OM in the News: IBM’s Strategy Changes Bring it 100 Years of Success

Every newspaper in the country heralded IBM’s 100th anniversary this week, so we also look at this globe-spanning technology behemoth. “IBM’s global reach and broad product portfolio still make it one of the largest and most profitable IT companies in the world”, says Computerworld (June 16-23, 2011). With 427,000 employees and nearly $15 billion profit on sales of $100 billion in 2010, IBM is 2nd in sales in the computer industry only to H-P. Not that the firm has avoided ups and downs. The US  antitrust suit in 1969 (dismissed in 1982) pushed IBM to separate hardware from software. After Tom Watson, Jr., retired in 1971, its mainframe business faced strong competition from smaller, more modular systems. But under the reins of Lou Gerstner, the firm bounced back in the 1990’s focusing on software, system integration, and other services. It was the strategy change  has likely been IBM’s key to success today.

A quick history:

1911  The merger of 4 tabulating companies results in the company, which has 13,000 employees.

1914  The icon Tom Watson, Sr.,  leaves NCR to lead IBM for 40 years.

1928  The IBM punched card becomes the standard for five decades.

1953  The IBM 701 becomes the 1st production computer; it features tape drive technology.

1957  IBM introduces FORTRAN, the standard for technical programming.

1964  The firm successfully bets $5 billion on the System/360– a family of computers that share technology.

1981  The IBM PC is invented, with Microsoft providing the operating system, paving the way for PC-clones such as Dell .

2002  IBM pays $3.5 billion for PricewaterhouseCoopers to strengthen its services and technology consulting units.

2007-today  The company spends over $14 billion to acquire dozens of business analytics software firms (such as SPSS and iLog), planning on $16 billion revenue from analytics by 2015.

As OM professors, this latest move will have a major impact on the availability of free software we can use in class, a trend we need to watch carefully.