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Happy 100th Birthday Big Blue – What’s Next?

{complink 2470|IBM Corp.}, otherwise known as “Big Blue,” turned 100 today, marking a major milestone in the company's history and, more importantly, helping to focus the technology world's collective mind on the history and future of the high-tech industry.

No other company represents the industry's past better than IBM. Incorporated as Computing-Tabulating-Recording Co. (CTR) in 1911, IBM has morphed since then into a $100 billion company with more than 426,000 employees (compared with 1,300 at its inception).

Of greater interest to the technology world is the role the company has played in the industry's growth. It's not an exaggeration to state that the high-tech market would not be what it is today without IBM and some of the extraordinary innovations that came out of the company. In my opinion, IBM is unparalleled in the history of the high-tech market and can unhesitatingly be described as the engine that drove the industry's growth.

IBM scored numerous firsts in its 100-year history, including the first bar code, the magnetic hard drive and magnetic strip for credit cards, the floppy disk, the personal computer, and numerous main frame computing technologies. Many innovative products introduced over the last century by IBM form the backbone for most of the technology products in use today.

In fact, the technological innovations from IBM are too extensive to list here. For additional information on the company's history click here. For those whose appetite for history is big enough, or who want to understand better how IBM structured itself and the underlying strategy behind its growth, the company has prepared a “how to” document that can be downloaded here. I plan to excerpt at least one of these in a separate blog today.

Here, though, I would like to concentrate on IBM of today and the forces that may drive the company over the next years. IBM has taken steps many would consider suicidal: It led the creation of the memory IC (DRAM) market but exited the sector, dumped its PC business (selling the division to China's Lenovo Group), and has focused on higher-end services, consulting, and more research intensive activities.

These actions, which hurt sales, were heavily criticized at the time, but the company took the steps because it visualized a different future for itself. Low-margin businesses and what IBM described as a “seismic shift in the world” compelled the company to make these moves in a bid to improve its competitiveness.

History has yet to deliver its verdict on some of these steps. IBM gamely fought the corrosive effects of commoditization on its operations but has seen limited revenue growth as a result. In 2010, IBM reported revenue of $99.9 billion, up 4 percent, from $95.8 billion in 2009 but down from the $103.6 billion reported in 2008. Net income has been improving, though, rising to $14.8 billion in 2010 from $13.4 billion and $12.3 billion in 2009 and 2008, respectively.

These are not numbers IBM should celebrate. Its sales growth is not comparable to that of Apple (fiscal 2010 revenue of $65.2 billion) or Google ($29.3 billion in 2010 revenue), and the company's market value is well below that of Apple ($302 billion versus $198.5 billion.) The story behind those numbers is simple: IBM just isn't the fastest-growing or the most profitable company in high-tech today. Its sales are forecast to reach approximately $106 billion in 2011 while Apple's will be approximately $103.4 billion for the current fiscal year. Within the next year, Apple's sales will eclipse those of the century-old company.

So, let's celebrate with IBM and acknowledge all it's achieved in the last 100 years. But the company will also need to deliver more than it has in recent years. IBM's history of innovation can make this possible, and its future demands it.

21 comments on “Happy 100th Birthday Big Blue – What’s Next?

  1. Ariella
    June 16, 2011

    To mark the occasion, IBM took out a 4 page ad in today's Wall Street Journal. You can see  the PDF of it it here

  2. Clairvoyant
    June 16, 2011

    Congrats, IBM! Here's to another 100 more!

  3. AnalyzeThis
    June 16, 2011

    @Ariella, that is an amazing “ad”, thank you for sharing! I loved how they even poked fun of some of their missteps, such as OS/2 and PCjr.

    And really, it's rather astonishing that IBM has even managed to survive all these year, given how much the market, the industry, and the technology has changed.

    Yes, Bolaji, you are correct that IBM shouldn't celebrate too much because there is much work to be done and many challenges yet to overcome… but I still think IBM does deserve to be recognized for all their accomplishments and longevity. I do think it's very impressive that my father used IBM mainframes in the 60's and 50 years later if I walked into his place of employment, I would very likely still see some AS/400's or a bunch of Blades.

    And I do think IBM is on the right track. I think selling off the PC stuff to Lenovo, in hindsight, was a very smart move.

    I sincerely believe IBM will out-live all of us!

  4. Tim Votapka
    June 16, 2011

    What's next? How about a “second life?” IBM corporate was piloting a project in which it was using this virtual world piece of technology to link employees together anywhere around the world. Frontline had a great segment on it (you may need to scroll into Chapter 7).

    http://www.pbs.org/wgbh/pages/frontline/digitalnation/view/

     

  5. Anna Young
    June 16, 2011

    Happy 100th birthday to IBM, it’s achieved a great deal and deserves to be called in my view the “grandpa” in high tech and innovation.

    Bolaji, I agree with your assertion that, “of greater interest to the technology world is the role the company has played in the industry's growth. This is well stated. 

    For IBM's achievements to be further celebrated in years to come, you're correct in saying that it needs to step up and deliver (not that it’s doing too badly) 

     

  6. DataCrunch
    June 16, 2011

    IBM no doubt has been a major technology innovator and they continued to wow everyone with Watson’s performance on the game show Jeopardy.  IBM several years ago and made some gutsy business moves to lower their footprint in the hardware space and focus on the higher margin software and services space, which I believe has been pretty successful.

  7. SunitaT
    June 17, 2011

    Happy Birthday IBM. I wonder where we would be without IBM, because s ome of the extraordinary innovations that came out of the company totally changed our lives. 

  8. seel225
    June 17, 2011

    Congratulations to IBM for successful 100 years, IBM has accomplished so much in the last century. It is not easy to keep brand alive for a century of period. I wish very all the best for IBM, here is a very good video about IBM have a look

    http://www.youtube.com/watch?v=39jtNUGgmd4&feature=player_embedded

  9. saranyatil
    June 18, 2011

    Happy birthday to IBM. Its really great to see a company grow such big with their enormous innovations.

  10. Himanshugupta
    June 19, 2011

    Happy belated birthday IBM, as it was on 16th June. With such rich history and technological record, i am sure that IBM will keep on contributing in the coming years and decades and centuries. Rightly said by Samuel Palmisano, if a company wants to move forward then it should not be emotionally tied to the past. Hopefully the smarter planet vision of IBM become the first such incentive. 

  11. mfbertozzi
    June 20, 2011

    I was trying to map 100 years ICT leadership, but I am feeling the rank is going down if we consider past 20. Other players achieved a prominent role, especially in quite recent markets network and mobile. New movements from IBM seem are coming in addressing green and could but I suppose other strong steps are still to conceive and to climb and achieve 1st position, as in the past.

  12. stochastic excursion
    June 20, 2011

    IBM has been behind a lot of movements that have been game-changing for society as well as industry.  In addition to developing the dominant PC, IBM also fostered the development of Microsoft.  That was a start-up to get in on the ground floor with.

  13. mfbertozzi
    June 20, 2011

    I agree with your point of view; it is a time also to put on the table one topic more. Even it was worldwide recognized their strong leadership in computations and communications moving forward, for several years they have “limited” to own proprietary platforms and protocol, architectures' deployment and users. Only the advent of Open System Interconnection (OSI) has broken that barrier, isn't it?

  14. stochastic excursion
    June 20, 2011

    Well, there are a lot of strides that have been made in standardized platforms and interfaces.  Maybe the biggest was converting the DARPANet to something that has had an unparalleled impact on industry and society alike.  Of course this was a public initiative; many comparable advances have been made by proprietary IP looking to be first to market.

  15. mfbertozzi
    June 21, 2011

    What's the post stochastic ex!

    Your example made me very fascinated. DARPAnet maybe was the biggest, anyway still holding on speaking about IBM, I would like to mention a couple of things: the firstone, SNA integration with IP, maybe was not as DARPAnet but it was a strong IBM step forward to open architecture. Second: believe it or not, in the occasion of 100th BigBlue birthday, in an european country IBM faced one of the biggest outage never happened on 3090Mainframe and the impact was to leave whole nation completed off in terms of postmail services.

     

  16. Himanshugupta
    June 22, 2011

    IBM is repositioning its anchor in the market by going in a direction which seems unexplored. It is not actully going after green technologies but better integration of technologies and service provider of such technologies. Astonishing to know that it has constantly received the highest number of patents for last 18 years. Building broader IP portifolo can be a strong step towards tech leadership.

  17. hwong
    June 22, 2011

    IBM is doing so well because it is ripping their employees off. Most of their employees are really not happy but the truth is, there is nothing they can do about it because many people will want to work for them because of their big name. So the good employees are leaving the comapny left and right. Turnover rate is extremely high. Clients just doesn't understand how bad they treat the employees… hahha

    eventually it'll hit the company as a whole.

  18. Mr. Roques
    June 22, 2011

    I remember reading a book in school called 'Build to Last' by Jerry Porras and James Collins. It's about what makes a company great and goes even further, what separates great companies from great companies that last at least 50 years.

    One of the most important things they found was: “an almost cult-like devotion to a “core ideology” or identity, and active indoctrination of employees into “ideologically commitment” to the company.” 

    Reading that, you inmediately think of IBM… there's a mystic to the company and brand that has helped them go beyond a normal company.

    Happy Birthday IBM.

  19. hwong
    June 22, 2011

    Haha you must either be a IBM management or don't know IBM well enough to let their marketing fool you. If you go to the IBM alliance website where you really hear the voice of the true ibmer then you would not be tricked into thinking how great they are. 'nuff said…..

  20. mario8a
    June 22, 2011

    Hello

    Few years ago had the opportunity to take a flight with one of the VPs of Mexico and Brazil, I asked them what was their biggest challenge and somehow they were not concern about innovating or been the tip of the spear on technology, their biggest concern was the safety of their goods once they leave the factory, IBM might be an sleeping giant.

     

    Regards

     

     

  21. Mr. Roques
    July 18, 2011

    haha! maybe they got to me! … I don't work for IBM (or never have, probably never will). 

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