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Happy Birthday, Big Blue

When you get some cash from an ATM today, start humming “Happy Birthday.” When you take the cash over to the grocery store and watch your selections get scanned by the cashier, keep the song going. When you power up your PC and check out last night’s lunar eclipse on YouTube….well, you get the idea.

IBM is 100 years old today.

It’s hard to believe Big Blue has been around for a century. After all, the huge mainframe computers IBM pioneered did not begin to proliferate until the 1950s and desktop PCs did not arrive until the 1980s.

But even when IBM was founded on June 16, 1911, the new company had computing on its mind. IBM was born as the Computing-Tabulating-Recording Company in New York City. This mouthful was trimmed to International Business Machines in 1924. As the company quickly gained iconic status for its revolutionary products, the acronym IBM joined the lexicon.

IBM (then CTR) really took off in 1914, when it poached a top exec from National Cash Register Co. Thomas J. Watson had overseen the creation of the first mechanical cash registers at NCR; he used this expertise to transform CTR into an innovative powerhouse. Revenues were doubled during the first few months of his tenure, he was named president of the company and the cash registers at IBM have been ringing ever since.

IBM became the flagship of American business in the American Century. Its clean-cut executives in dark suits (with more than a few geeky pocket protectors) all toiled under Mr. Watson’s mantra, a simple slogan that was printed on a sign he hung over his desk: THINK.

The complete list of innovations from IBM which transformed society is too long to publish here. From ATM machines and bar code scanners to the computers onboard the Space Shuttle, IBM has left its mark on just about every modern marvel we take for granted. Not surprisingly, the company holds more tech-related patents than any other entity on Earth.

It’s easy to forget the decades of research that were undertaken to bring IBM’s computers from the labs to your desktop. It took IBM and Harvard University six years to create the Mark I, an early computer known as the Automatic Sequence Controlled Calculator. When it debuted in 1944, the Mark I was 50 feet long, weighed more than five tons and took a full 12 seconds to do a simple long-division problem. A few years later, IBM unveiled the much-faster IBM 701, the first large computer based on the vacuum tube.

Government research labs were the first customers for the room-sized 701. In 1953, IBM started renting out the machines to private clients for $11,000 a month, heralding the arrival of the computer age.

Big Blue was the biggest of the Dow Jones blue chips for the next three decades. But in the early 1980s the computer giant made its biggest mistake, a whopper that had top execs at IBM later scratching their heads, looking up at Watson’s famous sign and wondering: WHAT WERE WE THINKING?

When IBM began producing desktop PCs in 1981, the company thought it would be at least a decade before consumers would consider a home computer as essential as a toaster or a TV. So the computer giant looked the other way as clones of IBM PCs were cranked out in Taiwan and shipped back to the U.S. market. The company incorrectly assumed–like TV pioneer Zenith before it–that simply having the IBM tag on the front of the PC would guarantee IBM the lion’s share of the market, even if would-be competitors undercut the hefty price tag for an IBM machine.

Even worse, IBM decided the microprocessor and operating system in its PC were mere components. It did not exercise ownership of these “components,” but licensed them out to young tech entrepreneurs, one of whom was named Bill Gates. Gates’ mom worked at IBM and got him through the front door to present a proposal for a digital operating system for IBM’s prototype PC. Gates didn’t have the program in hand when he got the job–his dad loaned him the money to buy DOS from the guy who actually wrote the code.

The rest, as they say, is history: by the end of the 1980s, IBM looked up at the big board of the New York Stock Exchange and watched Intel and Microsoft–two companies it essentially created–eating Big Blue’s lunch. It took more than a decade for IBM to recover from this stumble, which it did by reasserting itself in the mainframe market.

Today, 100 years after its birth, IBM still is synonymous with the leading edge of computer technology. Don’t believe us? Just ask Watson, the IBM computer that recently beat two human opponents on “Jeopardy!”

The company’s first president would be pleased to observe that Watson is a computer that knows how to THINK. Happy Birthday, Big Blue.

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