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Communications of the ACM

Technology strategy and management

In Defense of IBM

IBM Watson logo

Credit: YouTube

IBM's current financial results have made the news again—relatively good profits but flat or declining revenues for the past five years as well as a stagnant stock price.3,4,5,6 Rather than dismiss this historic company (founded in 1911) as an obsolete tech titan, however, I find myself instead appreciating what IBM has achieved over the past 100 years as well as thinking about what it might do in the future. IBM has struggled to grow but has also demonstrated the ability to navigate through multiple technological and business disruptions. These include mechanical punch-card tabulators to electromechanical calculators and then mainframes, personal computers, complex software programs, and now "cloud-based" services of almost magical sophistication, like the Watson artificial intelligence system that won the 2011 "Jeopardy!" game show.a

There are many accounts of IBM's history, so I will not attempt to relate all the details here.1,b However, most important to appreciate the modern company takes us back to 1993, when IBM appointed a new CEO, Louis Gerstner, who joined an organization that had just recorded the largest corporate loss in history— nearly $9 billion. IBM still dominated mainframes but that business was shrinking. The company had successfully launched a personal computer in 1981 but lost control over the new platform business to Microsoft and Intel. Gerstner's predecessor, John Akers, responded by laying off approximately 100,000 employees and devising a plan to split up the company into more than a dozen firms. Instead, IBM's board of directors hired Gerstner, and he decided to keep the company together but change the strategy.c


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