Thursday, June 16, 2011
US computer pioneer IBM turns 100
US technology pioneer IBM turns 100 years old on Thursday and while "Big Blue" is no longer the dominant player in the computer industry it remains a force to be reckoned with.
With a market capitalization of $197 billion, IBM is the world's 14th most valuable technology company, well behind California gadget-maker Apple's $304 billion but close to software giant Microsoft's $201 billion.
Thomas Misa, a history of science and technology professor at the University of Minnesota, credits IBM's longevity to its "mastery of getting information processing power into users' hands in a form that they need and want."
"They did this in the 1930s with punch-card tabulation machines and they are doing the same, essentially, with the post-1993 shift to information services," Misa said.
While its ancestry stretches back to the 19th century, IBM dates its birth to the June 16, 1911 merger of three firms: the Tabulating Machine Co., the International Time Recording Co. and the Computing Scale Co. of America.
Thomas Watson Sr., the man credited with building IBM into a powerhouse, joined the new company, Computing-Tabulating-Recording Co. (CTR) in 1914 and renamed it International Business Machines Corp. in 1924.
Over the years, rivals have mocked IBM's corporate culture of conformity but that has not stopped the Armonk, New York, company from being at the forefront of technological innovation.
IBM claims to hold more US patents than any other company and five of its employees have won Nobel prizes for physics.
Dag Spicer, senior curator of the Computer History Museum in Mountain View, California, said IBM's success can be traced in part to its readiness to take "big gambles."
"During the Depression, Tom Watson kept making machines even though there was no market," Spicer said.
"In 1935, FDR (president Franklin Delano Roosevelt) passed the Social Security Act. The law passed and IBM was the only company that had the equipment ready to go," he said.
Thomas Watson Jr., who took over the presidency of IBM in 1952 from his father, embarked on a huge gamble of his own in 1964, Spicer said.
"Tom Watson Jr decided to bet essentially the whole company -- $5 billion, probably the equivalent of $100 billion today -- on a new computer system, the System/360," he said. "It made all of IBM's products obsolete.
"The System/360 was the most successful mainframe computer of all time, sealing the blue letters IBM in the public imagination," he said.
IBM was unable, however, to emulate its success with mainframe computers with personal computers and the company struggled in the late 1980s and early 1990s.
"Microsoft and Intel were the big winners in the personal computer market, which IBM defined but did not long dominate," Misa said.
IBM sold its PC division to China's Lenovo in 2005 for $1.25 billion.
IBM's comeback came with a strategic shift to software and services and the company posted revenue of $99.9 billion in 2010.
IBM also grabbed headlines earlier this year when an IBM computer called Watson handily defeated two human champions on the popular US television game show "Jeopardy!" in a triumph of artificial intelligence.
Watson's triumph came 14 years after an IBM computer named Deep Blue defeated world chess champion Garry Kasparov in a closely-watched, six-game match.