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History of IBM and its Success

Updated on May 18, 2014
IBM is one of the leading computer software and hardware companies in the world.
IBM is one of the leading computer software and hardware companies in the world. | Source

International Business Machines, popularly known as IBM is the world's third largest IT company (2014) by revenue. IBM, headquarters in Armonk, New York, is in the busines of selling computer hardware, software and services. The company is colloquially referred to as The Big Blue for the prominent display of the colour of corporate communications, employee attire etc.

Former logo of IBM, International Business Machines
Former logo of IBM, International Business Machines | Source


The origin of IBM can be traced several decades before the arrival of personal computers- the line IBM, till a few years back, was most visible in the consumer mind. It was incorporated as Computing-Tabulating-Recording Corporation in 1911. Thomas J. Watson Sr, the founder of IBM, worked as the General Manager at C-T-R. In 1924, C-T-R was renamed International Business Machines(IBM). The Personal Computers designed by IBM became the industry standard after the IBM PC was introduced in 1981. Microsoft and Intel became the sole suppliers of the components that were to go into the IBM PC.

IBM has traditionally been a sales oriented company with even the top management positions chosen from the sales ranks. Sales conventions became a part of this company as early as 1915 and the now famous "THINK" signs were institutionalized in the same year.

One of the primitive models developed by IBM
One of the primitive models developed by IBM | Source

While many companies reeled under the Great Depression of the 1930s, Watson Sr took care of this company and the members by providing life insurance, survivor benefits and paid vacations. Following the Social Security Act of 1935, IBM successively completed the biggest accounting operation of all time-maintaining the records of more than 26 million people. Watson Sr initiated steps for establishment of research and development activities of the company and the first labs were set up in Endicott in New York.

During World War II, all production facilities in IBM were placed at the disposal of the U.S. Government. Out of the production facilities came various kinds of hardware for the U.S. field forces. In fact, Watson Sr kept the profits down to one percent and even initiated a fund to help war widows.


IBM and the Seven Dwarfs

In 1957, IBM took data processing to higher levels with Random Access Method of Accounting and Control (RAMAC) - first computer disk storage system that would later become the industry standard. The same year, IBM introduces FORTRAN, one of the world's most widely used computer languages for technical work. In 1952, Watson Sr. passed the baton of the CEO to his son Thomas Watson Jr. Under Watson Jr. IBM started a new marketing initiative called 'unbundling', where instead of selling computer hardware and software in combination, IBM started offering components individually thus paving way for the multi billion dollar business of software and services business.

THINK- an initiative by IBM
THINK- an initiative by IBM | Source

Of the top eight companies that ruled the industry through the 1960s, IBM was the biggest. This led the industry to speak of 'IBM and the seven dwarfs'. The dwarfs included companies like UNIVAC, GEand Honeywell. Its phenomenal success led to the initiation of anti trust litigation by the U.S.Department of Justice. The lawsuit alleged that IBM was monopolising the electronic digital computer system market.

The PC revolution of the 1980s put the computer directly into the front end individual users. IBM had always focused on selling to large corporations offering integrated solutions. Its rival Apple rode the PC wave and IBM was found lagging in the race. Losses at IBM reached a staggering U.S. $8 billion. In such circumstances, Louis Gerstner took charge as the CEO in 1993. He took concrete steps in product line planning and cost reductions in work force. This led to industry speak of ex-IBM employees talking of IBM as I've Been Moved. But the company did approach the issue with a human face. It set up placement cells and helped find an alternate source of employment for many of the employees who had to quit and leave the organization. This left a strong message to everyone in the company that the organization cared for its employees- past or present.

Ginni Rometty - the current CEO of IBM
Ginni Rometty - the current CEO of IBM | Source

The Internet Age

With the advent of internet and network computing, the industry wanted integrated solutions again. However this time around, the company , better prepared to lead the market, acquired Lotus Corporation and Trivoli Systems. Now services became the biggest breadwinner for the company. Deep Blue, IBM's supercomputer programmed to play chess defeated Garry Kasparov(1997), and showcased the potential of the computer to work with phenomenal number of complex variables and its various potential uses including in financial modeling.

Since 2002, when Samuel J. Palmisano succeeded Louis Gerstner, IBM has been focusing more on revenue generation by offering business solutions and consulting, services, and software. In 2005, IBM sold its PC business to Lenovo of China.

Compared to the offerings of other companies, IBM packs more more features into its products and communicates these benefits forcefully to the end consumer. In these environmentally correct times, IBM unveiled Project Green, through which the company intends to invest U.S. $1 billion across its businesses to raise energy efficiency.

A range of supercomputers developed by IBM
A range of supercomputers developed by IBM | Source

Currently, IBM has 12 research laboratories around the world. It also holds the world record for most patents generated by a company for 20 consucutive years. Its employees have won five Nobel prizes, six Turing awards, ten National medals of Technology and five National medals of science. Notable inventions by IBm include the Automated Teller Machine(ATM), the floppy disk, the hard disk drive, the magnetic stripe card, the relational database, the Universal Product Code(UPC) and Watson Artificial Intelligence.

In 2012, Fortune ranked IBM the second largest U.S. firm in terms of number of employees with 435,000 worldwide. The Big Blue is also the fourth largest in terms of market capitalization, the ninth most profitable, and the 19th largest firm in terms of revenue. Globally, IBM was ranked the No. 31 in terms of revenue by Forbes in 2011. Others rankings include No. 1 for leaders(Fortune 2011/12), No. 1 green company worldwide(Newsweek), No. 2 best global brand (Interbrand), No.2 most respected company(Barron's), No.5 most admired company(Fortune), and No. 18 most innovative company(Fast Company).

IBM Corporate Headquarters
IBM Corporate Headquarters | Source

In the dynamic world of technology, IBM is one of the few global companies that have thrived purely on the basis of research and development. Given its commitment to staying ahead of its highly competitive peers, IBM, the Armonk-based technology colossus, is going full throttle to make this world a better place through technology, which, by all measures, makes it a corporate par excellence.

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