Business

IBM at 100

IBM employee Lloyd Johnson volunteered at Bluegrass Technical Center in Lexington. The center creates special accessible versions of children's books for families, teachers and therapists to help serve children with disabilities.
IBM employee Lloyd Johnson volunteered at Bluegrass Technical Center in Lexington. The center creates special accessible versions of children's books for families, teachers and therapists to help serve children with disabilities.

ENDICOTT, N.Y. — Google, Apple and Facebook get all the attention. But the forgettable everyday tasks of technology — saving a file on your laptop, swiping your ATM card to get 40 bucks, scanning a gallon of milk at the checkout line — that's all IBM. International Business Machines turns 100 on Thursday.

"They were kind of like a cornerstone of that whole enterprise that has become the heart of the computer industry in the U.S.," says Bob Djurdjevic, a former IBM employee and president of Annex Research.

IBM dates to June 16, 1911, when three companies that made scales, punch-clocks for work and other machines merged to form the Computing Tabulating Recording Co. The modern-day name followed in 1924.

The new business also made cheese slicers and — significantly for its future — machines that read data stored on punch cards. As it evolved, IBM introduced the magnetic hard drive in 1956 and the floppy disk in 1971. In the 1960s, the company developed the first bar code, paving the way for automated supermarket checkouts. IBM introduced a high-speed processing system that allowed ATM transactions. It also created magnetic strip technology for credit cards.

But by the 1980s, Big Blue found itself adrift in a changing technology environment. In an infamous blunder, IBM introduced its influential personal computer in 1981, but it passed on buying the rights to the software that ran it — made by a startup called Microsoft.

IBM helped make the PC a mainstream product, but it quickly found itself outmatched in a market it helped create. With its legacy and very survival at stake, the company was forced to embark on a wrenching restructuring. CEO Louis Gerstner slashed more than 150,000 jobs in the 1990s as the company lost nearly $16 billion over five years.

He resisted pressure to break up the company and instead focused on services, such as data storage and technical support. Services could be sold as an add-on to companies that had already bought IBM computers. Even barely profitable pieces of hardware were used to open the door to more profitable deals.

The shift allowed IBM to ride out two recessions: When times are tough, businesses pay IBM to help them find ways to cut costs and handle technology chores that would be more expensive to perform in-house.

With around $100 billion in annual revenue today, IBM is ranked 18th in the Fortune 500. It's three times the size of Google and almost twice as big as Apple. Its market capitalization of around $200 billion beats Google and allowed IBM last month to briefly surpass its old nemesis, Microsoft.

The company that built its success making sense of millions of punch card records sees future innovations in the analysis of the billions and billions of bits of data being transmitted in the 21st century.

"The scale of that enables you to do discovery, whether it's in the case of drugs, medicine, crime — you name it," says Bernard Meyerson, IBM's vice president for innovation.

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