THE RISE OF IBM
1900-1970

To meet the needs of measuring population the US Census Bureau sponsored a contest to find the most efficient means of tabulating census data. The contest was won by German immigrant and Census Bureau statistician, Herman Hollerith. Hollerith formed the Punch Card Tabulating Machine Co. in 1896.

In 1911 Hollerith’s company merged with Computing Scale Co. of America and International Time Recording Co. to form Computing-Tabulating-Recording Co. During the period between 1910 and 1960, it developed products from punch-card tabulating machines to room-sized calculators to mainframe computing systems for large enterprises and changed the nature of accounting, calculation and basic back-office business processes. In the 1970s and 80s, IBM product lines expanded from its traditional mainframes to minicomputer and personal computers and applications moved from backend operations to departmental operation. In 1981, the company introduced the IBM Personal Computer or PC, allowing the use of computers in schools, homes and businesses. Components for the computer were sourced from outside the company. It developed products from punch-card tabulating machines to room sized calculators and main frame computers. The company manufactured and sold products ranging from commercial scales and industrial time recorder to meat and cheese slicers, tabulators and punch cards.

In the beginning the company operated in New York City only. Within a short period of time, however, it quickly expanded its office and plants to other parts of New York State, Washington, DC, Ohio, Michigan and Toronto, Canada.

In 1914 Thomas J. Watson joined the company and became the president of the company within eleven months. Under his leadership the company continued to expand its products and services.

At that time the company focused on producing large scales custom built tabulating solutions for businesses.

Within ten years Watson had expanded the company’s business operations to Europe, South America, Asia and Australia and in 1924 the company was renamed International Business Machines Corporation (IBM) to reflect the firm’s worldwide expansion.

In the decades leading up to the onset of WW2 IBM had operations in many countries that would be involved in the war, on both the side of the Allies and the Axis. IBM had a lucrative subsidiary in Germany, which it was majority owner of, as well as operations in Poland, Switzerland and other countries in Europe. As with most other enemy-owned businesses in Axis countries, these subsidiaries were taken over by the Nazis and other Axis governments early on in the war. The headquarters in New York meanwhile worked to help the American war effort.

The war years also marked IBM's first steps toward computing. The Automatic Sequence Controlled Calculator, also called the Mark I, was completed in 1944 after six years of development with Harvard University. It was the first machine that could execute long computations automatically.

Over 50 feet long, eight feet high and weighing almost five tons, the Mark I took less than a second to solve an addition problem but about six seconds for multiplication and twice as long for division - far slower than any pocket calculator today. Later in the decade, IBM introduced the Selective Sequence Electronic Calculator (1948) as the company's first large-scale digital calculating machine, the successful 604 Electronic Calculating Punch (1948) - 5,600 of which were built in a 10-year period - and the Card-Programmed Electronic Calculator (1949), the first IBM product designed specifically for computation centers.

IBM made a number of key technological changes in the decade of the 1950s. In 1952, the company introduced the IBM 701, its first large computer based on the vacuum tube. The tubes were quicker, smaller and more easily replaced than the electromechanical switches in the Mark I (1944). The 701 executed 17,000 instructions per second and was used primarily for government and research work. But vacuum tubes rapidly moved computers into business applications such as billing, payroll and inventory control. By 1959, transistors were replacing vacuum tubes.

The IBM 7090, one of the first fully transistorized mainframes, could perform 229,000 calculations per second. The U.S. Air Force used the 7090 to run its Ballistic Missile Early Warning System. IBM led data processing in a new direction with the 1957 delivery of the IBM 305 Random Access Method of Accounting and Control (RAMAC), the first computer disk storage system. Such machines became the industry's basic storage medium for transaction processing. In less than a second, the RAMAC's "random access" arm could retrieve data stored on any of the 50 spinning disks. At an IBM exhibit at the 1958 World's Fair in Brussels, the RAMAC answered world history questions in ten languages.

A new generation of IBM leadership oversaw this period of rapid technological change. After nearly four decades as IBM's chief executive, Thomas J. Watson, Sr., passed the title of president on to his son, Thomas J. Watson, Jr., in 1952. He became chief executive officer just six weeks before his father's death on June 19, 1956 at age 82.

Just as his father saw the company's future in tabulators rather than scales and clocks, Thomas J. Watson, Jr., foresaw the role computers would play in business, and he led IBM's transformation from a medium-sized maker of tabulating equipment and typewriters into a computer industry leader.

Under Thomas J. Watson, Jr., there were also innovations in marketing. In 1969, IBM changed the way it sold technology. Rather than offer hardware, services and software exclusively in packages, marketers "unbundled" the components and offered them for sale individually. Unbundling gave birth to the multibillion-dollar software and services industries, of which IBM is today a world leader.

On April 7, 1964, IBM introduced the System/360, the first large "family" of computers to use interchangeable software and peripheral equipment. It was a bold departure from the monolithic, one-size-fits-all mainframe. Fortune magazine dubbed it "IBM's $5 billion gamble."
System/360 offered a choice of five processors and 19 combinations of power, speed and memory. A user could operate the same magnetic tape and disk products as another user with a processor 100 times more powerful. System/360 also offered dramatic performance gains, thanks to Solid Logic Technology - half-inch ceramic modules containing circuitry far denser, faster and more reliable than earlier transistors.

International Business Machines (IBM) Mission Statement:
"At IBM, we strive to lead in the invention, development and manufacture of the industry's most advanced information technologies, including computer systems, software, storage systems and microelectronics.

We translate these advanced technologies into value for our customers through our professional solutions, services and consulting businesses worldwide."
Corporate Social Responsibility
Innovation – joining invention and insight to produce important, new value – is at the heart of what we are as a company. And, today, IBM is leading an evolution in corporate citizenship by contributing innovative solutions and strategies that will help transform and empower our global communities.
Our diverse and sustained programs support education, workforce development, arts and culture, and communities in need through targeted grants of technology and project funds.
Market Leadership

* Received the first-ever Frost & Sullivan 2007 Market Leadership Award in Storage Solutions in India. * IBM Daksh (now IBM Global Process Services India) recognized by Frost & Sullivan as 2009 Contact Center Outsourcing Service Provider of the Year in Asia Pacific. * Frost & Sullivan Market Share Leadership Award (2009) in three key categories: Operational Support Systems/ Business Support Systems. Intrusion Detection Systems/ Intrusion Prevention Systems, Service Oriented Architecture. * Best Technology Management Solutions Company (2009) by VAR India. * VAR India awarded IBM as the Leader in Server & Storage in Customer Survey Audit 2008 (for FY 2007). * Recognised as the Overall Best Company (Indo American Chamber of Commerce) in 2007. * Winner of ‘Most Valued Principal Award’ - most preferred channel partner by Channel World in 2009. * IBM India ranked as No.1 IT Services provider in the country by Springboard Research (2008). * Businessworld names IBM Daksh (now IBM Global Process Services India) "India's most respected BPO company". * Business Today names Daksh (now IBM Global Process Services India) one of India's most innovative BPOs. * CRN’s annual customer survey, Channel Champions 2009, puts IBM in the No.1 spot in the Server Category. * IBM ranked No.1 in non x86 UNIX market in India in FY2009 by IDC India. * IBM Ranked No.1 in the x86 blades server category in FY2009 by IDC. * IBM Ranked No.1 in external disk storage market in FY2009 by IDC.
Employer of Choice * National Award for Best Employer for people with disabilities (2009). * Helen Keller Award for policies and practices that promote equal employment opportunity for people with disabilities (2009). * NASSCOM Corporate Awards for Excellence in Gender Inclusivity 2009 - in the BPO category (IBM Daksh, now IBM Global Process Services India) and best Child Care Center (IBMs YROK). * IBM India ranked among top 5 companies in India in Business Today’s ‘Best Companies to Work for’ survey (2010). * IBM Global Process Services India wins the Golden Peacock National Training Award (2011).
Innovation
1) NASSCOM Innovation Award for IBM Daksh (now IBM Global Process Services India) in ‘New Technology Advancement’ category. 2) Best Innovative Server Technology Provider’ for 2009 by VAR India.
Contribution to society * Golden Peacock Award for Corporate Social Responsibility (2010). * National Award for ‘Technology Innovation’ that improves the lives of people with disabilities (2009). * National Award on ‘Best Adaptability of Innovation’ to provide cost effective technology and outstanding work in creation of barrier free environment for the Persons with Disability (2007).

I. OBJECTIVE
To retain leadership in the market by utilizing the company's lead in Research & Development and great sales force.

II. CENTRAL PROBLEM

What can IBM do to retain its position in the market while coping with the rapidly increasing demand for its product?

III. AREAS OF CONSIDERATION

STRENGTHS

* Brand name * Rising revenue * Diverse product line * Heavy research and development * Effective marketing strategy * Company globalization * Powerful sales force * Good employee responsibility * Innovative leaders

WEAKNESSES

* Too many employees * Weak Organizational Structure * Difficulty in the coordination of many geographic division * Disorganized product line * Uncompetitive Research and Development * Concentration on the development of one product instead of the whole line

OPPORTUNITIES

* Generate revenue through patents * Use their strong R&D to be more competitive * Organize their company hierarchy to generate better results * Develop System/360 into a wider line * Diversify into other computer segments * Obtain contracts like the previous census deal * Investments, partnerships, and/or acquisitions with/of other companies relative to their business * Hire international expertise

THREATS

* Fierce Competition * Aggressive change in technology that could render their products instantly obsolete * Loss of workforce in the Research Department * Economic instability in different countries * Incompatibility of their newly developed products with their old ones that could cause them to lose consumers * Inability to develop a leap larger than the one brought by the System/360

IV. ALTERNATIVE COURSES OF ACTION

1. Invest in aggressive R&D by utilizing international expertise in order to gain technological advantage over competitors; and then utilizing patent revenue to award researchers.

Advantages: * Readily available workforce * Utilizes company's global reach * Takes advantage of their current position * This could secure their position ot the top * Research-Reward incentive is a good motivation that could ensure workforce standards * They would retain technological advantage
Disadvantages
* R&D is expensive * It is difficult to be at the head of the technology race if they don't have notable electrical engineers * Their workforce is heavily trained on marketing instead of R&D * Their competitors usually are a step further in technology * The IBM leaders were not computer scientists

1. Find new market segments to enter in order to gain more market share, formulate new ideas for innovation, and gain advantage over competitors.

Advantages: * Penetrating new markets would ensure they could cater to everyone that would need their technology * New markets will open new opportunities * Learning more about new markets would lead them to know more of what they should have in their products * This would increase market share * Getting to a new market segment would give them advantage over competitors
Disadvantages
* The success of this still depends on whether the R&D department can produce innovative technologies that could cope with their findings * Entering a market is not easy, especially at a time when computers where not readily available to other segments except for lucrative businesses * A new segment might pose more threat than opportunities * Extensive research for this will drain the company of their needed workforce for innovation

2. Develop a system compatible with their competitors in order to provide low switching costs for consumers which they can use to their advantage by providing more affordable products.

Advantages: * This would allow IBM to exploit their advantage of having cheaper products and services * Their marketing force will be even stronger if they can enable future customers to change their old system into IBM's * This innovation is not as difficult to do as gaining advantage over their competitors
Disadvantages
* If IBM fails to deliver on their promises of a cheaper product and better services, their compatibility might be more of a drawback * This will not ensure their status at the top of their competitors * This will not give them advantage over their competitors for a long period

V. Recommendation

As a company that relies primarily on technological advancement to gain advantage over their competitors and provide quality service to its consumers, IBM should focus on competitive research and development that would allow them to not only have better products but also be one step ahead of the competition. Innovation is the key in this field, and whoever has the latest, more effective and efficient technology on their hands will have control over the market.

VI. Plan of Action
In order to have this control, IBM should initiate the following:

3. Give time and effort in recruiting notable computer engineers that would give them the necessary resources to create the innovation they need. These engineers should be properly compensated for their work and given rewards or bonuses for their achievements in order to encourage better productivity. 4. Aside from focusing on the technology, IBM should also observe their target market and try to predict what trends could emerge. Anticipating future demand will give the direction for their innovations. 5. Observe, too, their competitors and try to learn from them. 6. Exploit their global reach and look for innovators from other countries that have a fresh perspective on their technology.

In addition to those, IBM leaders should start learning more about their technology instead of focusing on the marketing side of its business because the company would not prosper if its leaders don’t know everything about a product, starting from what it is made of until how people use it.

VII. Potential Problems

Gaining an advantage over competitors who had always been technologically more advanced than IBM is difficult. It would require large investments that is more likely to hurt the company instead of help it if the research and development failed.

Also, the success of System/360 can also be a drawback in this situation. If they cannot provide an upgrade to 360 that is a larger leap than what the previous system did, then consumers are not likely to buy it. IBM would need to create something as game-changing as the System/360 in order to actually make their customers buy it, otherwise, their consumers might opt to just stay with the 360, and IBM will lose sales, or switch to another provider entirely who might have a better product than IBM had.

VIII. Contingency Plan

If they can show their customers that, like always, they can provide a much better service albeit their technological disadvantage or minimal innovation from System/360, then their customers would more likely avail of what they offer and therefore stabilize their sales and revenues instead of an undesired decline.