IBM: The Fall of the “Big Blues”!

This Para series makes you driveways when IBM had been a leading name in the world of technology. At that time, IBM dominated sales and no other machine carried the revered IBM name, even though companies including Apple and Tandy Corp., were making personal computers during the same. Despite dominance even, “the Big Blues (IBM)” couldn’t resist failures! Although, years after decline it has still managed to stay in the market and make the highest revenue and maintained as the 49th largest company overall. But is no longer a lead in the PC market, to which it once owned the title as the leading PC manufacturers.

World Dominance: A remarkable Beginning

Firstly, IBM was founded in 1911, at the time it was a holding company, previously named as Computing-Tabulating-Recording (CTR), which manufactured record-keeping and measuring systems. It was renamed “International Business Machines” in 1924, shortened as “IBM” and soon became the leading manufacturer of punch-card tabulating systems.

For several decades, IBM would remain a lead in several emerging technologies, including electric typewriters, electromechanical calculators, and personal computers. IBM didn’t invent the desktop computer, but simply manufactured and launched its first computer system family, the IBM System 360 on April 7, 1964. Further with IBM System 370 in 1970. Both the systems made IBM mainframes the dominant mainframe computers and the dominant computing platform.

It serves as specialised in computer hardware and software, middleware, provides hosting and consulting services in areas such as mainframe computers and nanotechnology. Indeed, IBM today serves as the largest industrial research organization in the world, with 19 research facilities across several countries.

As one of the world’s oldest and largest technology companies, IBM has been responsible for several tech sector innovations, like from the everyday used the automated teller machine (ATM), dynamic random-access memory (DRAM), the floppy disk, the hard disk drive, the magnetic stripe card, the relational database, and also programming language like SQL. The company has advanced in making quantum computing, computer chips, data infrastructure and artificial intelligence.

IBM’s essential contributor were to place the technology as suitable for wide use and to set a technology standard. Rivals were impelled to meet a demand that they had all grossly undervalued. Similarly, IBM had the greatest effect on the PC’s acceptance than did Apple, Compaq, Dell, and so did Microsoft.

The Break

Despite IBM’s grand entry into the tech industry marked a dominance, by 1986 IBM PC business became also-ran! IBM had set a standard for the personal computers, but after pioneering the multipurpose microcomputers in 1980, IBM began losing market to emerging competitors. By 1990, it began to downsize its operation and divest from commodity production. And sadly at the end of the decade, the PC manufacturing ended with the Chinese computer maker Lenovo Group purchasing IBM’s PC business in 2005.

Since then, IBM concentrated on services like computers, software, supercomputers, and scientific research. Since 2000, its supercomputers have consistently ranked among the most powerful in the world.

Classic Mistakes IBM Made

IBM hired Bill Gates to develop an operating system for its PC. However Gates (The Microsoft Team) retained the rights to the operating system on its release. This strategic error of not retaining rights of the operating system resulted in charging IBM for many dollars. This meant Microsoft had full rights for the OS and could set standards for the software. And despite IBM

Lately, Business had been led by executives who themselves didn’t have a good understanding of the PC market. To whom PCs required the same rigorous testing as other products which was a time taking process. With this procedure being followed no software was allowed to be released until it was made to be as close to bugproof as possible. Opposite to this, other software developers preferred speed to market over quality and let users identify flaws then fix them up quickly. They believed it was better to get something to release faster with users suggesting changes then doing it for them. This later on, actually proved to be a better strategy than one followed by IBM. As this prolonged IBM remained much behind its competitors in terms of both speed as well as product. This can be realized when IBM Team continued with the slower 286 chip, while rivals moved on to Intel 386 chip.

Known to few outside of IBM and Microsoft, Gates had offered to sell IBM a portion of his company in mid-1986. It was already clear that Microsoft was going to become one of the most successful firms in the industry. But IBM declined the offer, making what was perhaps the another-biggest mistake in IBM’s history up to then, following his first one of not insisting on proprietary rights to Microsoft’s DOS or the Intel chip used in the PC. The purchase price probably would have been around $100 million in 1986, an amount that by 1993 would have yielded a return of $3 billion and in subsequent decades orders of magnitude more.

As the PC market matured, the gold rush of the late 1970s and early 1980s gave way to a more stable market. A large software industry grew up. Customers found the PC clones, software, and networking tools to be just as good as IBM’s products. The cost of performing a calculation on a PC dropped so much that it was often significantly cheaper to use a little machine than a mainframe. Corporate customers were beginning to understand that economic reality.

In 1995, IBM CEO Louis V. Gerstner Jr. finally pulled the plug on OS/2. It did not matter that Microsoft’s software was notorious for having bugs or that IBM’s was far cleaner. As Gerstner noted in his 2002 book, “What my colleagues seemed unwilling or unable to accept was that the war was already over and was a resounding defeat — 90 percent market share for Windows to OS/2’s 5 percent or 6 percent.”

At the End of a decade

IBM soldiered on with the PC until Samuel J. Palmisano, who once worked in the PC organization, became CEO in 2002. IBM was still the third-largest producer of personal computers, including laptops, but PCs had become a commodity business, and the company struggled to turn a profit from those products. Palmisano and his senior executives had the courage to set aside any emotional attachments to their “Tool for Modern Times” and end it.

The deal ensured that IBM’s global customers had familiar support while providing a stable flow of maintenance revenue to IBM for five years. For Lenovo, the deal provided a high-profile partner. Palmisano wanted to expand IBM’s IT services business to Chinese corporations and government agencies. Now the company was partnered with China’s largest computer manufacturer, which controlled 27 percent of the Chinese PC market. The deal was one of the most creative in IBM’s history. And yet it remained for many IBMers a sad close to the quarter-century chapter of the PC.

Today

Currently, it is present in over 175 countries. It has held the record for most annual U.S. patents generated by a business for 29 consecutive years from 1993 to 2021. In 2001 it became the first company to generate more than 3,000 patents in one year, beating this record in 2008 with over 4,000 patents. As of 2022, the company held 150,000 patents. IBM employees or alumni have won various recognitions for their scientific research and inventions, including six Nobel Prizes and six Turing Awards.

It is among the world’s largest employers, with over 297,900 employees worldwide in 2022.[15] Despite its relative decline within the technology sector,[16] IBM is the seventh largest technology company by revenue, and 49th largest overall, according to Fortune.[17] It is also consistently ranked among the world’s most recognizable, valuable, and admired brands,[18] with devoted following among many tech enthusiasts and consumers.

Source — Wikipedia | IEEE SPECTRUM |