Hi there! You wanted to learn more about the history of tech giant IBM, so I put together this guide going decade-by-decade through IBM‘s story. I‘ll share details on IBM‘s key inventions, acquisitions, controversies, sources of revenue, and the corporation‘s enormous impact on technology and business over 111+ years.
Founding of IBM
IBM stands for International Business Machines, a name it adopted in 1924. But originally IBM was founded in 1911 as the Computing-Tabulating-Recording Company (CTR) by Charles Ranlett Flint in Endicott, NY. Flint combined 4 smaller companies that made punch card and business data processing machines:
- Computing Scale Company of America
- International Time Recording Company
- Tabulating Machine Company
- Bundy Manufacturing Company
As a side note, back then punch cards were a cutting-edge way to input data! The combined CTR company made $9 million in revenue and had 1,300 employees by 1920.
In 1914, Thomas J. Watson joined CTR as General Manager and became President in 1915. He played a huge role in growing CTR over the next few decades. Let‘s look at IBM‘s evolution decade-by-decade:
1911-1920s – Mechanical Tabulators, Time Recorders, Scales
In the 1910s and 1920s, CTR (not yet called IBM) mainly made mechanical time recording devices, weighing scales, meat slicers, and electromechanical tabulators that used punch cards to tally census data.
Tabulating machines leased by the U.S. government for the 1920 census helped CTR double its revenues from 1914-1924. One machine could do work in 1-2 hours that took 400-500 clerks several months!
1924-1930s – IBM incorporates, expands internationally
In 1924, Tom Watson renamed CTR to International Business Machines (IBM) to reflect the company‘s global expansion into Canada, Europe, South America, Asia, and Australia.
IBM leveraged new technology like time clocks that recorded employee hours electronically. This allowed efficient tracking of hourly wages as labor laws changed.
Despite the Great Depression, IBM continued growing by leasing its machines. Rental income actually grew every year from 1925-1937.
The 1930s-1940s – Punched card machines, WWII
In the 1930s, IBM‘s punch card tabulators got faster. The IBM 405 made 100 cards per minute in 1934, while the IBM 401 in 1936 handled 150 per minute.
Watson invested heavily in R&D even during the Depression. This paid off when Social Security passed in 1935, driving demand for automated record-keeping using IBM‘s machines.
IBM equipment sales boomed during World War 2 as the Allies relied on IBM technology. IBM even acquired German subsidiary Dehomag post-war.
The 1950s – Transition to computers, FORTRAN
In the post-war 1950s, IBM evolved from mechanical devices to electronic computers via research led by son Thomas Watson Jr.
IBM developed the first mass-produced computer, the 701 Electronic Data Processing Machine in 1953. The 701 could do 16,000 additions/subtractions per second!
FORTRAN, created by IBM in 1957, was one of the first programming languages. It became the standard for scientific computing.
IBM revenues grew from $892 million in 1950 to $2.4 billion in 1960 as it expanded into electronics.
The 1960s – System/360, Magnetic Stripes, Selectric Typewriters
The 1960s saw huge leaps in IBM technology:
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1964: IBM System/360 mainframes introduced modular, compatible computing architecture. Over 155,000 System/360s were installed.
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1969: IBM engineer Forrest Parry invented the magnetic stripe card, ushering in credit cards, ID cards, hotel keys.
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1961: The IBM Selectric typewriter with its iconic typeball became ubiquitous in offices.
IBM employed over 300,000 people by the end of the decade as revenues climbed.
The 1970s – Floppies, ASCII, Home PCs
In the 1970s, IBM pioneered the floppy disk in 1971. Their 8-inch disks held just 80KB!
The IBM 3279 display terminal (1972) was one of the first to use all-ASCII characters.
IBM developed a test prototype home PC in 1975 with Intel before launching the 5150 PC in 1981.
The 1980s – IBM PC, IT Services, Software
IBM‘s 1981 PC used Microsoft‘s MS-DOS operating system and software, fueling both company‘s growth. Over 2 million PCs were sold by 1986!
In 1984, IBM opened its first Services branch to provide business and IT consulting. It quickly grew into a multi-billion dollar business.
IBM drove the rise of commercial databases and business software like IBM DB2, introduced in 1983.
The 1990s – AI, Networks, Laptops
The 1990s saw IBM continue innovating with:
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Deep Blue chess computer that beat world champion Garry Kasparov in 1997 using AI
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IBM ThinkPad laptops with TrackPoint became top-selling in 1992.
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ADSL broadband, introduced by IBM in 1998, brought internet into homes.
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IBM Global Network of data centers managed business data traffic.
2000s – Consulting, Servers, Watson
Major moves by IBM in the 2000s:
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$3.5 billion acquisition of PwC Consulting in 2002 boosted IBM Global Services.
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IBM POWER microprocessors surpassed Intel and AMD for performance.
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Watson AI system beat trivia champions on Jeopardy! in 2011.
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IBM earned over 50,000 patents, most US patents for 24 straight years!
2010s – Cloud, AI, Quantum Computing
In the 2010s, IBM focused on cloud, analytics, security, and cognitive computing:
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Led in enterprise cloud with 2013 acquisition of SoftLayer for $2 billion
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IBM Watson Health applies AI and data analytics to healthcare
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2016 acquisition of Truven Health Analytics for $2.6 billion added health cloud data
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Quantum computing research advanced, with first commercial quantum system in 2019
2020s – Hybrid Cloud, Kyndryl Spin Off
IBM split into two public companies in late 2021:
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IBM focuses on hybrid cloud, AI, quantum, and consulting
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Kyndryl provides managed infrastructure services
IBM acquired Instana, Turbonomic, and BoxBoat to boost its hybrid cloud portfolio.
Acquisitions and growth in strategic areas has kept IBM at the forefront of emerging enterprise technology.
Sources of IBM Revenue
IBM generates over $70 billion in annual revenues from:
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Cloud computing platforms and services – 20%
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Consulting services – 17%
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Outsourcing services – 17%
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Hardware, servers, storage – 15%
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Software maintenance – 13%
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Financing services – 10%
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Other technology services and operating systems – 8%
Major Acquisitions
IBM has acquired over 150 companies, including large strategic deals like:
PwC Consulting – Acquired for $3.5 billion in 2002, boosted IBM Global Services revenues to over $50 billion.
The Weather Channel‘s Digital Assets – $2 billion in 2016. Provides global weather data to IBM Cloud and Watson.
Red Hat – IBM acquired open-source leader Red Hat in 2019 for $34 billion. Biggest deal in its history.
Instana – IBM bolstered its hybrid cloud portfolio by acquiring Instana for reportedly $200 million in 2020.
Turbonomic – Deal for approximately $2 billion in 2021 improves IBM‘s AI automation capabilities.
BoxBoat – IBM acquires BoxBoat, a DevOps consultancy and enterprise Kubernetes certified service provider in November 2021.
UPC Barcodes and Magnetic Stripes
Some of IBM‘s key inventions that transformed business processes:
UPC Barcodes – In the 1970s, IBM developed the Universal Product Code system for labeling products with barcodes to track inventory. Scanning UPC codes at checkout sped up retail.
Magnetic Stripe Cards – IBM engineer Forrest Parry invented the magstripe card in 1969. When paired with point-of-sale machines for reading cards, it revolutionized credit cards and ID badges.
Watson AI System
Watson leveraged natural language processing and machine learning to beat humans at Jeopardy! in 2011 and has advanced significantly since:
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Processes 500 gigabytes per second, equivalent to millions of books
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Has 200 million pages of structured and unstructured data, 90 servers, replaces human judgement and intuition
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IBM Watson Health assists doctors by surfacing insights from patient medical history
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Watson Assistant chatbot helps customers answer questions quickly without human agents
IBM Controversies and Challenges
With over 100+ years of business history, IBM has inevitably faced controversies and challenges during times of evolution:
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Use in Nazi Germany – IBM‘s German subsidiary Dehomag provided punched card machines that were used by the Nazis in the 1930s-40s. Details are still debated by historians.
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Antitrust lawsuits – The US government filed antitrust lawsuits in 1952 and again in 1969 alleging IBM monopolized computer technology. Both were eventually dropped.
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Pollution – Groundwater pollution from IBM‘s Endicott plant led to tons of toxic chemicals leaking into soil over decades. Cost hundreds of millions to clean up.
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Workplace discrimination – IBM faced allegations of promoting white men over women and minorities in the 1970s and 1980s, settling multiple lawsuits.
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Downsizing – As growth slowed in the early 1990s, IBM cut over 300,000 jobs between 1991-1994 as part of a major restructuring.
Conclusion
Well, that was a comprehensive look at IBM‘s history and evolution over the past century! From its 1911 roots making mechanical tabulating machines, to today‘s leadership in artificial intelligence and quantum computing, IBM has had an enormous impact on the world of technology and business.
Of course, no company is perfect. But IBM has shown a knack for reinventing itself and driving innovation decade after decade. I hope you found this guide interesting. Let me know if you want to learn about any other technology companies in this much detail!