IBM - International Business Machines Corporation






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 330,000 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. 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.


IBM Logo: 1924-1946


IBM early logo



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.



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 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.





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., 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 labour to cheap offshore countries such as the Philippines, 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 the Tabulating Machine Corporation, the Computing Scale Corporation and the International Time Recording Company. The president of the Tabulating Machine Corporation at that time was Herman Hollerith, who had founded the company in 1896. Thomas J. Watson Sr., the founder of IBM, became General Manager of CTR in 1914 and President in 1915. In 1917, the Computing-Tabulating-Recording Company 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


During World War II, IBM's German subsidiary Dehomag (from "Deutsche Hollerith Maschinen Gesellschaft", that is "German Hollerith Machine Company Ltd.") provided the Nazi regime with punch card machines. Dehomag was taken over by the Nazis in December 1941. In 2001 author Edwin Black published a book titled IBM and the Holocaust, which alleged that Thomas J. Watson knew of the German regime's activities and was indifferent to any moral issues. The conclusions of Black's book have been questioned, including its claim that the Holocaust would have been impossible on the scale it reached, without Dehomag's data processing systems. The author has responded to these claims (archive link, was dead; history). As of 2004 IBM's possible complicity in the Holocaust is the subject of at least one unresolved lawsuit. IBM has donated more than 10,000 pages of archived documents concerning Dehomag to Hohenheim University in Germany and New York University. The topic is explored in the 2003 documentary film The Corporation.


IBM contributed to the Allied war effort by manufacturing the Browning Automatic Rifle and the M1 Carbine.


IBM Logo: 1947-1956



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 zSeries (often referred to as "IBM mainframes").


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.



IBM logo


Public (NYSE: IBM)


1888, incorporated 1911


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


Computer hardware, IT Services, Consulting


See complete products listing


$91.1 billion USD (2005)

Operating Income

$13.7 billion USD (2005)

Net Income

$7.9 billion USD (2005)


329,373 (2005)





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 USD650 million in cash and USD600 million 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.



IBM logo in Tokyo.


IBM logo in Tokyo



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. Software Group 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).

  • 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] that 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 (as it was known at the time).

  • 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."

  • From 1933 to 1944, IBM punch card machines were installed at various German concentration camps. It has been alleged by a journalist that IBM president Thomas J. Watson, Sr. was aware of their use. Note however that concentration camps are a perfectly legal war disposition regulated by the Geneva convention. The problem lies with extermination camps, about which there were already a lot of war rumours, but nothing that could be confirmed or inferred formally before their discovery by the Allies in 1945.

  • From 1942 to 1944 IBM was one of nine companies contracted by the U.S. Government to produce M1 Carbine rifles; these are now sought-after antiques.

  • IBM also made clocks until they sold their time division in 1958.

  • 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.

  • 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 and, when the sale is complete, will come out of the business of manufacturing / designing / selling PCs, the business which it created in 1981.

  • The IBM iSeries minicomputer (in its 24-year history also variously known as System i5/OS, 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.

  • 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".

  • The "ThinkPad" name for its notebook computers was brought up after an IBM researcher went to a coffee break and took a notepad out 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's largest site in the world, in Research Triangle Park. In 2005 the company employed around 11,000 people and is still IBM's largest site. IBM occupies 39 buildings in metropolitan Raleigh-Durham and owns 750 acres in Research Triangle Park.

  • Multinational corporations in India were always looked upon with suspicion through the 60s and 70s thanks to the socialist ideologies of the governments then in power as well as powerful trade unions dominated by the communists. Among the multinationals none was more unloved than IBM. Part of this was to do with IBMs business model in India, based as it was on bringing in refurbished punch card machines, usually written off in the more advanced countries and then leasing them out at inflated rates to Indian users. When the Janata Government came to power in 1979, the first thing they did was give IBM the marching orders. Almost overnight IBM was forced to close their Indian operations and leave the country, after making dire predictions on how the entire computer operations in the country would collapse. None of that happened and in retrospect IBMs leaving was of great benefit to the development of the Indian computer industry. India is one of the few places that saw the use of distributed systems (rather than mainframe systems) for mission critical applications such as finance and manufacturing. IBM was allowed back into the country in the 90s and today looks upon India as a major centre of excellence for its worldwide operations.

  • 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).

  • The history of Grace Hopper, considered the "mother of the COBOL language", an anacronism for Common Business Oriented Language, and her history and relevance of that computer language, related to International Business Machines.







BlueEyes 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.

  3. IBM Performance Simulator for Linux on POWER: A tool that provides users of Linux on Power a set of performance models for IBM's POWER processors.

  4. Database File Archive And Restoration Management: An application for archiving and restoring hard disk files whose file references are stored in a database.

  5. Policy Management for Autonomic Computing: A policy-based autonomic management infrastructure that simplifies the automation of IT and business processes. (This is an ETTK technology.)

  6. FairUCE: A spam filter that stops spam by verifying sender identity instead of filtering content.

  7. Unstructured Information Management Architecture (UIMA) SDK: A Java SDK that supports the implementation, composition, and deployment of applications working with unstructured information.




IBM has been developing processing chips for gaming consoles. The new Xbox 360 contains IBM's new tri-core chipset (codenamed "Waternoose"). At the request of Microsoft, IBM was able to design the chip and ramp up to production volumes in less than 24 months (with co-production at Chartered Semiconductor Manufacturing in Singapore.) Meanwhile, Sony's PlayStation 3 will feature the Cell, a new chip designed by IBM, Toshiba and Sony in a joint venture. The Cell is already slated for use in other systems (Toshiba plans to use it on HDTVs), unlike the Xbox 360 chip, whose plans are owned by Microsoft. The Nintendo Wii will also feature an IBM chip (codenamed "Broadway"), like its predecessor, the GameCube.


IBM recently partnered with several game companies as a part of a new focus on gaming. It will provide grid computing, on-demand, and blade server solutions. Some of the involved companies are Hoplon Infotainment, Online Game Services Incorporated, and RenderRocket.



Corporate governance


Current members of the board of directors of IBM are: Soudeh Jahankhani, Cathleen Black, Ken Chenault, Juergen Dormann, Michael Eskew, Shirley Ann Jackson, Charles F. Knight, Minoru Makihara, Lucio Noto, James W. Owens (effective 1 March 2006), Samuel J. Palmisano, Joan Spero, Sina Jahankhani, Sidney Taurel, Charles Vest, and Lorenzo Zambrano.






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