The ups and downs of IBM essay
Today, International Business Machines (IBM) is a multinational corporation, one of the world’s largest manufacturers and suppliers of hardware and software, as well as IT and consulting services, which was a pioneer of the era of computers and owns the most significant developments in the information technology industry.
The history of IBM computers began in 1943, when the company created Mark I weighing nearly 4.5 tons (Yost 25). Already in 1952, the first big lamp computer IBM 701 appeared, and in 1959, IBM introduced the first transistor computers which reached such a level of reliability and performance that the U.S. Air Force found it possible to apply them in the early warning system of air defense (Yost 27-35). IBM is also the developer of the first general purpose computers, first computers with a byte-addressable memory (1964 IBM System/360), as well as Personal Computer (IBM PC, 1981) (Yost 87-90). The company owns such significant scientific and technological developments as the invention of hard drive and floppy drive, Dynamic Random Access Memory application, universal computer language SQL, the discovery of high-temperature superconductivity, and other truly revolutionary innovations.
As a result, at one time, IBM was producing up to 90% of all computers in the United States (Yost 113). The architecture of IBM PC became the de facto standard for the whole industry, and its openness greatly contributed to the huge success of IBM PC and mass production of PC-compatible clones by other companies, and, ultimately, to the unfolding of personal computers and computer revolution era. Until now, IBM-compatible computers still make about 90% of all the personal computers produced (Yost 171). However, contrary to its tough principles of intellectual property protection, IBM patented neither DOS (with BASIC language interpreter), nor another revolutionary invention BIOS (Lloyd and Heller 6). In addition, the principle of open architecture provided IBM PC with a tremendous success, but at the same time, deprived IBM of any opportunities to enjoy the fruits of this success alone, as soon as any company thus obtained a chance to produce its own computers with similar architecture. Eventually, in several years the market was filled with competitors who were able to sell their computers much cheaper (sometimes, by 2-3 times), and implement technological advances faster than IBM. Thus, due to its narrow-minded decision, already by 1986, IBM yielded its leading position in sales at the market of personal computers it factually created (Lloyd and Heller 7; Yost 123).
Later on, in 1990, the corporation made several attempts to seize the initiative in the PC market again, by releasing a series of PS/2 computers running OS/2 operating system, which were incompatible with the PC and DOS on both hardware and software level and involved progressive technologies like Micro-Channel or Mini-DIN plug; and then tried to re-establish the control over the market of software for personal computers by releasing OS/2 Warp V3.0 operating system, which had to compete with Microsoft-Windows95 project (Lloyd and Heller 7; Yost 157-59). Despite the massive advertising campaign and efficient characteristics, the projects lacked enthusiasm from the consumers. Thus, all the attempts of IBM to remonopolize the market and compete with a range of flexible and rapidly developing companies were unsuccessful. As a result, IBM had to sell its PC division to Lenovo for $1.75 billion in 2004 (Yost 198). It is symbolic that the same year, Lenovo became the leader of the PC market with a share of 16.3% (Yost 199). However, this was still occurring on the background of the ongoing reduction of the market as such. For instance, in the second quarter of 2013, PC shipments decreased by 10.9% compared to the same period in 2012 (76 million pieces). In general, the market of traditional desktops continues to decline under the pressure of the growing popularity of mobile computers, which might mean the beginning of the post-PC era.
At the same time, it is difficult to overestimate IBM’s contribution to the development of today’s technologies. The revolutionary nature of their devices in many ways determined the contemporary direction of innovation, and competition with IBM served for many start-up companies as a powerful incentive for their own development, as soon as at different times such young companies as Apple, DEC, Intel, Microsoft, and Compaq competed with IBM to later become the leaders of market. Moreover, despite some short-sighted solution made in the periods of the extensive computer market growth, the company still managed to demonstrate the incredible flexibility in the face of changes dictated by the times, without compromising corporate values. For example, already since 1990, the desire of IBM to shift the focus of the business towards the services supply, primarily, to consulting, could be clearly traced (Lloyd and Heller 8). This became most evident in 2002, when the company acquired the consulting department of PricewaterhouseCoopers Company for $3.5 billion (Yost 187). Currently, this business unit operated within IBM Global Services department and is the most profitable unit in the structure of IBM, producing more than 50% the company’s revenue and proving that the timely change in focus has helped the company to stay afloat in an age of rapid changes.
