Save content
Have you found this content useful? Use the button above to save it to your profile.
AIA

One hundred years of business machinery

by
16th Jun 2011
Save content
Have you found this content useful? Use the button above to save it to your profile.

The company that became the global behemoth IBM was founded on 16 June 1911. To celebrate its centenary, we look at some of the landmarks of business technology - and the company behind it.

After a century in business, IBM may have been toppled from its dominant perch in the technology industry by trendier newcomers such as Microsoft, Apple and Google, but it’s still here and continues to play an influential role. For the 18th consecutive year, for example, IBM once again ranked as the top recipient of US patents, with 5,896 granted in 2010.

IBM milestones

1928 IBM introduces rectangular, 80-column punch card design, which lasted nearly 40 years and and still contributed 20% of revenues in the mid-1950s.

1931 Type 600 Multiplying Punch introduced. It could multiply two numbers entered on a punched card and return the answer in another space

1934 IBM 801 Bank Proof machines could list, separate, endorse and record total of cheques.

1946 IBM shifts from mechanical to electronic computing with the 603 Electronic Multiplier, which boasted 300 vacuum tubes.

1949 The Model 407 Accounting Machine is introduced.

1952 IBM ships its 701 Defense Calculator or Electronic Data Processing Machine with Type 726 magnetic tape recorder and reader.

1957 Fortran, the first high level software language, is developed by IBMer John Backus

1961 IBM’s Selectric typewriter introduces the print “golfball” (pictured above), which sets new benchmarks for speed and quality

1964  Launch of the IBM 360 Series spearheads IBM’s drive into general business computing market. 

1971
- IBM engineers developed the 3330 disk drive unit, the first “floppy”

1973 - First dedicated electronic point of sale products launched, IBM
3650 and 3660 Store Systems

1981 IBM 5150 Personal Computer (PC) launched; a twin-disk drive model with 16Kb of RAM running Microsoft DOS, VisiCalc and EasyWriter on an Intel 8088 processor could be yours for just $1,565.

1995 IBM extols network-centric e-business computing and forecasts it would end the PC’s reign at the centre of the computing universe.

2000 IBM commits $1bn to support the open source Linux operating system.

2008 IBM “Roadrunner” machine at Los Alamos National Labs runs more than a quadrillion calculations per second - known by experts as a “Petaflop”. A hybrid supercomputer using two different processor architectures, Roadrunner  is twice as energy-efficient as the next fastest computer.
 

In spite of its unprecedented portfolio of hardware and technological innovations (see chronology, right), so much about IBM is down to its people and corporate culture, which were shaped in its formative years by Thomas Watson Sr - or “The Old Man” as company insiders used to call him.

An ambitious salesman who had served his apprenticeship with NCR (National Cash Register) - where he also picked up a conviction under the US Sherman Anti-Trust law - Watson joined CTR (Computing Tabulating Recording company) in 1914. Through sheer force of personality and a paternalistic outlook reminiscent of the corporate barons of the 19th century he created a company culture that laid the foundations for the success of the company he renamed International Business Machines in 1924.

As a salesman himself, Watson created a sales-focused, people-centric culture that probably explains why IBM is heading into its second century, as illustrated by the following extracts from Nancy Foy’s history, ‘The IBM World’ (aka ‘The Sun Never Sets On IBM’):

“Our company is known by the men it keeps”
Born to a family of Scots descent in a farmhouse in upstate New York, Thomas Watson was an asthmatic child with a fierce temper, unsure of himself with his contemporaries.

At the age of 18 the young man gave up a $6-a-week bookkeeping job to join a friend named George Cornwell selling pianos, organs, sewing machines and caskets around the countryside for a $10-a-week salary. He observed Cornwell’s easy manner and developed a skill at bartering sewing machines for bolts of calico or pianos for pigs.

He later joined CB Barron in a new business selling stock shares door to door. Barron believed that first impressions were vital. “Sell yourself and you sell your product,” he advised his young associate. However, Barron’s ethical style was somewhat less splendid than his wardrobe or sales styles; he soon absconded with most of the funds of the new venture, leaving the 21-year-old Watson to find a new employer.

Working at NCR (National Cash Register) Watson first encountered the carrot-and-stick style of motivation, with lavish pay for success and even more lavish tongue-lashing for failure. But after each scolding the senior man would patch together the tattered ego of his disciple and gently show him how to do better next time. [Cash registers] were sold as useful tools that would make the customer more efficient and successful. Customers were handled gently, given confidence, convinced that they were in charge of the situation, but mesemerised by the constantly recurring punctuation of the bell ringing up a sale.

Watson learned quickly. On 15% commissions he made $1,200 in one record week in Buffalo. Watson rose through the organisation, obedient to those above him and usually fair but demanding to those beneath him. As a sales manager, Watson took the Rochester office from the bottom of the NCR list to one of the top in the country, eliminating a number of local competitors in the process.

But NCR’s tactics brought it to the attention of federal anti-trust authorities and Watson’s career at the company was effectively ended when he was convicted in February 1913 along with other NCR officers, fined $5,000 and given a one-year jail sentence, held in abaeyance while appeals were heard. [the conviction was later overturned].

The man who took him out of his despondent period after the NCR events was Charles Flint, known as the ‘father of the trusts’. Flint believed in survival of the fittest and the ultimate morality of monopolies, a point which Watson did not quite accept after his NCR experience.

Flint was concerned about the financial wobbles of CTR, a little conglomerate which he had put together in 1911 from the remains of 13 preceding companies. Watson was hired to put it on its feet with a salary of $25,000 and 5% of any profits he could wring out of it (an arrangement that was later to make him the highest paid executive in America).

He carried on a running battle with Herman Hollerith, a technical genius whose tabulating machines (‘Hollerith Statistical Pianos’) were precursors to computers as we know them. In Watson’s view Hollerith’s technical brilliance was not matched by his business intelligence; for the rest of his life he would line up with his sales people in any dispute with boffins, even though he was impressed by technical achievement.

Watson saw the potential for international business very early. Monopoly might be considered poor form at home, but he felt it was his patriotic duty to make sure his people overseas gained as much of the market as possible for the American free enterprise system. By 1924, the company had installations all over Europe and in the next few years expanded into China and the Philippines, then Australia and New Zealand. The Old Man proclaimed, “Everywhere… there will be IBM machines in use. The sun never sets on IBM!” [In official company transcriptions of Watson’s speeches this motif sometimes appeared as “International Business Machines girdles the globe.”]

The cash famine in his early CTR years had left its mark and he had a firm policy of ploughing back profits to support growth. Even so, as the great depression advanced his patriotism and optimism kept him building machines at an ever-increasing rate, well beyond what could have been considered prudent at the time. The gamble paid off, though. A large contract from the new US Social Security department was won in 1935 because IBM could begin delivering machines immediately from its overflowing warehouses.

The war gave great impetus to grand designs for huge calculating machines. IBM turned down a project offered by two young men named Eckert and Mauchley for something they called “ENICAC”. The “first computer” was eventually sponsored by the US Army and Remington Rand, and became the precursor of the Univac computers.

During World War II IBM employees in Europe demonstrated a Watson-like loyalty to the company, even as they wrestled with national and company conflicts. One apocryphal story tells of an IBMer flying as a bombardier with the Royal Canadian Airforce, who contrived to drop his bombs on the Mercedes plant in Sindelfingen, near Stuttgart, across the railroad tracks from IBM’s plant. The employee concerned, personnel manager Frank McCarthy, later admitted, “At the time I didn’t even know we had a plant in Sindelfingen. I just hoped afterwards that I hadn’t hit any IBM people.”

In Germany director Otto Kiep was tortured and killed after his name was found on a list of “men of reason” who might run the country after the 1944 assassination attempt on Hitler.

In Belgium, by manufacturing spare parts in secret with materials coaxed or stolen from the Germans, IBM’s revenues were 20% higher at the end of the war than in 1942. Just before Brussels was liberated, the Germans decided to ship some machines back to Germany. An IBM employee named Aldolphe Mulkens supervised the loading, carefully removing one essential part from each machine. The Germans never discovered the perfidy; a few months later the machines were found abandoned in a railroad yard a few miles from the German frontier.

A veteran IBM World Trade executive added: “There were a lot of loyal IBMers in the German command. They protected a great deal of our property.”

Tags:

Replies (0)

Please login or register to join the discussion.

There are currently no replies, be the first to post a reply.