International Business Machines, better known simply as IBM, has been a pillar of technological innovation for over a century. From its beginnings as a merger of multiple business hardware companies to its current status as a global leader in advanced computing systems and services, IBM‘s history is filled with pivotal moments that have shaped the evolution of modern technology.
In this comprehensive guide, we will explore IBM‘s origins, monumental inventions, ever-adapting business model, notable acquisitions, historical computers, and even some controversies that have surfaced over the past 100+ years.
The History of IBM: Key Facts
- Founded: 1911 in Endicott, NY
- Founder: Charles Ranlett Flint
- Original Name: Computing-Tabulating-Recording Company (CTR)
- Renamed IBM in 1924 by president Thomas Watson Sr.
- Industry: Technology, Computing, Cloud Services
- Key Innovations: FORTRAN, UPC barcodes, magnetic stripes, Selectric typewriter, mainframes, PCs
- Current CEO: Arvind Krishna (since 2020)
IBM was founded in 1911 as CTR through the merger of 4 companies specializing in tabulating machines, time recording devices, computing scales and other business hardware. CTR experienced rapid growth under president Thomas Watson Sr., who renamed it to the now famous International Business Machines in 1924.
This new name proved fitting, as IBM expanded over the next century to become not just a dominant American but global company at the forefront of corporate computing technology.
The Founding of IBM
The origin story of IBM starts with its founder, Charles Ranlett Flint. Flint created a consolidated business trust in 1911 called Computing-Tabulating-Recording Company (CTR) which combined 4 leading companies in the business data processing industry:
- International Time Recording Company: Focused on mechanical time recorders
- Tabulating Machine Company: Created tabulators and sorting machines
- Bundy Manufacturing Company: Produced time recording devices
- Computing Scale Company of America: Specialized in computing scales and meat/cheese slicers
Flint envisioned that combining these companies under one corporation would allow them to better meet the growing data processing needs of businesses at the turn of the 20th century during the rise of industrialization.
The merged CTR company was headquartered in Endicott, NY and recorded over $1 million in revenue in its first year. Flint recruited Thomas Watson Sr. from National Cash Register in 1914 to serve as the new company’s general manager and straightaway the two men expanded CTR’s production capacity.
By 1924, having established a strong domestic footprint, CTR looked overseas to fuel its next stage of growth. The company’s Canadian division was known in full as International Business Machines and this name resonated with Watson Sr.
He proposed adopting the Canadian subsidiary’s name for the parent company as well, better reflecting its global aspirations. That year, CTR was officially rechristened International Business Machines (IBM) with Watson Sr. as its president.
IBM Through The Decades
IBM produced mechanical business data processors well into the 20th century but evolved with the times to remain an undisputed leader in the latest corporate computing technology. Some key milestones decade-by-decade:
1911-1920
Early punch card tabulators and other machines establish CTR/IBM as top provider of data processing equipment for government and businesses.
1921-1930
Under Watson Sr., IBM expands greatly including overseas as demand for business technology grows. The iconic IBM brand takes hold.
1931-1940
IBM punches strengthen during Great Depression due to data processing needs related to FDR’s New Deal programs like Social Security.
1941-1950
Allied military forces become major IBM customers during World War II. Watson Jr. begins steering IBM towards computers.
1951-1960
Watson Jr. takes over as CEO and ramps up IBM’s R&D of electronic computers. FORTRAN programming language developed along with Selectric typewriter.
1961-1970
IBM dominates computing industry with System/360 mainframes and makes magnetic stripe breakthrough that enables credit cards.
1971-1980
IBM innovates UPC barcodes for retail/grocery POS systems and refines iconic 8-bar logo. Maintains 70%+ share of computer market.
1981-1990
Launches first mass-produced PCs, the IBM 5150. Spins off Lexmark printer division. Competition from Microsoft/Intel-based computers grows.
1991-Present
Facing losses as desktop computing goes mainstream, IBM pivots to software/services like cloud, AI (Watson), while shedding hardware units. Eyes emerging technologies.
As this high-level timeline shows, IBM started off the computing revolution by helping businesses and government agencies tabulate and manage data via punch card systems. Later with Thomas Watson Jr. at the helm, IBM invested heavily in electronic computer R&D which paved the way for mainframes, programming languages, and even primitive artificial intelligence concepts.
Though no longer a device and hardware focused company, IBM continues to drive leading innovations in corporate computing – whether cloud platforms, enterprise software solutions, business analytics or quantum computing dreams. Their early mechanical roots enriched a century-long commitment to tackling corporations’ most pressing data questions.
Most Important IBM Inventions
Among its prolific innovations for business computing over 130+ years, these three IBM inventions perhaps stand out as most transformative:
FORTRAN Programming Language
Developed by IBM in the 1950s for scientific computing, FORTRAN (Formula Translation) was the first widely used high-level programming language. It sped up and simplified how developers could write software for tasks from math/engineering to data processing. The principles pioneered by FORTRAN paved the way for C, C++, Python and other essential languages.
Universal Product Codes (UPC)
Printed on billions of items we see and scan everyday, UPC barcodes were born at IBM to identify retail products. IBM engineer George Laurer led development in the 1970s of the now iconic black and white zebra stripe codes, solving inventory headaches for grocery and retail chains globally.
Magnetic Stripe Cards
In 1969 IBM engineer Forrest Parry invented the magnetic stripe we rely on to swipe credit cards, hotel keys and subway passes. The magnetic stripe breakthrough brought speed, security and accuracy to financial transactions and access systems. As IBM handled data processing, it became the foundation for the modern credit card industry.
From pioneering mainframes and PCs to QR codes, hard drives, ATMs and enabling mobile wallet payments today, IBM has delivered one paradigm shifting innovation after another – true to its name.
How Does IBM Make Money?
IBM generates billions in revenue annually through a diversified portfolio of enterprise technology offerings:
Hardware
- Servers
- Mainframes
- Storage systems
Software
- Cloud & cognitive software
- Transaction processing platforms
- IT management software
Services
- Business consulting
- IT infrastructure services
- Hybrid cloud deployments
Financing
- Equipment & solutions financing
In 2020, IBM reported $73.6 billion in total revenue. Segment-wise:
- 33% from cloud & cognitive software
- 18% from global business services (consulting)
- 16% global financing
- 15% from systems (servers, storage)
- 11% infrastructure services
- 7% from other smaller segments
So while no longer manufacturing PCs or laptops for everyday users, IBM continues to offer vanguard software, cutting edge systems/components, transformative cloud platforms, and actionable consulting – all for business and enterprise consumption. With large multinationals and government agencies as clients, IBM sells specialized tools for complex data, automation and optimization needs – rather than consumer productivity apps.
This B2B approach has kept IBM profitable year-after-year, even while consumer computing brands have come and gone around it.
IBM Acquisitions
Complementing vigorous in-house innovation, IBM has strategically acquired companies that bring desired tech capabilities and expertise:
2002 – PwC Consulting: $3.5 billion
2012 – Texas Memory Systems: Unknown value
2015 – Merge Healthcare: $1 billion
2015 – The Weather Channel: $2 billion
2016 – Truven Health Analytics: $2.6 billion
2019 – Red Hat: $34 billion
2021 – Turbonomic: $1.5 billion
Other major acquisitions have included cloud software firms like Gravitant, software analytics provider SPSS, and more recently open hybrid cloud company Red Hat.
By continuing to invest billions in sharpening its skills via acquisitions, IBM adds to its war chest of technologies – from AI to security to cloud. These allow IBM to cater to virtually any demand from its global commercial clients.
IBM First Personal Computers
Though a central player in enterprise computing for decades prior with mainframes and terminals, IBM’s dalliance with PCs for the mass market began in 1981. Seeking its own slice of the emerging personal computing pie, IBM announced the IBM 5150 Personal Computer in 1981.
Quickly dubbed the IBM PC, it became a business computing staple and IBM’s first major foray into the consumer space. Priced at $1,565 with keyboard and monitor included, the IBM PC featured a 4.77 MHz Intel 8088 processor, 16 KB of RAM (expandable to 256KB), and 40KB hard drive.
The IBM PC was a commercial success and spawned numerous variations and models over the following years. IBM’s own PC division delivered popular follow ups like the IBM PC XT (1983) and IBM PC AT (1984) with enhanced specs and performance.
By the late 1980s over 10 million IBM PC units had been sold globally. It initiated IBM’s reputation beyond enterprises as a familiar household name for common consumers as well.
However, IBM was reluctant to fully adapt from its business computing history and monopoly over the personal computing market. Rivals like Compaq, Dell and HP also ate into IBM PC sales particularly as more powerful yet cheaper models running Microsoft software emerged.
In 2005, with consumer laptop demand outpacing desktop sales, IBM made the tough call to sell its PC division to Lenovo and shift focus back to higher margin server, software and services markets where IBM already had deep corporate roots.
So while IBM itself no longer manufactures laptops or PCs, this defining foray over two decades significantly enlarged its customer base and reach worldwide. The IBM PC series paved the way for modern corporations equipping their entire workforce with company-issued devices and mobility solutions that boost productivity.
Controversies
With an eventful 100+ year history at the helm of global business computing advances, IBM has also encountered its share of controversies and criticisms over the decades:
Use of IBM equipment in Nazi Germany (1933-1945): Historians have pored over IBM‘s business dealings in Germany preceding and throughout World War 2. While no consensus, there is evidence that IBM machines helped Nazis efficiently identify and track Jewish populations and other groups. IBM equipment was leased not sold to the regime and any complicity by IBM in the Holocaust continues to be debated.
Environmental pollution: IBM’s manufacturing and research activities have resulted in chemical leaks and spills at some of its New York facilities. One Endicott plant saw heavy water contamination that IBM has been working to control through recovery wells and cleanup efforts. Critics assert IBM should have taken swifter measures when pollution first surfaced decades ago.
In looking back at IBM’s origins, exponential evolution and continued industry dominance, such isolated controversies dim in comparison to its prolific contributions advancing global business computing for over a century…with no signs of slowing.
Conclusion
For over 130 years and across technologies from mechanical tabulators to blockchain, IBM has improbably maintained its status as a predominant shaper and innovator of solutions that meet evolving business computational challenges.
As one of America’s pioneering and persistently visionary companies, IBM has kept looking ahead – beyond the latest fad – to fundamentally improve how organizations handle processes, glean insights, and make decisions fueled by data.
IBM has certainly changed with the times from its 1911 founding based on equipment mergers to today’s leader in hybrid cloud platforms, AI, and quantum frontiers.
However, IBM retains the same DNA passed down from Watson Sr. of refusing to stand still and continuously driving revolutions in corporate computing responsible for so much of the technology landscape we now take for granted.
