History of IBM

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Logos of IBM
1947–1956
1956–1972
Since 1972

International Business Machines (IBM) is a multinational corporation specializing in computer technology and information technology consulting. Headquartered in Armonk, New York, the company originated from the amalgamation of various enterprises dedicated to automating routine business transactions, notably pioneering punched card-based data tabulating machines and time clocks. In 1911, these entities were unified under the umbrella of the Computing-Tabulating-Recording Company (CTR).

electric typewriters
and other office equipment. Watson, a proficient salesman, aimed to cultivate a highly motivated, well-compensated sales force capable of devising solutions for clients unacquainted with the latest technological advancements.

In the 1940s and 1950s,

Big Blue". The customized nature of end-user software, tailored by in-house programmers for a specific brand of computers, deterred brand switching due to its associated costs. Despite challenges posed by clone makers like Amdahl
and legal confrontations, IBM leveraged its esteemed reputation, assuring clients with both hardware and system software solutions, earning acclaim as one of the esteemed American corporations during the 1970s and 1980s.

However, IBM encountered difficulties in the late 1980s and 1990s, marked by substantial losses surpassing $8 billion in 1993. The mainframe-centric corporation grappled with adapting swiftly to the burgeoning Unix open systems and personal computer revolutions.[1] Desktop machines and Unix midrange computers emerged as cost-effective and easily manageable alternatives, overshadowing multi-million-dollar mainframes. IBM responded by introducing a Unix line and a range of personal computers. The competitive edge was gradually lost to clone manufacturers who offered cost-effective alternatives, while chip manufacturers like Intel and software corporations like Microsoft reaped significant profits.

Through a series of strategic reorganizations, IBM managed to sustain its status as one of the world's largest computer companies and systems integrators. As of 2014, the company boasted a workforce exceeding 400,000 employees globally[2] and held the distinction of possessing the highest number of patents among U.S.-based technology firms.[3][4] IBM maintained a robust presence with research laboratories dispersed across twelve locations worldwide. Its extensive network comprised scientists, engineers, consultants, and sales professionals spanning over 175 countries.[5] IBM employees were recognized for their outstanding contributions with numerous accolades, including five Nobel Prizes, four Turing Awards, five National Medals of Technology, and five National Medals of Science.[6]

Chronology

1880s–1924: The origin of IBM

Main article: Computing-Tabulating-Recording Company
Year Gross income (in $m) Employees
1915 4 1,672
1920 14 2,731
1925 13 3,698

IBM traces its roots to the 1880s through the consolidation of four predecessor companies:[7][8][9][10]

  1. Bundy Manufacturing Company:
  2. Tabulating Machine Company:
  3. International Time Recording Company
    :
  4. Computing Scale Company of America:
    • Established in 1901 in Dayton, Ohio.
Hollerith's plant in 1893

The

1890 United States Census. That census was completed in 6-years and estimated to have saved the government $5 million.[11] The total population of 62,947,714, the family, or rough, count, was announced after only six weeks of processing (punched cards were not used for this tabulation).[12][13] Hollerith's punched cards become the tabulating industry standard for input for the next 70 years, and were initially sold as The Tabulating Machine Company.[citation needed] In 1906, Hollerith made the first tabulator with an automatic card feed and control panel.[14] Hollerith later expanded to private businesses in the United States and abroad. In 1911, due to declining health, Hollerith sold the business to financier Charles Flint for $2.3 million.[15][16]

On June 16, 1911, Flint merged the four companies into a new holding company named the Computing-Tabulating-Recording Company (CTR), headquartered in Endicott.[17][18][19][20] The consolidation aimed to diversify the company's revenue sources and mitigate risks associated with dependence on a single industry.[citation needed] The consolidated entity initially had 1,300 employees and offices/plants in several locations across the United States and Toronto, Ontario.[21] The amalgamated companies started manufacturing, and selling or leasing machinery such as commercial scales, industrial time recorders, meat and cheese slicers, tabulators, and punched cards.[22][23] The individual companies continued operating under their established names as subsidiaries of CTR until the holding company was dissolved in 1933.[24]

To manage the diversified businesses of CTR, Flint sought assistance from

National Cash Register Company (NCR).[citation needed] In 1914, Wastson was made general manager of CTR. Less than a year later the court verdict was set aside. A consent decree was drawn up which Watson refused to sign, gambling that there would not be a retrial. He became president of the firm Monday, March 15, 1915.[25] Watson's managerial strategies and emphasis on customer service and large-scale tabulating solutions propelled revenue growth and expanded the company's operations globally.[citation needed
]

In 1916, CTR started investing in its subsidiary's employees, creating an education program. Over the next two decades, the program expanded to include management education, volunteer study clubs, and the construction of the IBM Schoolhouse in 1933.[26] In 1917, CTR expanded to Brazil, invited by the Brazilian Government to conduct the census.[27] In 1920, the Tabulating Machine Co. made their printing tabulator. With prior tabulators the results were displayed and had to be copied by hand.[28] In 1923, CTR acquired majority ownership of the German tabulating firm Deutsche Hollerith Maschinen Groupe (Dehomag).[citation needed]

Watson had never liked the hyphenated title of Computing-Tabulating-Recording Company and chose the new name of "International Business Machines Corporation" (IBM) both for its aspirations and to escape the confines of "office appliance". The new name was first used for the company's Canadian subsidiary in 1917, and was formally changed on February 14, 1924.[29] The subsidiaries' names did not change; there would be no IBM labeled products until 1933 (below) when the subsidiaries are merged into IBM. Under Watson's leadership, he established key initiatives that shaped IBM's organizational culture, including hiring disabled workers, promoting employee education, and fostering a culture of thinking ("THINK" was a slogan made in 1915[30]). His Open Door policy and initiatives to support employees and their families became integral aspects of IBM's culture.[citation needed]

1925–1929: IBM's early growth

Our products are known in every zone. Our reputation sparkles like a gem. We've fought our way through and new fields we're sure to conquer too. For the ever-onward IBM

— "Ever Onward", IBM employee songbook[31]
Year Gross income (in $m) Employees
1925 13 3,698

Thomas J. Watson, during his tenure at IBM, implemented strict guidelines for employees, encompassing a dress code stipulating dark suits, white shirts, and striped ties. The consumption of alcohol, whether during working hours or otherwise, was prohibited. Watson actively led singing sessions during meetings, featuring songs such as "Ever Onward" from the official IBM songbook.[31] Additionally, the company initiated the publication of an employee newspaper named Business Machines, consolidating coverage of all IBM businesses into one publication.[32]

Several employee recognition programs were introduced, including the Quarter Century Club

Simplex Time Recorder Company.[38]
This division produced a range of equipment, including dial recorders, job recorders, recording door locks, time stamps, and traffic recorders.

IBM expanded its product line through innovative engineering, driven by notable inventors such as

IBM Card", effectively doubling its information capacity.[45] This format became an industry standard until the 1970s.[citation needed
]

Key events in IBM's history during this period include the first tabulator sold to Japan in 1925, through a partnership with Morimura-Brothers.[46][47][48] IBM established its presence in Italy by opening its first office in Milan in 1927, facilitating operations with national insurance and banks. A significant advancement in tabulator technology occurred in 1928 with the introduction of the Hollerith Type IV tabulator capable of subtraction.[49] This year also marked the debut of the Hollerith 80-column punched card, a format that became an industry standard, superseding the prior 45-column card and eventually ending vendor compatibility.[citation needed]

1930–1938: The Great Depression

Year Gross income (in $m) Employees
1930 19 6,346
1935 21 8,654

The 1930s Great Depression posed an extraordinary economic test, yet IBM displayed resilience by maintaining investments in personnel, manufacturing, and technological advancements during this challenging period. Rather than downsizing its workforce, Watson opted to hire additional salesmen and engineers in alignment with President Franklin Roosevelt's National Recovery Administration plan.[citation needed]

IBM accounting machines in operation at the U.S. Social Security Administration c. 1936

During this era, IBM emerged as a pioneering corporation by instituting employee benefits such as group life insurance (1934), survivor benefits (1935), and paid vacations (1936). The company furthered its commitment to education and research by establishing the IBM Schoolhouse in Endicott and constructing a modern research laboratory at the same location. Watson's strategic decisions during this time represented IBM's initial 'Bet the Company' gamble, marked by substantial internal investments to secure the future.[citation needed]

In an effort to manage the strain on resources caused by factories running at maximum capacity for six years without a market to sell to, IBM opted to sell the struggling Dayton Scale Division (food services equipment business) to Hobart Manufacturing in 1933.

Social Security Act of 1935, hailed as "the biggest accounting operation of all time",[52] wherein IBM secured the exclusive bid by promptly providing the necessary equipment. This landmark government contract involved maintaining employment records for 26 million individuals, propelling IBM's success and paving the way for additional government orders. By the decade's end, IBM had not only navigated through the Depression but had also ascended to a prominent position in the industry.[citation needed
]

Watson's visionary focus on international expansion emerged as a pivotal aspect of IBM's 20th-century growth and triumph. Influenced by the devastating impact of World War I on society and businesses, he advocated for commerce as a deterrent to war, emphasizing the compatibility of business interests and peace. Watson's belief was so strong that he inscribed his slogan "World Peace Through World Trade" on the façade of IBM's new World Headquarters (1938) in New York City.[53] This phrase became a fundamental IBM business tenet, and Watson actively campaigned for this idea with international business and government leaders. He played a role as an informal government host to visiting world leaders in New York and received numerous awards from foreign governments in recognition of his efforts to enhance international relations through the establishment of business connections.[citation needed]

Key events

1931
  • The first Hollerith punched card machine capable of multiplication is introduced, known as the Hollerith 600 Multiplying Punch.[54]
  • The first Hollerith alphabetical accounting machine, the Alphabetic Tabulator Model B, was swiftly followed by the full alphabet ATC.[55]
  • The New York World newspaper coins the term "Super Computing Machine" to describe the Columbia Difference Tabulator, a specialized tabulator-based machine created for the Columbia Statistical Bureau. It was exceptionally massive and earned the nickname "Packard". Institutions such as the Carnegie Foundation, Yale University, Harvard University, and others became users.[56][57][58]
1933
1934
  • IBM establishes a group life insurance plan for all employees with at least one year of service.[64]
  • Watson Sr. transitions IBM's factory employees to a salary-based payment system, eliminating piece work and enhancing economic stability for employees and their families.[65]
  • IBM introduces the IBM 801 Bank Proof machine, a new type of proof machine that improved the efficiency of the check clearing process.[66]
1935
1936
  • The Supreme Court rules that IBM can only set punched card specifications, following a legal battle initiated in 1932 regarding card usage restrictions.[68]
1937
1938
  • IBM dedicates its new World Headquarters at 590 Madison Avenue, New York City, and by that time, the company had operations in 79 countries.[53]

1939–1945: World War II

Year Gross income (in $m) Employees
1940 45 12,656
1945 138 18,257
Browning Automatic Rifle
M1 Carbine
Main article:
IBM during World War II

In the years preceding the commencement of World War II, the International Business Machines Corporation (IBM) had established operational presences across various nations that later became embroiled in the global conflict, aligning with either the Allies or the Axis powers. IBM maintained a financially significant subsidiary in Germany, where it held a majority ownership stake, alongside operations in Poland, Switzerland, and several other European countries. In line with the fate of numerous enterprises under enemy ownership in Axis-controlled territories, these IBM subsidiaries were seized by the Nazi regime and other Axis-affiliated governments early in the war. Concurrently, the corporation's central headquarters in New York redirected its efforts towards supporting the American war endeavor.

IBM in America

During World War II, IBM underwent a significant transformation in its product line[76] and operations to support the war effort. Originally known for its tabulating equipment and time recording devices, IBM shifted its focus to manufacturing various military ordnance items and essential products. The product line expanded to include Sperry and Norden bombsights, Browning Automatic Rifles, the M1 Carbine, and engine parts, comprising over three dozen major ordnance items and 70 products overall. Thomas J. Watson, the president of IBM at the time, set a nominal one percent profit on these war-related products. The profits generated were used to establish a fund dedicated to assisting the widows and orphans of IBM employee war casualties.[77]

The contributions of IBM during this period were instrumental in aiding Allied military forces. The company's tabulating equipment found extensive use in mobile records units, ballistics, accounting, logistics, and other war-related purposes. Particularly notable was the use of IBM punched-card machines at Los Alamos National Laboratory during the Manhattan Project, which played a crucial role in the development of the first atomic bombs.[78]

IBM also played a vital role in technological advancements during the war. In collaboration with the U.S. Navy, IBM built the Automatic Sequence Controlled Calculator, also known as the Harvard Mark I, which was the first large-scale electromechanical calculator in the United States.

In the early 1930s, IBM had acquired the rights to Radiotype, an electric typewriter attached to a radio transmitter.[79] This technology proved to be crucial during the war, as Admiral Richard E. Byrd successfully sent a test Radiotype message over 11,000 miles from Antarctica to an IBM receiving station in Ridgewood, New Jersey in 1935.[80] During the war, Radiotype installations were extensively used, processing up to 50,000,000 words a day,[81] and were selected by the Signal Corps for war-related communications.

To meet the demands of wartime production, IBM significantly expanded its manufacturing capacity. New buildings were constructed at its Endicott, New York plant in 1941, and new facilities were established in Poughkeepsie, New York (1941), Washington, D.C. (1942), and San Jose, California (1943).[82][83] The decision to establish a presence on the West Coast, particularly in San Jose, was strategic and capitalized on the burgeoning electronics research and high technology innovation base in the region, which later became known as Silicon Valley.

Additionally, IBM was subcontracted by the U.S. government for a critical project related to the Japanese internment camps. IBM provided punched card equipment and services for the administration and management of these camps.[84]

IBM's punched card equipment also played a vital role in code breaking and

decryption
during the war.

IBM in Germany and Nazi-occupied Europe

During the 1930s and throughout

Holocaust, leading to their internment in concentration camps.[citation needed
]

Third Reich[85] until the seizure of Dehomag following the United States' declaration of war against Germany in 1941.[citation needed
]

IBM countered these claims by stating that the allegations were based on known facts and previously disclosed documents, asserting the absence of new revelations. The company further denied any withholding of relevant documentation.[86] Notable historians have expressed varying views on IBM's complicity and awareness of Nazi utilization of tabulating machines as asserted by Black.[87][88][89]

In parallel to these events during

United Negro College Fund(UNCF).[93] Following the war, in 1945, IBM established its first research facility, the Watson Scientific Computing Laboratory, signifying a pivotal step in the evolution of the company's research endeavors.[94] Subsequently, in 1961, IBM relocated its research headquarters to the T.J. Watson Research Center in Yorktown Heights, New York.[citation needed
]

1946–1959: Postwar

Year Gross income (in $m) Employees
1950 266 30,261
1955 696 56,297
1960 1,810 104,241

IBM experienced significant growth in the aftermath of World War II. The company anticipated potential challenges due to a potential decrease in military spending after the war. To address this concern, IBM initiated an ambitious international expansion, leading to the establishment of the World Trade Corporation in 1949, tasked with managing and expanding foreign operations. Under the leadership of Arthur K. 'Dick' Watson, the youngest son of Watson Sr., the World Trade Corporation played a crucial role in contributing to half of IBM's profits by the 1970s.[citation needed]

IBM introduced its first computer in 1951, closely following

Thomas J. Watson, Jr., took over as the chief executive, after being president since 1952.[citation needed
]

The new CEO faced formidable challenges, navigating a rapidly evolving technological landscape with emerging computer technologies like electronic computers, magnetic tape storage, disk drives, and programming, creating both competitors and market uncertainties. Internally, the company experienced substantial growth, leading to organizational and management complexities. The absence of Watson Sr.'s charismatic leadership raised concerns among senior executives about managing IBM effectively during this transformative period. In response, Watson Jr. undertook a radical restructuring of the organization, implementing a modern management structure to enhance oversight and efficiency.[95]

Watson Jr. institutionalized IBM's well-known but unwritten practices and philosophies into formal corporate policies and programs, such as the Three Basic Beliefs, Open Door, and Speak Up! He notably introduced the company's first equal opportunity policy letter in 1953, preceding the U.S. Supreme Court decision in Brown v. Board of Education by a year and anticipating the Civil Rights Act of 1964.[96] by 11 years.[97]

Furthermore, Watson Jr. expanded the company's physical capabilities, establishing key research and development laboratories in various locations. Acknowledging the need to embrace transistor technology, he mandated a corporate policy in 1957, advocating the use of solid-state circuitry in all machine developments and discouraging the use of tube circuitry in new commercial machines or devices.[98]

IBM continued its collaboration with the U.S. government, driving

SAGE for the United States Air Force. This initiative enabled IBM to access groundbreaking research on real-time, digital computers and various technological advancements.[citation needed
]

These strategic government partnerships, combined with pioneering computer technology research and successful commercial products, including the IBM 700 series of computer systems, IBM 650, IBM 305 RAMAC with disk drive memory, and IBM 1401, positioned IBM as the world's leading technology firm by the end of the 1950s.[100] In the five years following Watson Sr.'s passing, IBM's size had more than doubled, its stock had quintupled, and a significant majority of computers in operation in the United States were IBM machines.[101]

IBM 7090 installation

Key events

During the period from 1946 to 1959, International Business Machines Corporation (IBM) witnessed several significant events and developments that played a crucial role in shaping the company's trajectory and influence in the emerging computer and technology industry. These events are outlined below:

1946
  • IBM 603 Electronic Multiplier: IBM announces the IBM 603 Electronic Multiplier, marking the company's first commercial product to incorporate electronic arithmetic circuits.[102]
  • Chinese Character Typewriter: IBM introduces an electric Chinese ideographic character typewriter, enabling users to type at a rate of 40 to 45 Chinese words per minute. The machine utilized a cylinder with engraved ideographic type faces, showcasing IBM's early forays into diverse language processing technologies.[103]
  • First Black Salesman: IBM hires its first black salesman, demonstrating an early commitment to diversity and inclusion, occurring well before the enactment of the Civil Rights Act of 1964.[104]
1948
1950s
  • IBM's Involvement in Space Exploration: IBM played a crucial role in space exploration endeavors, ranging from developing ballistics tables during World War II to designing intercontinental missiles and supporting satellite launching and tracking, marking a significant contribution to the aerospace industry.[106]
1952
  • IBM 701 Commercial Computer: IBM entered the commercial computer market with the introduction of the IBM 701, its first large-scale electronic computer manufactured in quantity. The IBM 701 played a pivotal role in establishing IBM's presence in the electronics industry.[107]
  • Magnetic Tape
    vacuum column, revolutionizing data storage by enabling fragile magnetic tape to become a viable medium. This innovation set the stage for the widespread adoption of magnetic storage technology.[108]
  • First California Research Lab: IBM opened its first West Coast laboratory in San Jose, California, a significant step that eventually contributed to the development of Silicon Valley. Within a few years, this lab played a pivotal role in inventing the hard disk drive.[107]
1953
  • Equal Opportunity Policy Letter: IBM's president, Thomas J. Watson Jr., published the company's first written equal opportunity policy letter, showcasing an early commitment to promoting equality within the workplace.[96]
  • IBM 650 Magnetic Drum Data-Processing Machine: IBM announced the IBM 650 Magnetic Drum Data-Processing Machine, an intermediate-sized electronic computer designed to handle both business and scientific computations. It became highly popular during the 1950s.[109]
1954
1956
1957
  • IBM introduces the
    better source needed
    ]
1958
  • Lincoln Laboratory, a critical component of the North American Air Defense System.[118]
1959
  • IBM 1401: IBM introduced the IBM 1401, the first high-volume, stored-program, core-memory, transistorized computer. Its versatility in running enterprise applications made it highly popular in the early 1960s.[119]
  • IBM 1403 Chain Printer: IBM launched the 1403 chain printer, marking the advent of high-speed, high-volume impact printing, a significant advancement in the field of data output and document processing.[120]

These events collectively reflect IBM's prominent role in the evolution of computing technology, its commitment to innovation, and its pioneering contributions to various aspects of the emerging computer industry during the late 1940s and 1950s.

1960–1969: The System/360 era, Unbundling software and services

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
See also: History of CP/CMS

On April 7, 1964, IBM introduced the revolutionary System/360, the first large "family" of computers to use interchangeable software and peripheral equipment, a departure from IBM's existing product line of incompatible machines, each of which was designed to solve specific customer requirements.[121] The idea of a general-purpose machine was considered a gamble at the time.[122]

Within two years, the System/360 became the dominant mainframe computer in the marketplace and its architecture became a de facto industry standard. During this time, IBM transformed from a medium-sized maker of tabulating equipment and typewriters into the world's largest computer company.[123]

In 1969 IBM "unbundled" software and services from hardware sales. Until this time customers did not pay for software or services separately from the high price for 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.

IBM's unbundling is widely credited with leading to the growth of the software industry.[124][125][126][127] 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 essentially been free. This helped enable the creation of the 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.[citation needed]

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 produced more than half of IBM's revenues by the early 1970s. The resulting technology transfer shaped the way governments and businesses operated around the world. IBM personnel and technology played an integral role in the space program and landing the first humans 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 starting today's software and services industry. See unbundling of software and services, below. IBM was massively profitable, with a nearly fivefold increase in revenues and earnings during the 1960s.[citation needed]

In 1967,

Robert Gatje. In September 1967, the Boca team shipped the first IBM System/360 Model 20 to the City of Clearwater – the first computer in its production run. A year later, IBM 1130 Computing Systems were being produced and shipped. By 1970, IBM's Boca workforce grew to around 1,300 in part due to a Systems Development Engineering Laboratory being added to the division's operations.[citation needed
]

Key events

1961
  • 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 product that pioneers numerous revolutionary computing technologies which are soon widely adopted by the computer industry.[129][130]
  • IBM moves its research headquarters from Poughkeepsie, NY 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. The lab which IBM established at Columbia University in 1945 was closed and moved to the Yorktown Heights laboratory in 1970.[131]
  • 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.[132] IBM replaced the Selectric line with the IBM Wheelwriter in 1984 and transferred its typewriter business to the newly formed Lexmark in 1991.[133]
  • IBM offers its Report Program Generator, an application that allows IBM 1401 users to produce reports. This capability was adopted throughout the industry, becoming a feature offered in subsequent generations of computers. It played an role in the introduction of computers into small businesses.[citation needed]
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.[134]
  • SABRE. Two IBM 7090 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.[135]
1964
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.[139]
  • New York World's Fair. The IBM Pavilion at the New York World's Fair closes, having hosted more than 10 million visitors during its two-year existence.[140]
1966
1967
  • Fractal geometry. IBM researcher Benoit Mandelbrot 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.[143]
1968
1969

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 endure two in two years. T. Vincent Learson succeeded Watson as CEO, then quickly retired upon reaching the mandatory retirement age of 60 in 1973. Following Learson in the CEO office was Frank T. Cary, a 25-year IBMer[149] who had run the data processing division in the 1960s.[citation needed]

Datamation in 1971 stated that "the perpetual, ominous force called IBM rolls on".[150] The company's dominance let it keep prices high and rarely update products,[151] all built with only IBM components.[152] During Cary's tenure as CEO, the IBM System/370 was introduced in 1970 as IBM's new mainframe. The S/370 did not prove as technologically revolutionary as its predecessor, the System/360. From a revenue perspective, it more than sustained the cash cow status of the 360.[153]

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. 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).[154]

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 – which was a 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.[citation needed]

Some 1970s-era IBM technologies emerged to become 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

Automatic Teller Machines.[citation needed
]

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.[citation needed]

A less successful business endeavor for IBM was its entry into the office copier market in the 1970s, after turning down the opportunity to purchase the

Xerox Corporation for patent infringement. Although Xerox held the patents for the use of selenium as a photoconductor, IBM researchers perfected the use of organic photoconductors which avoided the Xerox patents. The litigation lasted until the late 1970s and was ultimately settled. Despite this victory, IBM never gained traction in the copier market and withdrew from the marketplace in the 1980s. Organic photoconductors are now widely used in copiers.[citation needed
]

Throughout this period, IBM was litigating the antitrust suit filed by the Justice Department in 1969. But in a related bit of case law, the landmark

Honeywell v. Sperry Rand U.S. federal court case was concluded in April 1973. The 1964 patent for the ENIAC, the world's first general-purpose electronic digital computer, was found both invalid and unenforceable for a variety of reasons thus putting the invention of the electronic digital computer into the public domain. However, IBM was ruled to have created a monopoly via its 1956 patent-sharing agreement with Sperry-Rand.[citation needed
]

American antitrust laws did not affect IBM in Europe, where as of 1971 it had fewer competitors and more than 50% market share in almost every country. Customers preferred IBM because it was, as Datamation said, "the only truly international computer company", able to serve clients almost anywhere. Rivals such as

CII, and Siemens began to cooperate to preserve a European computer industry.[150]

Key events

1970
  • System/370. IBM announces System/370 as successor to System/360.[citation needed]
  • Relational databases. IBM introduces relational databases 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, most database structures are based on the IBM concept of relational databases.[citation needed]
  • Office copiers. IBM introduces its first of three models of xerographic copiers. These machines mark the first commercial use of organic
    photoconductors which since became the dominant technology.[citation needed
    ]
1971
1973
  • Winchester storage technology. The
    IBM 3340 disk unit – known as "Winchester" after IBM's internal project name – is introduced, more than doubling the information density on disk surfaces. It featured a smaller, lighter read/write head that rode 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.[157]
  • Nobel Prize. Dr. Leo Esaki, an IBM Fellow who joined the company in 1960, shares the 1973 Nobel Prize 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.[158]
1974
  • SNA. IBM announces 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 becomes the most widely used system for data processing until more open architecture standards were approved in the 1990s.[159]

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

President of IBM John R. Opel became CEO in 1981.[160] IBM was one of the world's largest companies and had a 62% share of the mainframe computer market that year.[146] While frequently relocated employees and families still joked that IBM stood for "I've Been Moved", and employees of acquisitions feared that formal IBM employees would change the culture of their more casual offices,[161] IBM no longer required white shirts for male employees, who still wore conservative suits when meeting customers. Former employees such as Gene Amdahl used their training to found and lead many competitors[31] and suppliers.[162]

Expecting Japanese competition, IBM in the late 1970s began investing in manufacturing to lower costs, offering volume discounts and lower prices to large customers, and introducing new products more frequently.

Displaywriter was the first new product less expensive than the competition.[146] IBM's share of the overall computer market, however, declined from 60% in 1970 to 32% in 1980.[165] Perhaps distracted by the long-running antitrust lawsuit,[31] the "Colossus of Armonk" missed the fast-growing minicomputer market during the 1970s,[163][166][167][168] and was behind rivals such as Wang, Hewlett-Packard (HP), Digital Equipment Corporation (DEC), Tandem Computers, and Control Data in other areas.[165]

In 1979

inflation rate – while those of DEC grew by more than 35%.[164] Although IBM began selling minicomputers,[169] in January 1982 the Justice Department ended the antitrust suit because, The New York Times reported, the government "recognized what computer experts and securities analysts had long since concluded: I.B.M. no longer dominates the computer business".[146]

IBM PC
(c. 1981)

IBM wished to avoid the same outcome with the new

Don Estridge. 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. Although not inexpensive, 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 these 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.[citation needed
]

IBM PC
was created.

IBM's dominance of the mainframe market in Europe and the US encouraged existing customers to buy the PC,[170][172] and vice versa; as sales of what had been an experiment in a new market became a substantial part of IBM's financials, the company found that customers also bought larger IBM computers.[173][166][161] Unlike the BUNCH and other rivals IBM quickly adjusted to the retail market,[170][174] with its own sales force competing with outside retailers for the first time.[161] By 1985 IBM was the world's most profitable industrial company,[161] and its sales of personal computers were larger than that of minicomputers despite having been in the latter market since the early 1970s.[169]

By 1983 industry analyst

Miniscribe shares of not only Miniscribe but that of uninvolved companies that sold to IBM fell, as investors feared their vulnerability.[162] IBM was also vulnerable when suppliers could not fulfill orders;[176] customers and dealers also feared becoming overdependent.[170][151]

The

ADAPSO discussed the company with the Justice Department, and European governments worried about IBM's influence but feared affecting its more than 100,000 employees there at 19 facilities.[151]

However, the company soon lost its lead in both PC hardware and software, thanks in part to its unprecedented (for IBM) decision to contract PC components to outside companies like Microsoft and Intel. Up to this point in its history, IBM relied on a vertically integrated strategy, building most key components of its systems itself, including processors, operating systems, peripherals, databases and the like. In an attempt to accelerate the time-to-market for the PC, IBM chose not to build a proprietary operating system and microprocessor. Instead, it sourced these vital components from

PC compatibles and the creation of hundreds of billions of dollars of market value outside of IBM.[citation needed
]

Reduced Instruction Set Computing (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 Microsystems.[citation needed
]

In 1984 the company partnered with Sears to develop a pioneering online home banking and shopping service for home PCs that launched in 1988 as Prodigy. Despite a strong reputation and anticipating many of the features, functions, and technology that characterize the online experience of today, the venture was plagued by overly conservative management decisions, and was eventually sold in the mid-1990s.[citation needed]

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 revenue stream, thereby missing a boom market of the 1990s. Still, IBM investments and advances in microprocessors, disk drives, network technologies, software applications, and online commerce in the 1980s set the stage for the emergence of the connected world in the 1990s.[citation needed]

However, by the end of the decade, IBM was in trouble. It was a bloated organization of some 400,000 employees that was heavily invested in too many 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. Additionally, the back-to-back revolutions – the PC and the client-server – combined to 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 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 and its mainframe competitors. 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 did not last 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.[citation needed]

Radical changes were considered and implemented. As IBM assessed the situation, it was clear that competition and innovation in the computer industry were now taking place along segmented, versus vertically integrated lines, where computer industry 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.[citation needed]

IBM also began spinning off its many divisions into autonomous subsidiaries (so-called "Baby Blues") in an attempt to make the company more manageable and to streamline IBM by having other investors finance those companies.

Selectric); and more.[182] Lexmark was acquired by Clayton & Dubilier in a leveraged buyout shortly after its formation.[183]

In September 1992, IBM combined and spun off their various non-

IBM Personal Computer Company (IBM PC Co.).[184][185] This corporate restructuring came after IBM reported a sharp drop in profit margins during the second quarter of fiscal year 1992; market analysts attributed the drop to a fierce price war in the personal computer market over the summer of 1992.[186] The corporate restructuring was one of the largest and most expensive in history up to that point.[187] By the summer of 1993, the IBM PC Co. had divided into multiple business units itself, including Ambra Computer Corporation and the IBM Power Personal Systems Group, the former an attempt to design and market "clone" computers of IBM's own architecture and the latter responsible for IBM's PowerPC-based workstations.[188][189]

These efforts failed to halt the slide. A decade of steady acceptance and widening corporate growth of

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.[190] 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.[citation needed
]

Key events

1993–2018: 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 91,400 329,373
2010 99,870 426,751

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 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 strengths was its ability to provide integrated solutions for customers – more than piece parts or components. Splitting the company would have destroyed that IBM advantage.[224]

These initial steps worked. In 1994 IBM turned a profit of $3 billion. Stabilization was not Gerstner's endgame – the restoration of IBM's once great reputation was. To do that, he needed a winning business strategy.[225] Over the next decade, Gerstner shed commodity businesses and focused on high-margin opportunities. IBM divested itself of low margin industries (DRAM, IBM Network, personal printers, and hard drives).[citation needed]

By building upon the decision to keep the company whole, IBM built a global services business and a reputation as a technology integrator. IBM claimed that the services business became brand agnostic integrating whatever technologies the client required, even if they were from an IBM competitor.

PricewaterhouseCoopers for $3.5 billion US.[227]

Another high margin opportunity IBM invested in was software. Starting in 1995 with its acquisition of

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.[228]

Not all software that IBM developed was successful. While the operating system OS/2 was arguably technically superior to Microsoft Windows 95, OS/2 sales were largely concentrated in networked computing used by corporate professionals. OS/2 failed to develop much penetration in the consumer and stand-alone desktop PC segments. There were reports that it could not be installed properly on IBM's own Aptiva series of home PCs.[229]

Microsoft made an offer in 1994 stipulating that if IBM ended development of OS/2 completely, then it would receive the same terms as

Lotus SmartSuite would have directly competed with Microsoft Office. As a result, IBM received their license later than their competitors which hurt sales of IBM PCs. IBM officials later conceded that OS/2 would not have been a viable operating system to keep them in the PC business.[230][231]

While IBM hardware and technologies were relatively de-emphasized in Gerstner's three-legged business model, they were not relegated to secondary status. The company brought its research organization to bear more closely on its existing product lines and development processes. While Internet applications and deep computing overtook client servers as key business technology priorities, mainframes returned to relevance. IBM reinvigorated their mainframe line with CMOS technologies, which made them among the most powerful and cost-efficient in the marketplace.[232] 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.[233] IBM-designed chips were 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.

An IBM ThinkPad series laptop

Equally significant in IBM's revival was its reentry into the popular mindset. On October 5, 1992, at the

TrackPoint II pointing device.[235] The design by noted designer Richard Sapper made the Thinkpad successful with the digerati, and the cool factor of the ThinkPad brought back some of the cachet to the IBM brand that was lost in the PC wars of the 1980s. Instrumental to this popular resurgence was the 1997 chess match between IBM's chess-playing computer system Deep Blue and reigning world chess champion Garry Kasparov. Deep Blue's victory was a historic first for a computer over a reigning world champion. Also helping the company reclaim its position as a technology leader was its annual domination of supercomputer rankings[236] and patent leadership statistics.[237] Ironically, a contributor in reviving the company's reputation was the Dot-com bubble
collapse in 2000, where many of the edgy technology high flyers of the 1990s failed to survive the downturn. These collapses discredited some of the more fashionable Internet-driven business models that IBM was previously compared against.

Another factor was the company's revival of the IBM brand. The company's marketing during the economic downturn was chaotic, presenting 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 consolidated its advertising in one agency. The result was a coherent, consistent message to the marketplace.[238]

As IBM recovered its financial footing, 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 e-commerce and On Demand.[239] It supported open source initiatives, forming ventures with partners and competitors alike.[240]

The company also revamped its philanthropic practices to bring 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 adopted and integrated diversity principles and practices ahead of the industry. 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 listed as among the best places for employees, employees of color, and women to work.[241] And in 1996, the Women in Technology International Hall of Fame inducted three IBM employees as part of its inaugural class of 10 women: Ruth Leach Amonette, the first woman to hold an executive position at IBM; Barbara Grant, PhD, first woman to be named an IBM site general manager; and Linda Sanford, the highest-placed technical woman in IBM. Fran Allen – a software pioneer for her innovative work in compilers over the decades – was inducted in 1997.[242]

In 1998, IBM merged the enterprise-oriented Personal Systems Group of the IBM PC Co. into IBM's own Global Services personal computer

consulting and customer service division. The resulting merged business units then became known simply as IBM Personal Systems Group.[243] In 1999, IBM stopped selling their computers at retail outlets after their market share in this sector had fallen considerably behind competitors Compaq and Dell.[244] Immediately afterwards, the IBM PC Co. was dissolved and merged into IBM Personal Systems Group.[245]

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

In 2005, the company

video surveillance system for Davao City.[249]

In 2014, IBM announced it would sell its

better source needed] while continuing to offer Power ISA
-based servers.

Key events

1993
  • IBM misreads two significant trends in the computer industry: personal computers and client-server computing: and as a result loses more than $8 billion in 1993, its third straight year of billion-dollar losses. Since 1991, the company lost $16 billion, and many feel IBM is no longer a viable player in the industry.[251]
  • Louis V. Gerstner Jr. 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.[252]
  • RISC System/6000 technology. IBM pioneers 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 that are run concurrently ("in parallel") to speed their completion.[253]
1994
1995
1996
1997
  • IBM RS/6000 SP supercomputer, Deep Blue, defeats World Chess Champion Garry Kasparov in the first known instance of a computer beating a reigning world champion chess player in a tournament-style competition.[262]
  • eBusiness. 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.[263]
1998
  • CMOS Gigaprocessor. IBM unveils the first microprocessor that runs at 1 billion cycles per second. IBM scientists develop new Silicon on insulator chips to be used in the construction of a mainstream processor. The breakthrough ushers in new circuit designs and product groups.[264]
1999
  • Blue Gene. 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.[265]
2000
  • Quantum mirage nanotechnology. IBM scientists discover a way to transport information on the atomic scale using electrons instead of conventional wiring. This new phenomenon, called the quantum mirage effect, may enable data transfer within future nanoscale electronic circuits too small to use wires. The quantum mirage technique can send information through solid forms and could do away with wiring that connects nanocircuit components.[266]
  • IBM
    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 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 Kasparov in chess in 1997.[267]
  • Flexible transistors. IBM creates flexible transistors, combining organic and inorganic materials as a medium for semiconductors. 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.[268]
  • Sydney Olympics. After a its successful engagement at the 2000 Olympic games in Sydney, IBM ends its 40-year technology partnership with the International Olympic Committee.[269]
2001
  • The book
    better source needed
    ]
  • Carbon nanotube 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 thought to be an important step in finding materials that can be used to build computer chips when silicon-based chips can't be made smaller.[271]
  • 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.[272]
  • 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 silicon", a breakthrough that alters silicon to boost chip speeds by up to 35 percent.[273][274]
2002
2003
  • Blue Gene/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 cubic meter machine is a 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.[276]
2005
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 software helps offset the shortage of military linguists.[279]
2007
  • Renewable energy. IBM is recognized by the US EPA for its 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.[280]
  • River watch using IBM Stream Computing. 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 project is made possible by IBM's "Stream Computing", a new computer architecture that can examine thousands of information sources to help scientists better understand what is happening as it happens.[281][282]
  • 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 annually in research, development, and engineering since 1996. IBM's active portfolio is about 26,000 patents in the US and over 40,000 patents worldwide is a direct result of that investment.[283]
2008
2011
2015

2019–present

The 2019 acquisition of Red Hat enabled IBM to change its focus on future platforms, according to IBM Chief Executive Arvind Krishna.[294]

In October 2020, IBM announced it is splitting itself into two public companies.[295] IBM will focus on high-margin cloud computing and artificial intelligence, built on the foundation of the 2019 Red Hat acquisition. The legacy Managed Infrastructure Services unit will be spun off into a new public company Kyndryl to manage clients' IT infrastructure and accounts, and have 4,600 clients in 115 countries, with a backlog of $60 billion.[296][297]

On January 21, 2022, IBM announced that it would sell Watson Health to the private equity firm Francisco Partners.[298]

This new focus on hybrid cloud, separating IBM from its other business units, will be larger than any of its previous divestitures, and welcomed by investors.[299][300][301]

In July 2022, IBM announced the acquisition of Databand, a data observability software developer, for an undisclosed amount. Following the acquisition, Databand employees will join IBM's data and AI division.[302]

In December 2022, it was announced IBM had acquired the Reston-headquartered digital transformation and IT modernization services provider, Octo Consulting from Arlington Capital Partners for an undisclosed price.[303][304] IBM also signed a partnership with new Japanese 2 nm process manufacturing company Rapidus.[305]

In August 2023, IBM announced that it would sell The Weather Company to private equity firm Francisco Partners.[306]

Twentieth-century market power and antitrust

IBM dominated the electronic data processing market for most of the 20th century, initially controlling over 70 percent of the punch card and tabulating machine market and then achieving a similar share in the computer market.[307] IBM asserted that its successes in achieving and maintaining such market share were due to its skill, industry and foresight; governments and competitors asserted that the maintenance of such large shares was at least in part due to anti-competitive acts such as unfair prices, terms and conditions, tying, product manipulations and creating FUD (Fear, Uncertainty and Doubt) related to its competitors, in the marketplace.[308] IBM was thus the defendant in more than twenty government and private antitrust actions during the 20th century. IBM lost only one of these matters but did settle others in ways that profoundly shaped the industry as summarized below. By the end of the 20th century, IBM was no longer so dominant in the computer industry. Some observers suggest management's attention to the many antitrust lawsuits of the 1970s was at least in part responsible for its decline.[307]

1936 Consent Decree

In 1932, U.S. Government prosecutors asserted as anti-competition tying IBM's practice of requiring customers who leased its tabulating equipment to purchase punched cards used on such equipment. IBM lost[309] the lawsuit and in the resulting 1936 consent decree, IBM agreed to no longer require only IBM cards and agreed to assist alternative suppliers of cards in starting production facilities that would compete with IBM's; thereby create a separate market for the punched cards and in effect for subsequent computer supplies such as magnetic tapes and disk packs.[310]

1956 Consent Decree

On January 21, 1952, the U.S. Government filed a lawsuit which resulted in a consent decree entered as a final judgment on January 25, 1956.[311] The government's goal to increase competition in the data processing industry was effected through several provisions in the decree:[312]

  • IBM was required to sell equipment on terms that would not place purchasers at a disadvantage with respect to customers leasing the same equipment from IBM. Prior to this decree, IBM had only rented its equipment. This created markets both for used IBM equipment[312] and enabled lease financing of IBM equipment by third parties (leasing companies).[312]
  • IBM was required to provide parts and information to independent maintainers of purchased IBM equipment,[312] enabling and creating a demand for such hardware maintenance services.
  • IBM was required to sell data processing services through a subsidiary that could be treated no differently than any company independent of IBM, enabling competition in the data processing services business.
  • IBM was required to grant non-exclusive, non-transferable, worldwide licenses for any and all patents at reasonable royalty rates to anyone, provided the licensee cross-licensed its patents to IBM on similar terms.[311] This removed IBM patents as a barrier to competition in the data processing industry and enabled the emergence of manufacturers of equipment plug compatible to IBM equipment.

While the decree did little to limit IBM's future dominance of the then-nascent computer industry, it did enable competition in segments such as leasing, services, maintenance, and equipment attachable to IBM systems and reduced barriers to entry through mandatory reasonable patent cross-licensing.

The decree's terms remained in effect until 1996; they were phased out over the next five years.[313]

1968–1984 Multiple government and private antitrust complaints

In 1968 the first of a series of antitrust suits against IBM was filed by

Control Data Corp (CDC). It was followed in 1969 by the US government's antitrust complaint, then by 19 private US antitrust complaints and one European complaint. In the end IBM settled a few of these matters but mainly won. The US government's case sustained by four US Presidents and their Attorneys General was dropped as "without merit" in 1982 by William Baxter, US President Reagans' Assistant Attorney General in charge of the Antitrust Division of the U.S. Department of Justice.[314]

1968–1973 Control Data Corp. v. IBM

CDC filed an antitrust lawsuit against IBM in Minnesota's federal court alleging that IBM had monopolized the market for computers in violation of section 2 of the Sherman Antitrust Act by among other things announcing products it could not deliver.[315] A 1965 internal IBM memo by an IBM attorney noted that Control Data had publicly blamed its declining earnings on IBM, "and its frequent model and price changes. There was some sentiment that the charges were true."[316] In 1973 IBM settled the CDC case for about $80 million in cash and the transfer of assets including the IBM Service Bureau Corporation to CDC.[315]

1969–1982 U.S. v. IBM

On January 17, 1969, the United States of America filed a complaint in the United States District Court for the Southern District of New York, alleging that IBM violated Section 2 of the Sherman Antitrust Act by monopolizing or attempting to monopolize the general-purpose electronic digital computer system market, specifically computers designed primarily for business. Subsequently, the US government alleged IBM violated the antitrust laws in IBM's actions directed against leasing companies and plug-compatible peripheral manufacturers.

In June 1969 IBM unbundled its software and services in what many observers believed was in anticipation of and a direct result of the 1969 US Antitrust lawsuit. Overnight a competitive software market was created.[317]

Among the major violations asserted were:[318]

  • Anticompetitive price discrimination such as giving away software services.
  • Bundling of software with "related computer hardware equipment" for a single price.
  • Predatorily priced and preannounced specific hardware "fighting machines".
  • Developed and announced specific hardware products primarily for the purpose of discouraging customers from acquiring competing products.
  • Announced certain future products knowing that it was unlikely to be able to ship such products within the announced time frame.
  • Engaged in below cost and discount conduct in selected markets in order to injure peripheral manufacturers and leasing companies.

It was in some ways one of the great single firm monopoly cases of all times. IBM produced 30 million pages of materials during discovery; it submitted its executives to a series of pretrial depositions. Trial began six years after the complaint was filed and then it battled in court for another six years. The trial transcript contains over 104,400 pages with thousands of documents placed in the record. It ended on January 8, 1982, when William Baxter, the then Assistant Attorney General in charge of the Antitrust Division of the Department of Justice dropped the case as "without merit".[314]

1969–1981 Private antitrust lawsuits

The U.S.'s 1969 antitrust lawsuit was followed by about 18 private antitrust complaints all but one of which IBM ultimately won. Some notable lawsuits include:

Greyhound Computer Corp.

Greyhound, a leasing company, filed a case under Illinois' state antitrust law in Illinois state court.[319] This case went to trial in federal court in 1972 in Arizona with a directed verdict for IBM on the antitrust claims; however, the court of appeals in 1977 reversed the decision. Just before the retrial was to start in January 1981, IBM and Greyhound settled the case for $17.7 million.[315]

Telex Corp.

Telex, a peripherals equipment manufacturer, filed suit on January 21, 1972, charging that IBM had monopolized and had attempted to monopolize the worldwide manufacture, distribution, sales, and leasing of electronic data processing equipment including the relevant submarket of plug-compatible peripheral devices. After a non-jury trial in 1973, IBM was found guilty "possessing and exercising monopoly power" over the "plug-compatible peripheral equipment market", and ordered to pay triple damages of $352.5‐million and other relief including disclosure of peripheral interface specifications. Separately Telex was found guilty of misappropriated IBM trade secrets.[320] The judgment against IBM was overturned on appeal and on October 4, 1975, both parties announced they were terminating their actions against each other.[321]

Other private lawsuits

Other private lawsuits ultimately won by IBM include California Computer Products Inc.,[322] Memorex Corp.,[323] Marshall Industries, Hudson General Corp., Transamerica Corporation[324] and Forro Precision, Inc.

1980–1984 European Union

The European Economic Community Commission on Monopolies initiated proceedings against IBM under article 86 of the Treaty of Rome for exploiting its domination of the continent's computer business and abusing its dominant market position by engaging in business practices designed to protect its position against plug-compatible manufacturers. The case was settled in 1984 with IBM agreeing to change its business practices with regard to disclosure of device interface information.[325]

Products and technologies

  See List of IBM products

Evolution of IBM's operating systems

Main article: History of IBM mainframe operating systems

IBM

System/360, however, operating systems had assumed a much larger role, in terms of cost, complexity, importance, and risk.[citation needed
]

High-level languages

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

Nevertheless, IBM had a significant role in the following major computer languages:[citation needed]

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

IBM and AIX/UNIX/Linux/SCO

IBM developed an inconsistent relationship with the

RS/6000 platform, this also meant that a decision had been made against the highly profitable and entrenched mainframe platform. So despite having some excellent technology, IBM often placed itself in a compromised position.[citation needed
]

A case in point is IBM's

GIS applications. Despite long having a dominant position in such industries as electric, gas, and water utilities, IBM stumbled in the 1990s trying to build workstation-based solutions to replace its existing mainframe-based products. Some customers moved to new technologies from other vendors; many felt betrayed by IBM.[citation needed
]

While IBM better embraced

UNIX and Linux platforms.[citation needed
]

See also

External links

Notes and references

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Further reading

Commentary, general histories

  For more recent IBM subject books see: IBM#Further reading

Technology

  For Punched card history, technology, see: Unit record equipment#Further reading
  For Herman Hollerith see: Herman Hollerith#Further reading

Locations – plants, labs, divisions, countries

Biographies, memoirs

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

External links

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