International Business Machines Corporation (IBM)


Vijith Pujari
International Business Machines Corporation (IBM)

Type :public (NYSE: IBM)

Founded :-1888, incorporated 1911

Location :-Armonk, New York, USA

Key people:-

Samuel J. Palmisano, Chairman & CEO
Dan Fortin, President (Canada)
Frank Kern, President (Asia Pacific)
Nick Donofrio, EVP (Innovation & Technology)
Colleen Arnold, President IOT EMEA North-East
Dominique Cerutti, President IOT EMEA South-West
Mark Loughridge SVP & CFO

Industry :-Computer hardware, IT Services, Consulting

Revenue :-$91.1 billion USD (2005)

Operating Income :-$13.7 billion USD (2005)

Net Income :- $7.9 billion USD (2005)

Employees :-329,373 (2005)

Website :- IBM

International Business Machines Corporation (IBM, or colloquially, Big Blue; NYSE: IBM) is a computer technology firm headquartered in Armonk, NY, USA. The company, which was founded in 1888 and incorporated June 15, 1911, manufactures and sells computer hardware, software, infrastructure services, hosting services, and consulting services. IBM is the biggest information technology company in the world and holds more patents than any other tech company.

With almost 332,000 employees worldwide and revenues of $91 billion annually (figures from 2005), IBM is also one of the few with a continuous history dating back to the 19th century. It has engineers and consultants in over 170 countries and development laboratories located all over the world, in all segments of computer science and information technology; some of them are pioneers in areas ranging from mainframe computers to nanotechnology.

In recent years, services and consulting revenues have been larger than those from manufacturing. Samuel J. Palmisano was elected CEO on January 29, 2002 after having led IBM's Global Services, and helping it to become a business with a $100 billion in backlog in 2004[1]. Palmisano replaced Louis V. Gerstner, who had held the job from 1992 to 2002, taking over from John Akers who was fired because of the company's serious financial problems.

In 2002 the company strengthened its business advisory capabilities by acquiring the consulting arm of professional services firm PricewaterhouseCoopers. The company is increasingly focused on business solution driven consulting, services and software, with emphasis also on high value chips and hardware technologies; as of 2005 it employs about 195,000 technical professionals. That total includes about 350 Distinguished Engineers and 60 IBM Fellows, its most senior engineers.

IBM Research has eight laboratories, all located in the Northern Hemisphere, with five of those locations outside of the United States. IBM employees have won five Nobel Prizes. In the USA, they have earned four Turing Awards, five National Medals of Technology, and five National Medals of Science, and outside the USA, many equivalents.

As a chip maker IBM is among the Worldwide Top 20 Semiconductor Sales Leaders.

Current business activities

In 2002, IBM announced the beginning of a $10 billion program to research and implement the infrastructure technology necessary to be able to provide supercomputer-level resources "on demand" to all businesses as a metered utility. This program will be implemented over the coming years.

In recent years IBM has steadily increased its patent portfolio, which is valuable for cross-licensing with other companies. In every year from 1993 until 2005, IBM has been granted significantly more U.S. patents than any other company. That thirteen-year period has resulted in over 31,000 patents for which IBM is the primary assignee

Protection of the company's intellectual property has grown into a business in its own right, generating over $10 billion dollars [3] to the bottom line for the company during this period.

A 2003 Forbes article quotes the head of IBM Research, who suggested a $1 billion in profit just for the research staff; however, they probably generate the bulk of new inventions in the company.

In 2005, IBM sold its PC division to China-based Lenovo. As part of the agreement, Lenovo moved its headquarters to New York State. IBM owns a significant stake (about 19%) in Lenovo. Starting from the date of the acquisition, Lenovo is permitted five years' use of the IBM and Thinkpad trademarks.

Of late, IBM has shifted much of its focus to the provision of business consulting & re-engineering services from its hardware & technology focus. The new IBM has enhanced global delivery capabilities in consulting, software and technology based process services - and this change is reflected in its top-line.


IBM has often been described as having a sales-centric or a sales-oriented business culture. Traditionally, many of its executives and general managers would be chosen from its sales force. In addition, middle and top management would often be enlisted to give direct support to salesmen in the process of making sales to important customers.

For most of the 20th century, a blue suit, white shirt and dark tie was the public uniform of IBM employees. But by the 1990s, IBM relaxed these codes; the dress and behavior of its employees does not differ appreciably from that of their counterparts in large technology companies.

In 2003, IBM embarked on an ambitious project to rewrite company values using its "Jam" technology -- Intranet-based online discussions on key business issues for a limited time, involving more than 50,000 employees over 3 days in this case. Jam technology includes sophisticated text analysis software (eClassifier) to mine online comments for themes, and Jams have now been used six times internally at IBM. As a result of the 2003 Jam, the company values were updated to reflect three modern business, marketplace and employee views: "Dedication to every client's success", "Innovation that matters - for our company and for the world", "Trust and personal responsibility in all relationships".

In 2004, another Jam was conducted in which more than 52,000 employees exchanged best practices for 72 hours. This event was focused on finding actionable ideas to support implementation of the values identified previously. A new post-Jam Ratings event was developed to allow IBMers to select key ideas that support the values. (For further information, see Harvard Business Review, December 2004, interview with IBM Chairman Sam Palmisano.)

IBM's culture has been recently influenced by the open source movement. The company invests billions of dollars in services and software based on Linux. This includes over 300 Linux kernel developers. IBM's open source involvement has not been trouble-free, however; see SCO v. IBM.

Diversity and workforce issues

IBM's efforts to promote workforce diversity and equal opportunity date back at least to World War I, when the company hired disabled veterans. IBM is the only technology company ranked in Working Mother Magazine's Top 10 for 2004.

The company has traditionally resisted labor union organizing, although unions represent some IBM workers outside the United States. [email protected], part of the Communications Workers of America, is trying to organize IBM in the U.S.

In the 1990s, two major pension program changes, including a conversion to a cash balance plan, resulted in an employee class action lawsuit alleging age discrimination. IBM employees won the lawsuit and arrived at a partial settlement, although appeals are still underway.

Historically IBM has had a good reputation of long-term staff retention with few large scale layoffs. In more recent years there have been a number of broad sweeping cuts to the workforce as IBM attempts to adapt to changing market conditions and a declining profit base. After posting weaker than expected revenues in the first quarter of 2005, IBM eliminated 14,500 positions from its workforce, predominantly in Europe. On June 8, 2005, IBM Canada Ltd. eliminated approximately 700 positions. There has also been a steadily increasing movement of labor to cheaper offshore countries such as the Philippines, Costa Rica, India and China.

On October 10, 2005, IBM became the first major company in the world to formally commit to not using genetic information in its employment decisions. This came just a few months after IBM announced its support of the National Geographic's Genographic Project.


Early years

IBM's history dates back decades before the development of electronic computers – before that it developed punched card data processing equipment. It originated as the Computing Tabulating Recording (CTR) Corporation, which was incorporated on June 15, 1911 in Endicott, New York a few miles west of Binghamton, New York.

This company was a merger of three separate corporations; Tabulating Machine Corporation of Washington D.C, the Computing Scale Corporation of Dayton, Ohio and the International Time Recording Company of Endicott, NY. The president of the Tabulating Machine Corporation at that time was Herman Hollerith, who had founded the company in 1896.

The key person behind the merger was financier, Charles Flint who brought together the founders of the three companies to propose a merger. Flint remained a member of the board of CTR until his retirement in 1930 [1].

Thomas J. Watson Sr., the founder of IBM, became General Manager of CTR in 1914 and President in 1915. In 1917, the CTR entered the Canadian market under the name of International Business Machines Co., Limited. On February 14, 1924, CTR changed its name to International Business Machines Corporation.

The companies that merged to form CTR manufactured a wide range of products, including employee time-keeping systems, weighing scales, automatic meat slicers, and most importantly for the development of the computer, punched card equipment. Over time CTR came to focus purely on the punched card business, and ceased its involvement in the other activities.

World War II and Holocaust era

In 2001 author Edwin Black published IBM and the Holocaust, a book alleging that IBM's New York headquarters and CEO Thomas J. Watson assisted its overseas subsidiaries in providing the Third Reich with punch card machines knowing that the machines could help the Nazis prosecute their "Final Solution." The book claims that, with New York's cooperation, IBM's Geneva office and Dehomag, its German subsidiary, were intimately involved in supporting Nazi atrocities. Black also alleges that these machines made the Nazis much more efficient in their efforts. The 2003 documentary film The Corporation also explores this issue.

IBM denies these allegations and states that the Nazis seized control of Dehomag before World War II. Holocaust-related plaintiffs voluntarily withdrew one lawsuit against IBM in U.S. courts, but there is one case still pending as of early 2006 in Swiss courts. IBM says the case is "without merit."

During World War II IBM manufactured the Browning Automatic Rifle and the M1 Carbine. Allied military forces widely utilized IBM's tabulating equipment for military accounting, logistics, and other War-related purposes. During the War IBM also built the Harvard Mark I for the U.S. Navy, the first large-scale automatic digital computer in the U.S.

Airforce and airline projects

In the 1950s, IBM became a chief contractor for developing computers for the United States Air Force's automated defense systems. Working on the SAGE anti-aircraft system, IBM gained access to crucial research being done at MIT, working on the first real-time, digital computer (which included many other advancements such as an integrated video display, magnetic core memory, light guns, the first effective algebraic computer language, analog-to-digital and digital-to-analog conversion techniques, digital data transmission over telephone lines, duplexing, multiprocessing, and networks). IBM built fifty-six SAGE computers at the price of $30 million each, and at the peak of the project devoted more than 7,000 employees (20% of its then workforce) to the project. More valuable to the company in the long run than the profits, however, was the access to cutting-edge research into digital computers being done under military auspices. IBM neglected, however, to gain an even more dominant role in the nascent industry by allowing the RAND Corporation to take over the job of programming the new computers, because, according to one project participant (Robert P. Crago), "we couldn't imagine where we could absorb two thousand programmers at IBM when this job would be over someday." IBM would use its experience designing massive, integrated real-time networks with SAGE to design its SABRE airline reservation system, which met with much success.

Successes of the 1960s

IBM was the largest of the eight major computer companies (with UNIVAC, Burroughs, Scientific Data Systems, Control Data Corporation, General Electric, RCA and Honeywell) through most of the 1960s. People in this business would talk of "IBM and the seven dwarfs", given the much smaller size of the other companies or of their computer divisions. When only Burroughs, Univac, NCR and Honeywell produced mainframes, a bit later, people talked of "IBM and the B.U.N.C.H.". Most of those companies are now long gone as IBM competitors, except for Unisys, which is the result of multiple mergers that included UNIVAC and Burroughs. NCR and Honeywell dropped out of the general mainframe and mini sector and concentrated on lucrative niche markets, NCR's being cash registers (hence the name, National Cash Register) and Honeywell becoming the market leader in thermostats. General Electric remains one of the world's largest companies, but no longer operates in the computer market. The IBM computer range that earned it its position in the market at that time is still growing today. It was originally known as the IBM System/360 and, in far more modern 64-bit form, is now known as the IBM System z9 (often referred to as "IBM mainframes").
IBM Logo: 1956-1972

IBM's success in the mid-1960s led to inquiries as to IBM antitrust violations by the U.S. Department of Justice, which filed a complaint for the case U.S. v. IBM in the United States District Court for the Southern District of New York, on January 17, 1969. The suit alleged that IBM violated the Section 2 of the Sherman Act by monopolizing or attempting to monopolize the general purpose electronic digital computer system market, specifically computers designed primarily for business. Litigation continued until 1983, and had a significant impact on the company's practices.

Recent history

On January 19, 1993 IBM announced a $4.97 billion loss for the 1992 fiscal year, which was at that time the largest single-year corporate loss in United States history. Since that loss, IBM has made major changes in its business activities, shifting its focus significantly away from components and hardware and towards software and services.

In 2004, IBM announced the proposed sale of its PC business to Chinese computer maker Lenovo, which is partially owned by the Chinese government, for $650 million US in cash and $600 million US in Lenovo stock. The deal was approved by the Committee on Foreign Investment in the United States in March of 2005, and completed in May of 2005. IBM will have a 19% stake in Lenovo, which will move its headquarters to New York State and appoint an IBM executive as its chief executive officer. The company will retain the right to use certain IBM brand names for an initial period of five years.

IBM is in the news again, as IBM is apart of the Cell Project, a revolutionary, next generation processor architecture designed for multimedia, hi-def and gaming content.

Facts and trivia

* The IBM Logo was designed by Paul Rand.
* IBM's Software Group, if it were a separate entity, would be the second largest software company in the world, behind only Microsoft in total revenue. IBM SWG groups its products into five brands: DB2 (information management), Rational (software development lifecycle), Lotus (collaboration), Tivoli (systems management and security), and WebSphere (application as well as data integration and middleware). SWG contributes as much profit to the company as its huge services division (IBM Global Services).
* IBM's famous mainframe business is growing quite robustly.
* IBM invented many of the core technologies used in all forms of computing, including the first hard disk drive and the Winchester hard disk drive, the cursor (on computer screens), Dynamic RAM (DRAM), the relational database, Thin Film recording heads, RISC architecture, and the floppy disk. The infamous Control-Alt-Delete keystroke (David Bradley, 2001: "I invented it, but it was Bill [Gates] who made it famous"), also invented at IBM, is still frequently used on PCs running the Microsoft Windows operating systems.
* The first black employee was hired in 1899 by the Computing Scale Corporation, one of the companies that formed IBM.
* IBM began hiring women to work as professional systems service staff in 1935. Thomas J. Watson Sr. wrote: "Men and women will do the same kind of work for equal pay. They will have the same treatment, the same responsibilities and the same opportunities for advancement."
* IBM made clocks until selling its time division in 1958. Other past IBM products: fax machines, dictation equipment, photocopiers, meat and grocery scales, cheese slicers, telephones and telephone/data service (Rolm and Advantis/IBM Global Network), wireless data service (Ardis), and factory employee timecard systems.
* In 1944, IBM was the first corporation to support the United Negro College Fund.
* In 1953, IBM published the first U.S. corporate mandate on equal employment opportunity, stating that the company would hire people based on their ability, "regardless of race, color or creed". Sexual orientation was added to the nondiscrimination policy in 1984. Genetic makeup was added in 2005.
* In 1982, the IBM Personal Computer was awarded Time Magazine's "Man of the Year" award.
* IBM invented the USB flash drive in 1998 but did not patent it.
* Whilst IBM did not invent the personal computer, architectures cloned from its design for the IBM PC (which relied on third-party componentry) became the industry standard and are now often simply called the PC. The IBM PC was introduced on August 12, 1981. Microsoft and Intel became monopoly suppliers of two of the key components of PC-compatible systems. IBM sold its PC division to Lenovo in December, 2004.
* The IBM iSeries minicomputer (in its 24-year history also variously known as System i5, AS/400 and System/38) is the world's largest-selling computer family, if PC-type machines are excluded. It was the first successful 64-bit machine. It has been calculated that, if the Rochester, Minnesota facility that produces the machine were independent, it would be the third largest computer company in the world.
* In 2004, for the twelfth consecutive year, IBM was awarded the greatest number of patents by the USPTO. IBM received 3,248 patents that year[7].
* If you step backward one letter in the alphabet for each letter of "IBM" you will arrive at "HAL." Some think that this bears a striking similarity to the name of the fictional computer "HAL" featured in the Arthur C. Clarke book and film "2001, A Space Odyssey." However, Arthur C. Clarke has stated that any connection was purely coincidental, and that the name HAL 9000 was derived from the term 'Heuristic ALgorithm.'
* The "ThinkPad" name for IBM's (former) notebook computers was brought up after an IBM researcher went to a coffee break and took a notepad which had the word "THINK" on it. Subsequently they conceived the idea of a small, portable tool which was able to read, write, work and think, which eventually turned out to be their first "ThinkPad" notebook computer back in 1992.
* IBM arrived in 1965 to Raleigh-Durham's Research Triangle Park. In 2005, IBM celebrated the 40th anniversary of its Research Triangle Park facility. In 2003, some 13,300 people worked at IBM RTP making it IBM's largest. RTP is still IBM's largest site as of 2005 with 11,000 employees. IBM occupies 39 buildings in metropolitan Raleigh-Durham and owns 750 acres in Research Triangle Park.
* IBM is playing a major role in shifting of information technology and consulting work from the developed countries to "offshore" destinations like India, China and Brazil. IBM India has grown rapidly in employee numbers and now accounts for almost one-sixth of the total IBM employees worldwide.
* The 2005 Annual Report for IBM estimates that the Medicare prescription drug program will lead to the company receiving a $400 million subsidy during the six-year period beginning in 2006)[8].
* The history of Grace Hopper, considered the "mother of the COBOL language" (COmmon Business Oriented Language) and her history and relevance of that computer language, related to International Business Machines.


* 1889 Bundy Manufacturing Company incorporated.
* 1891 Computing Scale Company incorporated.
* 1893 Dey Patents Company (Dey Time Registers) incorporated.
* 1894 Willard & Frick Manufacturing Company (Rochester, New York) incorporated.
* 1896 Detroit Automatic Scale Company incorporated.
* 1896 Tabulating Machine Company incorporated.
* 1899 Standard Time Stamp Company acquired by Bundy Manufacturing Company.
* 1900 Willard & Frick Manufacturing Company (Rochester) acquired by International Time Recording Company.
* 1901 Chicago Time-Register Company acquired by International Time Recording Company.
* 1901 Dayton Moneyweight Scale Company acquired by Computing Scale Company.
* 1901 Detroit Automatic Scale Company acquired by Computing Scale Company.
* 1902 Bundy Manufacturing Company acquired by International Time Recording Company.
* 1907 Dey Time Registers acquired by International Time Recording Company.
* 1908 Syracuse Time Recording Company acquired by International Time Recording Company.
* 1911 Computing Scale Company acquired by Computing-Tabulating-Recording Company (C-T-R).
* 1911 International Time Recording Company acquired by Computing-Time-Recording Company (C-T-R).
* 1911 Tabulating Machine Company acquired by Computing-Tabulating-Recording Company (C-T-R).
* 1917 American Automatic Scale Company acquired by Computing-Tabulating-Recording Company (C-T-R) as International Scale Company.
* 1917 C-T-R opens in Canada as International Business Machines Company Limited.
* 1921 Pierce Accounting Machine Company (asset purchase).
* 1921 Ticketograph Company (of Chicago).
* 1924 C-T-R renamed International Business Machines Corporation.
* 1930 Automatic Accounting Scale Company.
* 1932 National Counting Scale Company.
* 1933 Electromatic Typewriters Inc. (See: IBM Electromatic typewriter)
* 1941 Munitions Manufacturing Corporation.
* August, 1959 Pierce Wire Recorder Corporation.
* 1984 ROLM.
* 1986 RealCom Communications Corporation.
* 1995 Lotus Development Corporation for $3.5 billion.
* 1996 Tivoli Systems for $743 million.
* 1997 Software Artistry for $200 million.
* 1997 Unison Software.
* 1998 CommQuest Technologies.
* 1999 Mylex Corporation.
* 1999 Sequent Computer Systems for $810 million.
* 2001 Informix Software (a purchase of assets rather than a true acquisition) for $1.0 billion.
* 2001 Mainspring Inc. for $80 million.
* 2002
o PricewaterhouseCoopers' Consulting for $3.5 billion (recalculated by IBM in August 2003 as $3.9 billion).
o January, Crossworlds.
o September, Holosofx.
* 2003
o March, Rational Software Corporation for $2.1 billion.
o July, Presence Online, Aptrix.
o October, CrossAccess.
* 2004
o Maersk Data & DMData.
o March, Logicalis Australia (renamed to Cerulean Solutions in April 2005) and Logical CSI New Zealand.
o April, Candle Corp., Daksh eServices in India.
o April, Schlumberger Business Continuity Services (Renamed to Continuity Services Ltd)
o July, Alphablox.
o July, Cyanea Systems.
o August, Venetica.
o October, Systemcorp.
* 2005
o February, Corio crio for $211 million.
o April, Ascential Software for approximately $1.1 billion in cash.
o May, Gluecode.
o July, PureEdge.
o August, DWL.
o October, DataPower.
o November, Network Solutions Pvt Ltd, India
o December, Bowstreet.
o December, Micromuse for $865 million.
* 2006
o January, Classic Blue.
o May, Build Forge


* 1934 Dayton Scale Division is sold to the Hobart Manufacturing Company.
* 1942 Ticketograph Division is sold to the National Postal Meter Company.
* 1958 Time Equipment Division is sold to the Simplex Time Recorder Company.
* Taligent, a joint software venture with Apple Computer.
* Prodigy, formerly a joint venture with Sears.
* AT&T Business Internet
* ARDIS mobile packet network, a joint venture with Motorola. Now Motient.
* 1991 Lexmark (keyboards, typewriters, and printers). IBM Retained a 10% interest. Lexmark has sold its keyboard and typewriter businesses. IBM Printing Systems now competes with Lexmark.
* 1996 Celestica Celestica Electronic Manufacturing Services (EMS).
* 2003 Hitachi Global Storage Technologies now provides many of the hardware storage devices formerly provided by IBM, including IBM Harddrives & The Microdrive. IBM continues to develop storage systems, including Tape Backup, Storage software, Enterprise storage, etc.
* December, 2004 Lenovo acquires 90% interest in IBM Personal Systems Group, 10,000 employees and $9 billion in revenue.



BlueEyes[9] is the name of a human recognition venture initiated by IBM to allow people to interact with computers in a more natural manner. The technology aims to enable devices to recognize and use natural input, such as facial expressions. The initial developments of this project include scroll mice and other input devices that sense the user's pulse, monitor his or her facial expressions, and the movement of his or her eyelids.


Free software available at alphaWorks, IBM's source for emerging software technology:

1. Flexible Internet Evaluation Report Architecture: A highly flexible architecture for the design, display, and reporting of Internet surveys.
2. History Flow Visualization Application: A tool for visualizing dynamic, evolving documents and the interactions of multiple collaborating authors. Examples for Wikipedia can be seen here and here.
3. IBM Performance Simulator for Linux on POWER: A tool that provides users of Linux on Power a set of performance models