001). IBM and the Holocaust: The Strategic Alliance between Nazi Germany and America's Most Powerful Corporation. ISBN 0-609-60799-5. - Flint, Charles R.Charles Ranlett Flint-Further reading:**...
(1923). Memories of an Active Life: Men, and Ships, and Sealing Wax. G.P. Putnam's Sons. - Maney, Kevin (2003). The Maverick and His Machine: Thomas Watson, Sr., and the Making of IBM. Wiley. ISBN 0471414638. ISBN 978-0471414636.
- Richardson, F.L.W. Jr.; Walker, Charles R. (1948). Human Relations in an Expanding Company. Labor and Management Center Yale University. Reprinted by Arno, 1977.
-
- 1950s onward History, Technology, Commentary
- Bashe, Charles J.; Pugh, Emerson W.; Johnson, Lyle R./Palmer, John H. (1986). IBM's Early Computers. MIT Press. ISBN 0-262-02225-7.
- Bauer, Roy; Collar, Emilio; Tang, Victor (2002). The Silverlake Project: Transformation at IBM. Oxford University Press. ISBN 0-19-506754-1.
- Chposky, James; Leonsis, Ted (1988). Blue Magic: The People, Power, and Politics Behind The IBM Personal Computer. Facts on File.
- Carroll, Paul (1993). Big Blues: The Unmaking of IBM. Crown Publishers.
- DeLamarter, Richard Thomas (1986). Big Blue: IBM's Use and Abuse of Power. Dodd, Mead and Company. ISBN 0-396-08515-6.
- Dell, Deborah; Purdy, J. Gerry. ThinkPad: A Different Shade of Blue. Sams. ISBN 0672317567. ISBN 978-0672317569.
- Hsu, Feng-hsiungFeng-hsiung HsuFeng-hsiung Hsu is a computer scientist and the author of the book Behind Deep Blue: Building the Computer that Defeated the World Chess Champion...
(2002). Behind Deep Blue: Building the Computer that Defeated the World Chess Champion. Princeton University Press. ISBN 0-691-09065-3. ISBN 9780691090658. - Mills, D. Quinn; Friesen, G. Bruce (1996). Broken Promises: An Unconventional View of What Went Wrong at IBM. Harvard Business School. ISBN 0-87584-654-8.
- Pugh, Emerson W. (1995). Building IBM: Shaping and Industry and Its Technology. MIT Press. ISBN 978-0-262-16147-3.
- Pugh, Emerson W.; Johnson, Lyle R.; Palmer, John H. (1991). IBM's 360 and Early 370 Systems. MIT Press. ISBN 0-262-16123-0.
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- 1950s onward Biographies, Memoirs
- Gerstner, Louis V. Jr.Louis V. Gerstner, Jr.Louis V. Gerstner, Jr. KBE was chairman of the board and chief executive officer of IBM from April 1993 until 2002 when he retired as CEO in March and chairman in December. He is largely credited with turning around IBM's fortunes.He was formerly CEO of RJR Nabisco, and also held senior positions...
(2002). Who Says Elephants Can't Dance? Inside IBM's Historic Turnaround. Harper Business. ISBN 0-06-052379-4. - Lamassonne, Luis A. (2001). My Life With IBM. Protea. ISBN 1-883707-65-X.
- Maisonrouge, Jacques (1985). Inside IBM: A Personal Story. McGraw Hill. ISBN 0-07-039737-6.
- Rodgers, William; Think: A Biography of the Watsons and IBM Stein and Day, NY NY 1969 SBN 8128-1226-3
External links
- IBM at 100 IBM reviews and reflects on its first 100 years
- THINK: Our History of Progress; 1890s to 2001. IBM
- IBM Archives: IBM Mainframes IBM's long line of the company's mainframe computers spanning more than 50 years
- IBM Archives: IBM Mainframe Family tree & chronology
- IBM Archives: IBM Storage basic information sources History of IBM magnetic tape, Key events in IBM Disk Storage, ...
- IBM Archives: The history of IBM electric typewriters
- Oral History with James W. Birkenstock, Charles Babbage InstituteCharles Babbage InstituteThe Charles Babbage Institute is a research center at the University of Minnesota specializing in the history of information technology, particularly the history since 1935 of digital computing, programming/software, and computer networking....
, University of Minnesota. Birkenstock was an adviser to the president and subsequently as Director of Product Planning and Market Analysis at IBM. In this oral history, Birkenstock discusses the metamorphosis of the company from leader of the tabulating machine industry to leader of the data processing industry. He describes his involvement with magnetic tape development in 1947, the involvement of IBM in the Korean War, the development of the Defense Calculator and the IBM 701IBM 701The IBM 701, known as the Defense Calculator while in development, was announced to the public on April 29, 1952, and was IBM’s first commercial scientific computer...
computer, and the emergence of magnetic core memoryMagnetic core memoryMagnetic-core memory was the predominant form of random-access computer memory for 20 years . It uses tiny magnetic toroids , the cores, through which wires are threaded to write and read information. Each core represents one bit of information...
from the SAGESemi Automatic Ground EnvironmentThe Semi-Automatic Ground Environment was an automated control system for tracking and intercepting enemy bomber aircraft used by NORAD from the late 1950s into the 1980s...
project. He then recounts the entry of IBM into the commercial computer market with the IBM 702IBM 702The IBM 702 was IBM's response to the UNIVAC—the first mainframe computer using magnetic tapes. Because these machines had less computational power than the IBM 701 and ERA 1103, which were favored for scientific computing, the 702 was aimed at business computing.The system used electrostatic...
. The end of the interview concerns IBM's relationship with other early entrants in the international computer industry, including litigation with Sperry Rand, its cross-licensing agreements, and cooperation with Japanese electronics firms.