What Is IBM (International Business Machines)?

IBM, an acronym for International Business Machines, is one of the largest information technology companies in the world. They offer a range of software, hardware, and services in the IT world.

Nicknamed “Big Blue,” IBM started as a hardware company that dominated that sector for decades as the top producer of mainframe computers. The company shifted from hardware to focus on software and offering services. IBM transitioned in the 2010s to focus on other sectors like cognitive computing and cloud-based services.

The company’s biggest offering in the cognitive computing industry has been the IBM Watson cognitive system.

Although IBM is still a big player in the IT world, it has never regained the dominance it once had in its mainframe heyday. As of the third quarter of 2016, it had experienced 18 quarters of consecutive declines in revenue, just as it was shifting into new lines of business and new technologies. The revenue in 2015 was $81.7 billion, as opposed to the $106.9 billion it garnered in 2011.

Early on, IBM was known for the punched card, which was invented by Herman Hollerith, who was part of the CTR Company (Computing-Tabulating-Recording Company). CTR was a conglomeration of three companies that sold time recording devices, store scales, and tabulators. When CTR brought on Thomas J. Watson as the general manager, Watson built up the company into what eventually became known as International Business Machines.

IBM first introduced its System/360 mainframe computer in 1964, which would eventually become the industry standard for large business computers. In 1974 IBM debuted Multiple Virtual Storage (MVS), which has remained the backbone of IBM’s mainframe OS for over 40 years. The IBM z/OS—the company’s current iteration of z Systems mainframes—can trace its origins back to the MVS.

The System/360 and subsequent models were so popular that IBM enjoyed an incredible market advantage. But competitors entering the market, such as Amdahl Corporation and the corporations known as the “BUNCH” companies (Burroughs Corporation, UNIVAC, NCR Corporation, Control Data Corporation, and Honeywell), challenged IBM’s hold on the marketplace.

To further complicate matters, IBM faced the enormous challenge of the midrange systems known as minicomputers, which were cheaper and aimed at the smaller departments within larger companies.

In the early 1970s, punched card machines began to be replaced by interactive display terminals like the IBM 3270. When Apple II arrived on the scene in 1977, personal computers gained popularity, which only grew with the introduction of similar machines from Tandy Corporation and Commodore International.

IBM finally introduced the IBM Personal Computer in 1981 and quickly became the business standard. But IBM-compatible PCs soon followed from vendors like Compaq, and when IBM chose the Microsoft Disk Operating System (MS-DOS) as the operating system for the IBM PC (with the PC clone vendors the following suit), Microsoft eventually dominated the PC software segment.

Late in the 1980s, IBM introduced the Unix workstations platform to its hardware catalog, and in the 1990s, the AIX, OS/2, OS/400, and MVS where the core platforms at IBM. The company also restructured its operations, but due to some of the large expenses in the restructuring, such as funding early retirements and shutting down some production lines, in 1992 the company showed a $5 billion loss.

Management consulting and IT outsourcing became an integral part of the IBM services and acquired PwC Consulting in 2002 for $3.5 billion. In 2011 IBM shifted once again to focus on cloud computing platforms and cognitive solutions and acquired infrastructure service provider SoftLayer Technologies Inc. in 2013.

In the fall of 2016 IBM’s Bluemix platform was introduced, incorporating SoftLayer’s cloud products and services into IBM’s growing portfolio of services, offering competition to Google, Microsoft, and Amazon Web Services.

The IBM Watson supercomputer, the company’s flagship cognitive computer, combines analytical software with artificial intelligence, which allows customers to perform such functions as embedding their applications with cognitive computing components. IBM also offers products that have cognitive abilities built in, such as the IBM Watson Analytics for Social Media and the IBM Watson Internet of Things Platform.

Today, IBM is no longer in the microelectronics manufacturing business, since it sold that operation to GLOBALFOUNDRIES in 2015.

Instead, Big Blues’ research and development are focusing on the research into quantum computing, the blockchain, and cognitive technology. It also is investigating semiconductor research as well as chips that can support big data systems and cloud computing.