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Encyclopedia > International Business Machines
International Business Machines
Type Public (NYSE: IBM (http://www.nyse.com/about/listed/lcddata.html?ticker=IBM))
Slogan Think
Founded 1911
Location Armonk, New York
Key people Chairman & CEO: Sam Palmisano
SVP Technology Nick Donofrio
Employees 300K+
Products List of IBM products
Web site www.ibm.com

International Business Machines Corporation (IBM, or colloquially, Big Blue) (NYSE: IBM (http://www.nyse.com/about/listed/lcddata.html?ticker=IBM)) (incorporated June 15, 1911, in operation since 1888) is headquartered in Armonk, New York, USA. The company manufactures and sells computer hardware, software, and services.

With over 330,000 employees worldwide and revenues of $96 billion (figures from 2004), IBM is the largest information technology company in the world, and 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] (http://www.ibm.com/ibm/sjp/bio.shtml).

In 2002 the company has 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 2004 it employs about 191,000 technical professionals. That total includes 300-400 Distinguished Engineers and 50-60 IBM Fellows, its most senior engineers. IBM Research has eight research labs located in the Northern Hemisphere, with half 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.

IBM revenue and net earnings, 1980 to 2003

Current business activities

(click on the
year to go to
IBM's page of
for that year)
Year Patents
2004 3248
2003 (http://www.ibm.com/ibm/history/history/year_2003.html) 3415
2002 (http://www.ibm.com/ibm/history/history/year_2002.html) 3288
2001 (http://www.ibm.com/ibm/history/history/year_2001.html) 3411
2000 (http://www.ibm.com/ibm/history/history/year_2000.html) 2886
1999 (http://www.ibm.com/ibm/history/history/year_1999.html) 2756
1998 (http://www.ibm.com/ibm/history/history/year_1998.html) 2658
1997 (http://www.ibm.com/ibm/history/history/year_1997.html) 1724
1996 (http://www.ibm.com/ibm/history/history/year_1996.html) 1867
1995 (http://www.ibm.com/ibm/history/history/year_1995.html) 1383
1994 (http://www.ibm.com/ibm/history/history/year_1994.html) 1298
1993 (http://www.ibm.com/ibm/history/history/year_1993.html) 1087

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 2003, IBM has been granted significantly more U.S. patents than any other company. That eleven-year period has resulted in over 25,000 patents for which IBM is the primary assignee. [2] (http://www.research.ibm.com/resources/news/20000111_patents99.shtml)

Protection of the company's intellectual property has grown into a business in its own right, generating over $10 billion dollars [3] (http://www.industryweek.com/CurrentArticles/asp/articles.asp?ArticleID=1400) to the bottom line for the company during this period. [4] (http://www.forbes.com/2003/08/07/cx_ld_0807ibm_print.html), [5] (http://www.inc.com/articles/legal/ip/patents/23293.html)

As of 10 December 2004, IBM has finalized negotiations to sell its PC division to China-based Lenovo. The new division is headquartered in New York. IBM maintains a significant (about 19%) stake in the new division. Starting from the date of the acquisition, Lenevo will have five years use of the IBM and "Think" 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 the IBM company embarked on an ambitious project to rewrite its company values through a world-jam over the internet involving more than 50,000 employees over 3 days. The company values have been updated to reflect modern business, marketplace and employee views. "Dedication to every client's success", "Innovation that matters - for our company and the world", "Trust and personal responsibility in all relationships".

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. More recently, IBM received a 100% rating on the Corporate Equality Index released by the Human Rights Campaign starting in 2003, the second year of the report. IBM is the only technology company ranked in Working Mother Magazine's Top 10 (http://www.workingwoman.com/top10.html) for 2004.

The company has traditionally resisted labor union organizing, although unions represent some IBM workers outside the United States. Alliance@IBM (http://www.allianceibm.org), 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.


IBM's history dates back decades before the development of 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 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. 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.

During World War II, IBM's German subsidiary Dehomag (an acronym formed from "German Hollerith Machine Company Ltd") provided the Nazi regime with punch card machines. Dehomag was taken over by the Nazis in 1939. In 2001 author Edwin Black published a book titled IBM and the Holocaust (http://www.ibmandtheholocaust.com/), which alleged that although IBM did not control Dehomag once World War II began, Thomas J. Watson nevertheless knew of the German regime's activities and was indifferent to any moral issues. The credibility of Black's book has been questioned (http://www.businessweek.com/magazine/content/01_12/b3724036.htm), as has its claim that the Holocaust would have been impossible without Dehomag's data processing systems. As of 2004 IBM's possible complicity in the Holocaust is the subject of at least one unresolved lawsuit (http://www.cnn.com/2004/LAW/07/08/ramasastry.holocaust.ibm/). IBM has donated more than 10,000 pages of archived documents concerning Dehomag to Hohenheim University in Germany and New York University.

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 image 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.

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. 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 in use today by many Fortune 500 companies; it was originally known as the IBM 360 and is now known as the IBM z-Series (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.

On January 19, 1993 IBM announced a $4.97 billion loss for 1992, 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 in cash and $600 million in Lenovo stock. The deal is expected to complete in 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 logo in Tokyo.
  • The IBM Logo was designed by Paul Rand.
  • 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, the Scanning Tunneling Microscope, and the floppy disk. While the floppy disk is rapidly falling into disuse, the infamous Control-Alt-Delete keystroke (Bradly, 2001: "I invented it, but it was Bill that made it famous"), also invented at IBM, is still frequently used on PCs running 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 allies in 1945. [6] (http://ibmandtheholocaust.com/)
  • From 1942 to 1944 IBM was one of nine companies contracted by the US 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 US 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.
  • 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 agreed to sell its PC division to Lenovo in December 2004 and finally came 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 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 IBM was awarded the greatest number of patents by the USPTO. IBM received 3,248 patents that year. (Reference: IBM, Matsushita, Canon and HP received the most US patents in 2004 (http://www.itfacts.biz/index.php?id=P2370), retrieved January 13, 2005)


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.


  • 1889 Bundy Manufacturing Company incorporated.
  • 1891 Computing Scale Company incorporated.
  • 1893 Dey Patents Company (Dey Time Registers) incorporated.
  • 1894 Willard & Frick Manufacturing Company (Rochester) 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 acquire by International Time Recording Company.
  • 1901 Dayton Moneyweight Scale Company acquire 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 IBM.
  • 1921 Pierce Accounting Machine Company (asset purchase).
  • 1921 Ticketograph Company (of Chicago).
  • 1924 C-T-R renamed IBM.
  • 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.
  • 1995 Tivoli Systems for $750 million.
  • 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.
  • January, 2002 Crossworlds.
  • 2002 PricewaterhouseCoopers' Consulting for $3.5 billion (recalculated by IBM in August 2003 as $3.9 billion).
  • October, 2003 CrossAccess.
  • 2003 Rational Software Corporation for $2.1 billion.
  • March, 2004 Trigo.
  • April, 2004 Candle Corp..
  • July, 2004 Alphablox.
  • July, 2004 Cyanea Systems.
  • August, 2004 Venetica.
  • October, 2004 Systemcorp.
  • 2004 Maersk Data & DMData.


See also

External links

  Results from FactBites:
Highbeam Encyclopedia - Search Results for International Business Machines (842 words)
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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.
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, the Scanning Tunneling Microscope, and the floppy disk.
  More results at FactBites »



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