International Business Machines Corporation (IBM), American computer manufacturer, with headquarters in Armonk, New York. The company is a major supplier of information-processing products and systems, software, communications systems, workstations, and related supplies and services around the world. Its products are used in a wide variety of industries, including business, government, science, defence, education, medicine, and space exploration.
The company was incorporated in 1911 as the Computing-Tabulating-Recording Company in a merger of three smaller companies. After further acquisitions, it absorbed the International Business Machines Corporation in 1924 and assumed that company's name. Thomas Watson arrived that same year and began to build the foundering company into an industrial giant. IBM soon became the country's largest manufacturer of time clocks and developed and marketed the first electric typewriter. In 1951 the company entered the computer field. The development of IBM's technology was largely funded by contracts with the United States government's Atomic Energy Commission; close parallels existed between products made for government use and those introduced by IBM into the public marketplace. In the late 1950s IBM distinguished itself with two innovations: the concept of a family of computers (its 360 family) in which the same software could be run across the entire family and a corporate policy dictating that no customer would be allowed to fail in implementing an IBM system. This policy spawned enormous loyalty to “Big Blue”, as IBM came to be called.
From the 1960s until the 1980s IBM dominated the global mainframe market, although in the 1980s IBM lost market share to other manufacturers in speciality areas such as high-performance computing. When minicomputers were introduced in the 1970s IBM viewed them as a threat to the mainframe market and failed to recognize their potential, opening the door for such competitors as Digital Equipment Corporation, Hewlett-Packard, and Data General.
In 1981, however, IBM introduced the highly successful IBM PC, which rapidly became a standard in microcomputing. The company met with less success defending its market share against lower-cost producers.
In the late 1980s IBM was the world's largest producer of a full line of computers and the leading producer of office equipment, including typewriters and photocopiers. The company was also the largest manufacturer of integrated circuits, all of which were used in its own products. The sale of mainframe computers and related software and peripherals accounted for nearly half of IBM's business and about 70 to 80 per cent of its profits.
In the early 1990s, amid a recession in the US economy, IBM reorganized itself into autonomous business units more closely aligned to the company's markets. As a result, 40,000 employees lost their jobs in 1992, and more cuts were announced for 1993. After record losses during 1992 and, for the first time in IBM's history, a cut in stock dividends (to less than half of their previous value), John F. Akers, chairman since 1985, resigned in early 1993. Louis V. Gerstner, Jr, was named chair of the company in April 1993. IBM paid US$3.5 billion to acquire the software company Lotus Development Corporation in 1995, thereby expanding its presence in the software industry. From 1996, IBM began increasing its stock dividends as the company returned to profitability. The company’s supercomputer Deep Blue defeated world chess champion Garry Kasparov in a six-game chess match in 1997—a feat of some significance to the development of artificial intelligence, though the supercomputer was operating quite differently from the human brain. IBM testified in November 1998 during the prosecution of Microsoft by the US Department of Justice for monopolistic practices that Microsoft had undermined the development of its own OS/2 operating system software, restricting it to a small share of the market.
In 1999, IBM announced a US$16 billion, seven-year agreement to provide Dell Computer Corporation with storage, networking, and display peripherals—the largest agreement of its kind ever made. IBM is also providing support and developing products for Linux, a free version of the UNIX operating system. In 2000, IBM announced that it had built the world’s fastest supercomputer for the US Department of Energy at the Lawrence Livermore National Laboratory. The computer has been shown to be capable of 12.3 teraflops or trillion operations per second, and was developed to simulate nuclear-weapons tests. The company announced an agreement with the British Broadcasting Corporation in April 2001 to work together to deliver rich digital media solutions for European and American customers. In its research into nanotechnology, IBM have developed a batch process allowing the building of an array of transistors from carbon nanotubes just 10 atoms across—a key step towards the production of tiny chips far smaller than is possible with silicon-based technology.
In 2004, IBM decided to get out of the PC business, which had become only occasionally and marginally profitable. It sold the majority share of its PC division to Lenovo Group Ltd., China’s largest manufacturer of PCs, retaining only an 18.9 per cent minority share. The sale, which amounted to US$1.75 billion in cash, stock, and acquisition of debt, meant that Lenovo became the third largest PC maker in the world, after Dell and Hewlett-Packard. Under the terms of the deal, Lenovo was allowed to retain the IBM brand name for five years.