Can Big Blue survive another century?

100 down, 100 to go

Internet Security Threat Report 2014

Intended consequences

That 1952 lawsuit by Uncle Sam, and the 1956 consent decree that IBM signed to settle it, set the stage for the modern computer industry in a number of ways, even though it initially only applied to punch card machinery, not electronic computers. (The decree was subsequently extended to computers). This consent decree did a lot of things, including opening up specifications on IBM machinery so third-party peripherals could plug into them and, eventually, so third-party software could run on them without prejudice. (Think of this as an early version of open source APIs, only compelled by law, not generosity.) The decree also required IBM to sell its machinery at a reasonable price that bore some relationship to the lease price, and fostered the leasing of IBM equipment and their support by third parties. But ironically, given all the yammering about the high capital expenses in the data center, more than anything, the consent decree set the conditions for acquiring rather than renting IT equipment, moving it from the OpEx to the CapEx side of the corporate ledger.

IBM Global Services has spent the past 20 years trying to put that genie back in the bottle, and with all this talk about cloud computing, 20 years hence it may be unusual to own a computer at all.

The IBM of the 1960s and 1970s had a hard time coping with that antitrust settlement, which coincided with the rise of the System/360 mainframe and its adoption as the primary platform for business applications in the world at the time. Over its century of life, IBM has generally played it very safe, doing what is necessary to generate the most profits with the least amount of work – precisely what a company should do, and only what it should do, if you adhere to the code of behavior espoused by Wall Street.

By the time IBM had inked the Consent Decree, Tom Watson Jr was ready to take the helm at Big Blue, and only a few years later, the company made the biggest bet in its history. At a time when IBM was only raking in $3bn a year in revenues, it committed $5bn to create the System/360 mainframe, the world's first "write once, run anywhere" system architecture.

IBM logos

IBM's true genius was always with electromechanical devices, with its punch-card driven mainframes and midrange gear as well as its Selectric typewriter, various printers, and disk drives being good examples but by no means an exhaustive list. IBM was very good at building and, equally important, maintaining these devices, and its sales force was properly motivated, from the first day when Tom Watson Sr took over at CTR, to clean up their act and make sales. The current crop of IBM top brass can barely remember this Big Blue, of course, but they are experts at financial engineering and rather than making big bets that shape the future of computing, as the System/360 combined with the Consent Decree surely did, they chart the safest course possible to the most profits in a turbulent IT market.

And current IBMers are quite proud of this, starting right at the top.

"For IBMers, long-term thinking means continually moving to the future," said Sam Palmisano, IBM's president, CEO, and chairman, in a statement marking the company's 100th birthday. "IBM has survived and thrived for 100 years by remaining true to our core values, while being ready to change everything else. This has allowed us to transform technology, business and society through our first century, and we believe it will enable us to achieve even more in our second."

I have my doubts. The IBM that many of us respect set the standard with punch cards and mainframes in the data center and did the same on the desktop with the Personal Computer, despite its own best efforts to not acknowledge there was a place in the world for personal computing. That IBM never quite recovered psychologically from its near-death experience when the mainframe business collapsed in the early 1990s and Unix systems swarmed the data center and PCs kicked dumb terminals off the desktops. It did recover financially, obviously, thanks in large part to former CEO and chairman Lou Gerstner, the first and probably not the last CEO from outside the IBM Company.

Cloudy thinking

IBM may be growing fast and throwing off giant bags of cash that it can use to buy back its own shares, but that is not making a big bet on the future of computing, like it did back in 1964 with the launch of the System/360 or even little bets like launching midrange System/3 machines in 1969 or the original PC back in 1981. IBM has been playing it careful since 1956, and has been playing it safe since 1993; it only bets on sure things and only places small bets.

IBM controls its legacy environments with an iron price list and is a tough competitor in Unix, Windows, and Linux systems, but much of the hardware and software in its systems come from elsewhere. Google and Microsoft absolutely control their environments in ways that IBM used to. While I was impressed earlier this year with the Watson question-answer machine that beat humans playing Jeopardy!, IBM has not put a stake in the ground and said it would be building the world's largest cloud and convincing customers that it was time to get back to timesharing for economic as well as technical reasons.

Given how any company running such a large cloud might be tempted to abuse this position, perhaps we should all be grateful that Big Blue is busy living quarter to quarter, counting its money and being smugly satisfied with itself. Bigger Blue could be so much more dangerous than Big Blue ever was, if Palmisano ever got the idea of building a legacy for himself instead of just being somewhat rich and powerful. ®

Beginner's guide to SSL certificates

More from The Register

next story
Docker's app containers are coming to Windows Server, says Microsoft
MS chases app deployment speeds already enjoyed by Linux devs
'Hmm, why CAN'T I run a water pipe through that rack of media servers?'
Leaving Las Vegas for Armenia kludging and Dubai dune bashing
'Urika': Cray unveils new 1,500-core big data crunching monster
6TB of DRAM, 38TB of SSD flash and 120TB of disk storage
Facebook slurps 'paste sites' for STOLEN passwords, sprinkles on hash and salt
Zuck's ad empire DOESN'T see details in plain text. Phew!
SDI wars: WTF is software defined infrastructure?
This time we play for ALL the marbles
Windows 10: Forget Cloudobile, put Security and Privacy First
But - dammit - It would be insane to say 'don't collect, because NSA'
Oracle hires former SAP exec for cloudy push
'We know Larry said cloud was gibberish, and insane, and idiotic, but...'
Symantec backs out of Backup Exec: Plans to can appliance in Jan
Will still provide support to existing customers
prev story


Forging a new future with identity relationship management
Learn about ForgeRock's next generation IRM platform and how it is designed to empower CEOS's and enterprises to engage with consumers.
Why cloud backup?
Combining the latest advancements in disk-based backup with secure, integrated, cloud technologies offer organizations fast and assured recovery of their critical enterprise data.
Win a year’s supply of chocolate
There is no techie angle to this competition so we're not going to pretend there is, but everyone loves chocolate so who cares.
High Performance for All
While HPC is not new, it has traditionally been seen as a specialist area – is it now geared up to meet more mainstream requirements?
Intelligent flash storage arrays
Tegile Intelligent Storage Arrays with IntelliFlash helps IT boost storage utilization and effciency while delivering unmatched storage savings and performance.