History of IBM

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Contents 1 Timeline 1.1 1888–1924: The founding of IBM 1.2 1924–1938: Between the wars 1.3 1938–1949: World War II and Holocaust era 1.4 1950–1959: Postwar recovery and the rise of business computing 1.5 1960–1968: The System/360 era 1.6 1969–1979: The System/370 era 1.7 1980–1989: Information revolution, rise of software and PC industries 1.8 1990–1999: IBM's rebirth 1.9 after 2000: Recent trends 2 Major events, trends, and technologies 2.1 Evolution of IBM's computer hardware 2.2 Evolution of IBM's operating systems 2.3 Non-computer lines of business 2.4 Federal Systems Division 2.5 IBM service organizations 2.6 Unbundling of software and services in 1969 2.7 High-level languages 2.8 IBM and AIX/UNIX/Linux/SCO 2.9 Antitrust 3 References

[edit] Timeline

For issues and trends that span particular time periods, see major events, trends, and technologies, below.

[edit] 1888–1924: The founding of IBM

IBM's history dates back decades before the development of electronic computers when it developed punched card data processing equipment. It originated as the Computing Tabulating Recording (CTR) Corporation, which was incorporated on June 15, 1911 in Endicott, New York a few miles west of Binghamton.

CTR was formed through a merger of three separate corporations: Tabulating Machine Corporation (founded 1896 in Washington D.C.), the Computing Scale Corporation (founded 1901 in Dayton, Ohio) and the International Time Recording Company (founded 1900 in Endicott, NY). The president of the Tabulating Machine Corporation at that time was Herman Hollerith, who had founded the company. The key person behind the merger was financier Charles Flint, who brought together the founders of the three companies to propose a merger and remained a member of the board of CTR until his retirement in 1930.^[1]

Thomas J. Watson Sr., the founder of IBM, became General Manager of CTR in 1914 and President in 1915. In 1917, the CTR entered the Canadian market under the name of International Business Machines Co., Limited and in February 14, 1924, CTR changed its name to International Business Machines Corporation.

The companies that merged to form CTR manufactured a wide range of products, including employee time-keeping systems, weighing scales, automatic meat slicers, and most importantly for the development of the computer, punched card equipment. Over time CTR came to focus purely on the punched card business, and ceased its involvement in the other activities.

[edit] 1924–1938: Between the wars

[edit] 1938–1949: World War II and Holocaust era

During World War II, IBM manufactured the Browning Automatic Rifle and the M1 Carbine. Allied military forces widely utilized IBM's tabulating equipment for military accounting, logistics, and other War-related purposes. There was extensive use of IBM punch-card machines for calculations made at Los Alamos during the Manhattan Project for developing the first atomic bombs; this has been notably discussed by Richard Feynman in his book, Surely You're Joking, Mr. Feynman!. During the War IBM also built the Harvard Mark I for the U.S. Navy, the first large-scale automatic digital computer in the U.S.

In 2001, author Edwin Black published IBM and the Holocaust (ISBN 0-609-80899-0), a book documenting how IBM's New York headquarters and CEO Thomas J. Watson acted through its overseas subsidiaries to provide the Third Reich with punch card machines knowing that the machines could help the Nazis conquer Europe and destroy European Jewry. The book extensively quoted from numerous IBM and governmental memos and letters chronicling how IBM in New York, IBM's Geneva office and Dehomag, its German subsidiary, were intimately involved in supporting Nazi oppression. Black also published IBM's own internal reports admitting that these machines made the Nazis much more efficient in their efforts. The 2003 documentary film The Corporation showed close-ups of several documents including IBM code sheets for concentration camps taken from the files of the National Archives.

Shortly after the war, IBM recovered the profit made from their Hollerith departments in the concentration camps, the printing of millions of punchcards used to keep track of the prisoners, the custom-built punchcard systems, etc.

IBM asserts that, since their German subsidiary came under control by the Nazi authorities, they were not responsible for their role in the holocaust.^[2]. As in many cases, when the US entered the war, the Reich left in place the original IBM managers who continued their contacts via Geneva.

[edit] 1950–1959: Postwar recovery and the rise of business computing

In the 1950s, IBM became a chief contractor for developing computers for the United States Air Force's automated defense systems. Working on the SAGE anti-aircraft system, IBM gained access to crucial research being done at MIT, working on the first real-time, digital computer (which included many other advancements such as an integrated video display, magnetic core memory, light guns, the first effective algebraic computer language, analog-to-digital and digital-to-analog conversion techniques, digital data transmission over telephone lines, duplexing, multiprocessing, and networks). IBM built fifty-six SAGE computers at the price of US$30 million each, and at the peak of the project devoted more than 7,000 employees (20% of its then workforce) to the project. More valuable to the company in the long run than the profits, however, was the access to cutting-edge research into digital computers being done under military auspices. IBM neglected, however, to gain an even more dominant role in the nascent industry by allowing the RAND Corporation to take over the job of programming the new computers, because, according to one project participant (Robert P. Crago), "we couldn't imagine where we could absorb two thousand programmers at IBM when this job would be over some day, which shows how well we were understanding the future at that time"^[3] IBM would use its experience designing massive, integrated real-time networks with SAGE to design its SABRE airline reservation system, which met with much success.

[edit] 1960–1968: The System/360 era

See also: History of CP/CMS

IBM was the largest of the eight major computer companies (with UNIVAC, Burroughs, Scientific Data Systems, Control Data Corporation, General Electric, RCA and Honeywell) through most of the 1960s. People in this business would talk of "IBM and the seven dwarfs", given the much smaller size of the other companies or of their computer divisions (IBM produced approximately 70 % of all computers in 1964).^[4]

The major technical development of the 1960s was IBM's System/360 series.^[5]

[edit] 1969–1979: The System/370 era

In 1970, GE sold most of its computer business to Honeywell and in 1971, RCA sold its computing division to Sperry Rand. With only Burroughs, UNIVAC, NCR, Control Data, and Honeywell producing mainframes, people then talked of "IBM and the BUNCH."^[4] In April 1973 Honeywell v. Sperry Rand, a landmark U.S. federal court case, was decided. That decision invalidated the 1964 patent for the ENIAC, the world's first general-purpose electronic digital computer, thus putting the invention of the electronic digital computer into the public domain.

Most of those companies are now long gone as IBM competitors, except for Unisys, which is the result of multiple mergers that included UNIVAC and Burroughs. NCR and Honeywell dropped out of the general mainframe and mini sector and concentrated on lucrative niche markets, NCR's being cash registers (hence the name, National Cash Register), and Honeywell becoming the market leader in thermostats. General Electric remains one of the world's largest companies, but no longer operates in the computer market. The IBM computer, the IBM mainframe, that earned it its position in the market at that time is still growing today. It was originally known as the IBM System/360 and, in far more modern 64-bit form, is now known as the IBM System z9.

IBM's success in the mid-1960s led to inquiries as to IBM antitrust violations by the U.S. Department of Justice, which filed a complaint for the case U.S. v. IBM in the United States District Court for the Southern District of New York, on January 17, 1969. The suit alleged that IBM violated the Section 2 of the Sherman Act by monopolizing or attempting to monopolize the general purpose electronic digital computer system market, specifically computers designed primarily for business. Litigation continued until 1983, and had a significant impact on the company's practices. In 1973, IBM was ruled to have created a monopoly via its 1956 patent-sharing agreement with Sperry-Rand in the decision of Honeywell v. Sperry Rand, a decision that invalidated the patent on the ENIAC.

A key event at IBM in 1969 was the decision to "unbundle" software from hardware sales. See unbundling software and services, below.

The major technical development of the 1970s was IBM's System/370 series.

[edit] 1980–1989: Information revolution, rise of software and PC industries

In the 1980s, IBM consolidated its mainframe business, and expanded the scope of mainframes with the S/390 and ESA/390 series.

The company hired Don Estridge at the IBM Entry Systems Division in Boca Raton, Florida. With a team known as "chess", they built the IBM PC, released on August 11, 1981. Although not cheap, at a base price of US$1,565 it was affordable for businesses — and it was business that purchased the PC. However it was not the corporate computer department that was responsible for this, for the PC was not seen as a proper computer. It was generally well-educated middle managers that saw the potential — once the revolutionary VisiCalc spreadsheet, the killer app, had been ported to the PC as the clone, Lotus 1-2-3. Reassured by the IBM name, they began buying the machines on their own budgets to help do the calculations they had learned at business school.

[edit] 1990–1999: IBM's rebirth

IBM's traditional mainframe business underwent major changes in the 1990s, as customers increased their emphasis on departmental and desktop computing.

On October 5, 1992, at the COMDEX computer expo, IBM announced the first Thinkpad laptop computer, the 700c. The computer, which then cost US$ 4350, included a 25 MHz Intel 80486SL processor, a 10.4-inch active matrix display, removable 120 MB hard drive, 4 MB RAM (expandable to 16 MB) and a TrackPoint II pointing device.^[6]

On January 19, 1993 IBM announced a US$4.97 billion loss for the 1992 financial year, which was at that time the largest single-year corporate loss in U.S. history. Since that loss, IBM has made major changes in its business activities, shifting its focus significantly away from components and hardware and towards software and services.

[edit] after 2000: Recent trends

In 2002, IBM strengthened its business advisory capabilities by acquiring the consulting arm of professional services firm PricewaterhouseCoopers. The company is increasingly focused on business solution-driven consulting, services and software, with emphasis also on high-value chips and hardware technologies; as of 2005 it employs about 195,000 technical professionals. That total includes about 350 Distinguished Engineers and 60 IBM Fellows, its most-senior engineers.

In 2002, IBM announced the beginning of a US$10 billion program to research and implement the infrastructure technology necessary to be able to provide supercomputer-level resources "on demand" to all businesses as a metered utility.^[7] The program has since then been implemented.^[8]

IBM has steadily increased its patent portfolio since the early 1990s, which is valuable for cross-licensing with other companies. In every year from 1993 to 2005, IBM has been granted significantly more U.S. patents than any other company. The thirteen-year period has resulted in over 31,000 patents for which IBM is the primary assignee.^[9] In 2003, IBM earned 3415 patents, breaking the US record for patents in a single year.^[10]

Protection of the company's intellectual property has grown into a business in its own right, generating over $10 billion dollars to the bottom line for the company during this period.^[11][12] A 2003 Forbes article quotes Paul Horn, head of IBM Research, saying that IBM has generated $1 billion in profit by licensing intellectual property.^[13]

In 2004, IBM announced the proposed sale of its PC business to Chinese computer maker Lenovo Group, which is partially owned by the Chinese government, for US$650 million in cash and US$600 million in Lenovo stock. The deal was approved by the Committee on Foreign Investment in the United States in March 2005, and completed in May 2005. IBM will have a 19% stake in Lenovo, which will move its headquarters to New York State and appoint an IBM executive as its chief executive officer. The company will retain the right to use certain IBM brand names for an initial period of five years. As a result of the purchase, Lenovo inherited a product line that featured the ThinkPad, a line of laptops that had been one of IBM's most successful products.

As of 2004, IBM had shifted much of its focus to the provision of business consulting & re-engineering services from its hardware & technology focus. The new IBM has enhanced global delivery capabilities in consulting, software and technology based process services - and this change is reflected in its top-line.^[14]

On June 20, 2006, IBM and Georgia Institute of Technology jointly announced a new record in silicon-based chip speed at 500GHz. This was done by freezing the chip to -451 °F (-268 °C) using liquid helium and is not comparable to CPU speed. The chip operated at about 350GHz at room temperature.^[15]

[edit] Major events, trends, and technologies

[edit] Evolution of IBM's computer hardware

The story of IBM's hardware is intertwined with the story of the computer industry – from vacuum tubes, to transistors, to integrated circuits, to microprocessors and beyond. The following systems and series represent key steps:

• IBM 70x
• IBM 70xx
• System/360
• System/3
• System/370
• IBM Series/1
• IBM 801 RISC processor
• PowerPC
• System/390
• AS/400
• RS/6000
• zSeries

[edit] Evolution of IBM's operating systems

IBM operating systems have paralleled hardware development. On early systems, operating systems represented a relatively modest level of investment, and were essentially viewed as an adjumct to the hardware. By the time of the System/360, however, operating systems had assumed a much larger role, in terms of cost, complexity, importance, and risk. There are several families of modern IBM mainframe operating systems:

• OS family, including: OS/360, OS/MFT, OS/MVT, OS/VS1, OS/VS2, MVS, OS/390 z/OS
• DOS family, including: DOS/360, DOS/VS, DOS/VSE, z/VSE
• VM family, including: CP/CMS, VM/370, VM/XA, VM/ESA, z/VM
• Special purpose systems, including: TPF, z/TPF

IBM had important operating systems on other platforms as well, including:

• PC family, including: PC-DOS, OS/2
• AIX family, including: AIX
• Linux family, including: Linux for zSeries

[edit] Non-computer lines of business

IBM has largely been known for its dominance of the computer business. However, it has had significant roles in many other industries. Major areas of non-computer operation include:

• Typewriters
• Tabulating and other office equipment
• Wartime armaments, such as manufacture of the Browning Automatic Rifle
• Real estate (at one time owning vast tracts of undeveloped land on the U.S. east coast)
• Instruments, e.g. medical instruments

[edit] Federal Systems Division

A significant part of IBM's operations were dedicated to the support of the U.S. Federal Government, with a wide range of projects ranging from the U.S. Census Bureau to the Department of Defense to the National Security Agency. These projects spanned mundane administrative processing to ultra-secret supercomputing.

[edit] IBM service organizations

IBM's early dominance of the computer industry was in part due to its strong professional services activities. IBM's advantage in building software for its own computers eventually was seen as monopolistic, leading to antitrust proceedings. As a result, a complex, artificial "arms-length" relationship was created separating IBM's computer business from its service organizations. This situation persisted for decades. An example was IBM Global Services, a huge services firm that competed with the likes of Electronic Data Systems.

[edit] Unbundling of software and services in 1969

In 1969, IBM "unbundled" software from hardware sales. Until this time, customers did not generally pay for software; software was provided at no additional charge, generally in source code form. This practice existed throughout the industry. Quoting from the abstract to a widely-read IEEE paper on the topic:^[16]

Many people believe that one pivotal event in the growth of the business software products market was IBM's decision, in 1969, to price its software and services separately from its hardware.

At the time, the unbundling of services was perhaps the most contentious point, involving antitrust issues that had recently been widely debated in the press and the courts. However, IBM's unbundling of software had long-term impacts. After the unbundling event, IBM software was divided into two main categories: System Control Programming (SCP), which remained free to customers; and Program Products (PP), which were subject to a separate cost. This transformed the customer's value proposition for computer solutions, giving a significant monetary value to something that, before, had essentially been free. This helped enable the creation of a software industry.^[17][18]

[edit] 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 higher level languages for programming. IBM played a complicated role in this process. Hardware vendors were naturally concerned about the implications of portable languages that would allow customers to pick and choose among vendors without compatibility problems. IBM in particular helped create barriers that tended to lock customers into a single platform.

IBM had a significant role in the following major computer languages:

• 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 language for business applications
• PL/S – an internal systems programming language proprietary to IBM
• SQL – a relational query language developed for IBM's System R; now the standard RDBMS query language

[edit] IBM and AIX/UNIX/Linux/SCO

IBM developed a schizophrenic relationship with the UNIX and Linux worlds. The importance of IBM's large computer business placed strange pressures on all of IBM's attempts to develop other lines of business. All IBM projects faced the risk of being seen as competing against company priorities. This was because, if a customer decided to build an application on an RS/6000 platform, this also meant that a decision had been made against a mainframe platform. So despite having some excellent technology, IBM often placed itself in a compromised position. For UNIX zealots, this meant that IBM lagged behind leaders like Sun Microsystems.

A case in point is IBM's GFIS products for infrastructure management and GIS applications. Despite long having a dominant position in such industries as electric, gas, and water utilities, IBM stumbled badly in the 1990s trying to build workstation-based solutions to replace its old mainframe-based products. Customers were forced to move on to new technologies from other vendors; many felt betrayed by IBM.

IBM embraced open source technologies in the 1990s. It later became embroiled in a complex litigation with SCO group over intellectual property rights related to the UNIX and Linux platforms.

[edit] Antitrust

[edit] References

1. ^ IBM Archives: Charles R. Flint.
2. ^ IBM Statement on Nazi-era Book and Lawsuit. IBM (2001-02-14).
3. ^ Wendover, Robert (2003). High Performance Hiring. Thomson Crisp Learning, 179. ISBN 1-56052-666-1.
4. ^ ^{a b} W. Pugh, Emerson (1995-02-01). Building IBM, 296 - 297. ISBN 0-262-16147-8.
5. ^ * E.W. Pugh, L.R. Johnson, and John H. Palmer, IBM's 360 and early 370 systems, MIT Press, Cambridge MA and London, ISBN 0-262-16123-0
   – extensive (819 pp.) treatment of IBM's offerings during this period
6. ^ IBM's ThinkPad turns 10. CNET News.com (2002-10-06).
7. ^ Spooner, John G.; Sandeep Junnarkar (2002-10-30). IBM talks up 'computing on demand'. CNET.
8. ^ Lamonica, Martin (2004-03-02). IBM fills in on-demand picture. CNET.
9. ^ IBM maintains patent lead, moves to increase patent quality (2006-01-10).
10. ^ IBM breaks U.S. patent record. IBM (2004-01-12).
11. ^ John Teresko (2003-03-01). IBM's Patent/Licensing Connection. IndustryWeek.
12. ^ Patent Licensing: Another Way to Enhance Return on Investment. Inc. (magazine) (2001-08-09). Archived from the original on 2002-07-16.
13. ^ IBM's Path From Invention To Income. Forbes (2003-08-07).
14. ^ Can Big Blue Succeed In BPO?. Wharton School of the University of Pennsylvania (2004-12-01).
15. ^ Toon, John (2006-06-20). Georgia Tech/IBM Announce New Chip Speed Record. Georgia Institute of Technology.
16. ^ Burton Grad, "A Personal Recollection: IBM's Unbundling of Software and Services," IEEE Annals of the History of Computing, Vol. 24, No. 1 (Jan-Mar, 2002), pp. 64-71.
17. ^ Pugh, Emerson W. "Origins of Software Unbundling." IEEE Annals of the History of Computing, Vol. 24, No. 1 (Jan-Mar 2002): pp. 57-58.
18. ^ Hamilton, Thomas W.IBM's unbundling decision: Consequences for users and the industry, Programming Sciences Corporation, 1969.