IBM or International Business Machines Corporation is one of the largest multinational technology and IT consulting companies focused on innovative research and development of hardware, middleware and software.
The 1880s were particularly abound with technological advancements – Julius E. Pitrat patented the computing scale and Alexander Dey invented the dial recorder just a few years later. Herman Hollerith patented the Electric Tabulating Machinewhile Willard Bundy invented a time clock – collectively all these inventors would later form the core of what came to be known as International Business Machines (IBM).
On June 16, 1911, three successful companies merged and marked the beginning of IBM. The Tabulating Machine Company, the International Time Recording Company, and the Computing Scale Company of America first joined together into the Computing Tabulating Recording Company. In 1914 when Thomas J. Watson Sr. joined CTR as CEO it became clear his intentions were to turn it into a multi-national entity. 1924 was marked by a brand revamp that saw the name of the company changing into its current International Business Machines Corporation (IBM). From the beginning, IBM demonstrated a strong focus on research and development of new technologies.
The first breakthrough of IBM came in the 1930s with the design and sale of manufacturing calculators using their own processing equipment. In 1944, IBM secured financing from Harvard University to co-fund the invention of the Mark 1 computer – the first machine to automatically compute long calculations. By 1953, IBM had gained sufficient know-how and experience to completely produce their own computers, which began with the IBM 701 EDPM – the first commercially successful general-purpose computer.
1980 marked a turning point for IBM when it negotiated a partnership with Microsoft founder and CEO Bill Gates for the creation of an operating system for IBM’s newly developed computer targeted at the home consumer. It was subsequently released in 1981. The first IBM PC operated on a 4.77 MHz Intel 8088 microprocessor, marking the entry of IBM into the personal computer market and thus initiating the computer revolution.
Amongst its many contributions to the modern technology scene, IBM is responsible for the floppy disk, the hard disk drive (HDD), the automated teller machine (ATM), the Universal Product Code (UPC), SQL, Watson artificial intelligence, and the magnetic stripe card to name a few.
Business model of IBM
IBM serves two customer segments: large enterprises looking to invest in virtualization, cloud or other software or hardware solutions and services to streamline corporate operations and end-users interested in personal computers and mobile applications.
IBM has always been characterized by a powerful drive for innovation and development and these continue to make the larger part of its value propositions. The company actively engages in research in the fields of nanotechnology and mainframe and personal computers with recent years seeing it slowly expand into digital data management, cloud services and virtualization.
It offers corporate clients high-value solutions based on its working model of integrating technology and business model innovation to deliver scalable solutions. IBM also provides IT consulting and implementation services for the design, setup, management and maintenance of cross-industry and industry-specific processes.
After consolidating its channel sales and marketing groups for all business units IBM has announced a single channel team to better support its business partner network.
The One Channel Team improves communication with clients who are now given a single point of contact within the global giant. A single interface platform with increased functionality is also available through the company’s web portal.
IBM customer relationships are primarily self-service, although as a hardware and software developer there is a midmarket channel as well as one for larger enterprises.
They have a designated Marketplace on their official web page, which is easy to navigate and can be used by both individuals and businesses to select the products and services that meet their needs and requirements.
IBM focuses on the development and distribution of hardware, software, business consulting and IT services at enterprise-level.
In recent years it has shifted its focus towards capitalizing on business intelligence, data analytics, business continuity, security, cloud computing, virtualization and green solutions as well as semiconductor manufacturing.
In recent years IBM has struck a number of high-profile partnerships with other global companies, such as Apple Inc. in mobile enterprise and Twitter for the integration of social media data and cloud-based analytics.
The company has been involved in a lot of mergers and acquisitions, actively reshaping and changing the structure of its divisions through the formation of new units to position itself better within a global context.
IBM operates numerous research laboratories worldwide that are all bundled under IBM Research.
Major campus installations, science centres and a Linux Technology Centre make the spine of the company’s development core with a collective working force of 435,000 employees worldwide, making it the second largest US firm in terms of workforce.
IBM continuously directs investments into its growth initiatives in order to improve cost structure. Its main goal is to focus on more profitable services and phase out products and services that are no longer generating public interest. This has allowed the company to continue to operate profitably despite seeing a decline in revenues in recent years. It currently combines an increase in investments in cloud and analytics with leveraging lower-cost talent.
IBM’s cost structure is very much driven by investing into its people and customer acquisition.
Additionally, the shift towards service and app development has resulted in increasingly lower qualified service employees that are cheaper to retain than skilled resources.
Despite a thirteenth straight decline in sales, IBM continues to invest in cloud technology and data analytics as strategic imperatives. The company’s software business is responsible for a big part of the drop in sales while the aforementioned categories contributed $25 billion and represented 27% of IBM’s total revenue in 2014 alone. IBM investors are reassured with focus on new growth areas will offset consulting business losses.
Under Rometty’s leadership IBM has shifted focus towards its membership-based cloud and data services, which it markets through its web platform. With over 1,500 clients that consist of small and medium-sized businesses worldwide – a significant portion of the company’s earnings are contributed to service and maintenance fees. IBM’s service packages are currently sold in an annual subscription format.