IBM - The Fall of an Empire
 | Author:
Victor Sample
Vic Sample: MT43 News Treasurer |
TechTalk
The Fall of an Empire
My first job as a programmer was with The Montana Power Company in Butte. At that time IBM had a 92% market share of corporate data processing. Most companies would be ecstatic to have a 30% – 40% market share; IBM had a 92% share.
In the late 1970s / early 1980s personal computers started being sold to consumers. Prior to that only hard-core computer hobbyists had “personal computers”. Apple was giving computers to elementary schools in the hopes that parents would then buy one for their children or the kids would grow up wanting to use Apple computers. Timex-Sinclair created a very nice computer. Tandy-Radio Shack sold the TRS line of computers.
The very first word processor software was created for these computers. A spreadsheet product called VisiCalc was the first “killer” app that everyone had to have on their personal computer.
IBM decided they needed to get in on this fad and protect their computer dominance. They put a couple of junior executives on the project with the mandate to get an IBM personal computer out quickly – and they did.
Rather than have the IBM engineers design a computer, they had the IBM computers manufactured out of “off-the-shelf” computer parts. Rather than have their software engineers create an IBM operating system they contracted with Bill Gates at Microsoft to provide the PC DOS operating system (another interesting story all by itself).
Up to that point, personal computers were being bought by people for use at home. Companies were not buying personal computers – BUT that all changed when IBM put their name on a personal computer. An IBM branded personal computer meant it was now a Business Computer.
The IBM PC was a huge success; IBM could not keep up with demand. They built a huge facility in Boca Raton, Florida with more than 10 buildings and peaked at over 10,000 employees. Based on the strength of the IBM PC, they planned to build a workforce of over 1,000,000 employees.
However, there was a huge problem developing – IBM had no strategy for the IBM PC. They had no plan for how an IBM PC fit into their corporate computing strategy. Businesses found their own solutions for how to fit the IBM PC into their computing environment; other hardware/software vendors developed solutions for how to integrate the IBM PC.
Since IBM used “off-the-shelf” parts to manufacture the PC, ANY OTHER company could manufacture a computer fully compatible with the IBM PC. Since IBM contracted with Microsoft to create the operating system they had NO control over the operating system.
Companies like Compaq and Dell made PCs fully compatible with IBM PCs but they were able to make them much cheaper. IBM finally decided to create their own operating system – but too late. Microsoft introduced Windows 95 before IBM and the IBM operating system had no chance.
By 1992 IBM had ramped up to over 750,000 employees – and almost went bankrupt. Wall Street told IBM they needed to sell off their individual business areas and shut down.
IBM did survive but they no longer manufacture PCs; they no longer manufacture any computers except IBM mainframes. They are largely a consulting company now.
It’s impossible to know for sure, but if IBM had put together a plan for integrating PCs into their computing environment; if IBM had designed and manufactured their own computer parts; if IBM had created their own PC Operating System they might still have a 92% market share instead of a largely forgotten computer company.
