top of page

The Evolution of IBM: A Century of Resilience and Innovation

International Business Machines Corporation, better known as IBM, is one of the most iconic and enduring technology companies in history. Founded in 1911 as the Computing-Tabulating-Recording Company (CTR), IBM has undergone a remarkable transformation over the past 100+ years to remain a leading force in the tech industry.

IBM Ribbon Cassette | The Business Anecdote

The Early Days: Tabulators and Punched Cards

IBM's origins trace back to the late 19th century, when new business practices created a need for advanced data processing technology. Hermann Hollerith invented a tabulating machine that used punched cards to process census data, founding the Tabulating Machine Company in 1896. In 1911, CTR was formed through a merger of three companies, including the Tabulating Machine Company. CTR specialized in making tabulators and punch card data processing equipment used for accounting, inventory, and statistics.


During the 1920s-1930s, CTR expanded rapidly under the leadership of Thomas J. Watson Sr. The company changed its name to International Business Machines in 1924 to reflect its growing international presence. IBM popularized the phrase “THINK” during this era, promoting its data processing machines as helping customers “think” through difficult business questions.

IBM Computer used in 1940 Census | The Business Anecdote

The Computer Age: Vacuum Tubes to Mainframes

IBM began taking an interest in electronic computers in the 1940s, driven by the needs of the scientific and military communities during World War II. Although not a pioneer in computer technology, IBM made great strides through engineering brilliance and business strategy. In the 1950s, IBM introduced the IBM 700 series of mainframe computers using vacuum tube technology.


In the mid-1950s, IBM made a bold gamble to completely redesign its product line around all-transistorized computers. The IBM System/360 launched in 1964 and gave customers compatibility across a range of computing power. By the late 1960s, IBM systems were in wide use by government agencies, research labs and large corporations. IBM had established itself as the leading computing company.

Computer Science Museum Mountain View California | The Business Anecdote

The PC Revolution: From Mainframes to PCs

In 1981, IBM shook up the computer industry again by introducing its first personal computer, the IBM PC. The company tapped into third party software and add-ons to fuel the PC market. However, IBM was slow to capitalize on its own invention, giving room for competitors like Apple and Microsoft to take over segments of the market in the 1980s and 90s.

IBM did continue to lead in the high-capacity server and mainframe market through the 1990s. The company also became a pioneer in virtualization technology, linguistic search, and made advancements in artificial intelligence including Deep Blue beating chess grandmaster Garry Kasparov.

IBM IT and Cloud Computing | The Business Anecdote
Photo from IBM

The Turnaround: Refocusing on IT and Cloud Computing Services

IBM hit troubled times in the 1990s with declining hardware sales. The rise of cheap personal computers and price wars drove down profit margins. In response, IBM began selling PC assets and increasing its focus on software and IT services. This strategic shift was accelerated when Louis V. Gerstner Jr. took over as CEO in 1993 with the directive to reshape IBM for the IT services age.

Under Gerstner and his successor Samuel Palmisano, IBM expanded its services capabilities and consulting acquisitions dramatically. Palmisano also made the big bet to drive IBM’s growth into the new frontier of cloud computing, both through internal development and acquisitions of companies such as:

  • Lotus Development Corporation (1995) - Spreadsheet and desktop software like Lotus 1-2-3

  • Tivoli Systems (1996) - Systems management software

  • DataMirror (1996) - Data management software

  • PwC consulting (2002) - Big push into IT consulting services

  • Rational Software (2003) - Software and systems development tools

  • Filenet (2006) - Content and document management software

  • SPSS (2009) - Analytics/business intelligence software

  • SoftLayer Technologies (2013) - Cloud computing/web hosting services

  • Trusteer (2013) - Cybersecurity software

  • The Weather Company (2016) - Weather data and forecasting

  • Red Hat (2019) - Open source software and hybrid cloud tools.

Kasparov vs Deep Blue | The Business Anecdote
Photo from Britannica

Into the AI Verse: IBM's Artificial Intelligence Journey

IBM has been at the forefront of artificial intelligence (AI) research and development for decades. A major milestone in IBM's AI journey was in 1997 when its supercomputer Deep Blue defeated world chess champion Garry Kasparov. This historic match between machine and man generated widespread public interest in AI. Deep Blue's victory demonstrated the rapid progress being made in AI.


In 2011, IBM achieved another breakthrough in AI when its system Watson won the quiz show Jeopardy! against two of the game's most successful contestants. Watson showed an ability to understand natural language questions and generate accurate answers by analyzing its vast database instantaneously. Jeopardy! required capabilities beyond just chess, showcasing IBM's advances in machine learning and natural language processing.

IBM Watson | The Business Anecdote
IBM Watson Logo

Propelled by these successes, IBM established research labs dedicated to AI like MIT-IBM Watson AI Lab and IBM Research AI. Its scientists made innovative contributions in areas like deep learning, computer vision and optimization algorithms. IBM also opened its AI technologies through the IBM Watson Developer Cloud to spur new applications. Leveraging its research, IBM brought AI into the real world. It partnered with organizations to apply AI to transform industries like healthcare, financial services, oil and gas. IBM Watson became a popular AI product, used by companies to create virtual assistants and chatbots. According to IBM, its AI services and offerings generated over $20 billion in revenue by 2019.

IBM watsonx | The  Business Anecdote
An IBM image

In October 2023, IBM launched the watsonx Code Assistant. This AI-powered coding assistant was designed to help software developers write better code more efficiently by providing AI powered suggestions, optimizations, and analyses as they code. It leveraged IBM's natural language processing capabilities to understand comments and documentation in code, and make related recommendations.


The product currently excels in two specific enterprise use cases. Firstly, it offers IT Automation through watsonx Code Assistant for Red Hat Ansible Lightspeed, which streamlines tasks like network configuration and code deployment. Secondly, it supports mainframe application modernization with watsonx Code Assistant for Z, allowing for seamless translation of COBOL to Java.


Today, IBM continues to innovate in AI through initiatives like Project Debater which focuses on natural language processing, and IBM Watson OpenScale which tracks and measures the outcomes of AI models to ensures they remain fair, explainable, and compliant. IBM also emphasizes ethical use of AI. With trusted AI principles and mitigation of bias, IBM aims to shape the future trajectory of this transformational technology.

The Evolution of IBM: A Century of Resilience and Innovation | The Business Anecdote

Conclusion

Today, IBM remains a leading global technology player, providing services ranging from cloud to AI to cybersecurity. After over a century of business, IBM continues evolving to stay relevant into the future. With its track record of reinvention, IBM is poised to transform itself again and again.

Sources

1) International Business Machines Corporation (IBM) | Selling the .... https://www.computerhistory.org/brochures/g-i/international-business-machines-corporation-ibm/.

2) IBM - Archives - History of IBM - United States. https://www.ibm.com/ibm/history/history/history_intro.html.

3) Other sources.

Comments


bottom of page