(Today marks the 59th anniversary of the announcement of the IBM System/360 series)
Buy the book: Father, Son, & Co
When Tom Watson Jr was 10 years old, his father came home and proudly announced that he had changed the name of his company. The business that had been known as the Computing-Tabulating-Recording Company would now be known by the grand name International Business Machines.
“That little outfit?” thought young Tom to himself, picturing the company’s rather random-seeming collection of products, which included time clocks, coffee grinders, and scales, and the “cigar-chomping guys” who sold them. This was in 1924.
This is the best business autobiography I’ve read. It’s about Watson Jr, his difficult relationship with his father, the company they built, and the emergence of the computing industry. It is an emotional, reflective, and self-critical book, without the kind of “here’s how brilliant I was” tone that afflicts too many executive autobiographies. With today being IBM’s 100th anniversary (counting from the incorporation of CTR), I thought it would be a good time to finally get this review finished and posted.
Watson’s relationship with his father was never an easy one. From an early age, he sensed a parental expectation that he would follow his father into IBM, despite both his parents assuring him that this was not the case and he could do whatever he wanted. This feeling that his life course was defined in advance, combined with fear that he would never be able to measure up to his increasingly-famous father, was likely a factor in the episodes of severe depression which afflicted him from 13 to 19. In college Watson was an indifferent student and something of a playboy. His most significant accomplishment during this period was learning to fly airplanes—-”I’d finally discovered something I was good at”–a skill that would have great influence on his future. His first job at IBM, as a trainee salesman, did little to boost his self-confidence or his sense of independence: he was aware that local IBM managers were handing him easy accounts, wanting to ensure success for the chief executive’s son. It was only when Watson joined the Army Air Force during WWII–he flew B-24s and was based in Russia, assisting General Follett Bradley in the organization of supply shipments to the Soviet Union–that he proved to himself that he could succeed without special treatment. As the war wound down, he set his sights on becoming an airline pilot–General Bradley expressed surprise, saying “Really? I always thought you’d go back and run the IBM company.” This expression of confidence, from a man he greatly respected, helped influence Watson to give IBM another try.
The products that Watson had been selling, as a junior salesman, were punched card systems. Although these were not computers in the modern sense of the word, they could be used to implement some pretty comprehensive information systems. Punched card systems were an important enabler of the increasing dominance of larger organizations in both business and government: the Social Security Act of 1935 was hugely beneficial to IBM both because of the systems they sold to the government directly and those sold to businesses needing to keep up with the required record-keeping.
During the war, the first true digital computers were created. IBM partnered with Harvard University to create an electromechanical machine, programmed by punched paper tape, for the U.S. Navy; separately, the University of Pennsylvania built an all-electronic computer, the ENIAC, for the Army. ENIAC was fast by the standards of the day–5000 additions per second–it contained 18000 vacuum tubes, took up a lot of space, and consumed a lot of power. Neither Watson nor his father initially saw ENIAC as the sort of thing that would be useful for the typical business. Tom Jr did, though, soon develop an interest on the application of electronics to IBM’s business, albeit on a less-grandiose scale than that represented by ENIAC. After meeting an engineer who had hooked up a relatively simple assembly of electronics to a standard punched card machine, he pressed for the rapid commercialization of this technology. It was released, as the IBM 603 Electronic Multiplier, in September 1946. Its function was simple: it read a punched card, multiplied two numbers, punched the result back out on the same card, and kept on doing it, 100 times a minute–this was perhaps 5-10 times the speed of the earlier electromechanical multiplier. The fact that people were willing to pay $350/month to rent this thing (that would be the equivalent of about $3300/month in today’s money) illustrates how strong the need must have been for solutions to burdensome computational problems. The 603 was soon upgraded to the more capable 604, and several thousand of these systems were “sold” (IBM used the term “sold” even though its products were actually almost always rented.)
IBM’s first stored-program computer wasn’t announced until 1952; this was the IBM 701, which was given the patriotic name “Defense Calculator” for the purpose of warding off internal critics of the large investment required. Rental price was about $15000/month.
Watson gives considerable credit for IBM’s success with computers to several individuals within the company, including executive named Jim Birkenstock. As a young sales manager, Birkenstock had been spontaneously elevated to the position of general sales manager for the entire country by Watson Senior based on a single impressive presentation. Unsurprisingly, he was not a success in this job, and was demoted to running a market-research group called Future Demands. He was pretty demoralized by this fall; however, Tom Jr persuaded him to stay with the company, and Birkenstock, once he got over his initial self-pity, transformed Future Demands from a group concerned with keeping track of customer enhancement requests to “a watchdog of IBM’s future.” The Birkenstock story is an interesting example of the point that a person who is unsuccessful in one job can sometimes make very substantial contributions in a different one.
The elder Watson was not opposed to use the use electronics for computing; indeed, Tom Jr says that electronics was almost “the only major issue on which we didn’t fight.” When it came to the use of electronics for information storage, however, Mr Watson had serious reservations–he viewed the punched card itself as IBM’s Unique Selling Proposition, and believed that businesspeople would never tolerate their criticial information being stored invisibly on magnetic media. Large customers, however, were beginning to think differently. Metropolitan Life, for one, stated their unwillingness to continue to devoting whole floors of expensive Manhattan real-estate to the storage and processing of their immense punched-card files. The magnetic-tape-based IBM 702 was announced in 1953.
The tendency of companies to hold an excessive allegiance to technologies which have worked well for them in the past and with which they are strongly identified can be very strong–if Birkenstock, Tom Jr, and others had not made a strong effort to overcome this tendency and if Watson Sr had not allowed himself to be convinced, then business history would have been very different.
Even as IBM was growing into a very large company and Tom Jr was promoted to President, the father-son conflicts continued. On one occasion, they were arguing vehemently about something or other when Tom had to leave to catch a West Coast flight. On arrival at the airport, he found that his father had followed him there, unwilling to delay the argument. Tom Jr, never known for the ability to hold his temper, lost it pretty badly:
God damn you, old man! Can’t you ever leave me alone?
There were no phones on planes in those days, of course, and “that flight was the longest nine hours I’d ever spent in my life…When we landed I couldn’t wait to get to a phone to tell him how sorry I was.”
The government filed an antitrust suit against IBM, and Tom Jr was deeply involved in settlement negotiations. Just as he was about to go downtown for another session, his father flew into a rage and told him he was not competent to handle this sort of matter. Finally, Mr Watson told his son to go on to the meeting, but not to make any decisions.
I was so upset that I was shaking. I got to the courthouse and sat down at that long table. I didn’t say much to anybody because I was so tense.
His father’s secretary came into the room and handed him a note, which Tom Jr accepted expecting the worst. But it said:
100%
Confidence
Appreciation
Admiration
Love
Dad
In the early 1960s, IBM decided to adopt a new architecture which would obsolete all of its existing product lines and replace them with a single compatable family–the System/360 series–spanning a wide price and performance range. This was very much a bet-your-company decision by Tom Jr, as much as the decision to expand production during the Depression had been a high-risk decision by his father, and he vividly describes the problems and the tensions involved in this program. Unfortunately, during this period Watson made the unwise decision to put his brother Dick in charge of the company’s technology and manufacturing operations. Although Dick…”a merry fellow”…had many strengths, this job did not match them very well, and he eventually had to be removed.
I felt nothing but shame and frustration at the way I’d treated him. There were so many other ways to have managed things. Perhaps the wisest course would have been to leave Dick in World Trade. He would have been known as the great IBM internationalist…As it was, we remade the computer industry with the System/360, and objectively it was the greatest triumph of my business career. But whenever I look back on it, I think about the brother I injured and the dream of my father’s that I could never make come right.
After retirement from IBM, Watson served as US ambassador to the Soviet Union, continuing his lifelong interest in that country and its people.There’s a lot in this book…descriptions of some amusing incidents from Watson’s college years (like the friend who was too lazy to feed his dog and got the animal a meal ticket at a local restaurant), a portrait of IBM’s sales culture (company songs!), discussions of various business and management issues and how they were handled, and information about many historical IBM products and projects, including the remarkable SAGE air defense system of the mid-1950s. There are 449 pages, and not many dull ones. Highly recommended.
In another book that I can’t locate at the moment, someone asserted that Thomas Watson Jr “was not a very nice man.” It may be the case that Watson was not a nice man, but in the present book he certainly comes across as a complex, thoughtful and interesting one.
IBM in Europe sold to, serviced, and upgraded their machines for the Nazis. See Edwin Black’s “IBM and the Holocaust.”
In 1959, I was working for Douglas Aircraft in El Segundo, CA. I was running an IBM 650, which had 2000 addressable memory sites on a drum covered with magnetic tape material and which rotated at 12,500 rpm. My boss wrote a program for it called “SOAP,” Symbolic Optimal Assembly Program, which calculated the optimal time for each word to be installed in a memory space based on the rotation rate. Programs were quite small and data was usually on punched cards rather than memory. The main plant, across the street, used the IBM 704 and later, after I left for medical school, the 7040 was adopted and was the first model to use transistors, I believe.
He appears to have been a very useful fellow.
What has amazed me about this industry is the fact that among even some of the revolutionaries who were the flag-bearers, even they could not see the ultimate uses and courses their creations would take. And what surprised me about the card-readers – from the 1920s, people got a hint of the power of computers and data bases when they could re-arrange the wiring and learn completely different things from the data held on those cards.
As for young Watson, a father like that would probably have driven lesser men to the bottle.
I can vaguely remember when the 360 came out – I was 14 – and IBM became a go-go stock – they could do no wrong. And into the 70s with their mainframe dominance, there must have been a dozen companies making clones of the mighty 370 family. IIRC there was even a court case forcing IBM to license their OS and software to these clone makers. Among some of the names: Xerox, Itel (a company whose main business was leasing – I guess they saw the potential of leasing 370s and thought they could offer a more cost effective alternative)…
Of course their hardware was only half the reason for their success – the support, which was the gold standard and the software.
At their height, I can remember my father’s business seeing 2 different IBM salesmen for competing mini computers – the Series 1 and the System 34, from 2 different divisions. IBM in their mini computers (a class now gone with the increased power of micros) competed against itself.
“Nobody was ever fired for picking IBM” was a solid truth.
I can remember reading a Forbes article in the 1970s about the 50 largest computer companies. #1, of course, was IBM. Number 2, Digital Equipment (no gone). #3 was either Burroughs (now gone) or HP).
Here’s the thing: It took the “bottom 49” to equal the revenue of mighty IBM.
I think it was in the 80s or 90s that IBM had a crisis – with the shift of so many to micro computers. I think the company was saved by Lou Gerstner.
https://en.wikipedia.org/wiki/Lou_Gerstner
Today I think much of their revenue is services.
It is hard to underestimate the dominance of IBM. Ross Perot made his fortune leasing his own IBM mainframes and providing what he called “facilities management – where his company, EDS – Electronic Data Systems, would completely staff the mainframes that they leased. From programmers to operators,m EDS provided the hardware and the IT Dept. They were a 1-stop solution.
https://en.wikipedia.org/wiki/Electronic_Data_Systems
Well, at 0217 I bid you all….god night.
There is another excellent book titled “Blue Magic”, which is the story of the development of the IBM PC. The guy who headed it promised to have a working model in one year. To avoid the corporate culture he moved the operation to Florida. To meet the deadline, he used commercially available parts, which led to the clone wars, but he made the deadline. As a reward, he and his wife were given a company paid vacation. On the first leg of that trip they were killed in a plane crash in Dallas. His name was Don Estridge.
@Mike K – That accident led to a lot of changes at the FAA – they became aware of wind shear. There was one difference between the IBM PC and the clones –
BM devised a plan to regain control of the PC-compatible market by introducing a new series of machines–the PS/2 line–with a proprietary expansion bus, operating system, and BIOS that would require clone makers to pay a hefty license if they wanted to play IBM’s game. Unfortunately for IBM, PC clone manufacturers had already been playing their own game.
https://www.pcworld.com/article/465931/the_ibm_ps_2_25_years_of_pc_history.html
I remember my first PC – paid $3300 for it – an Intel 8086 – an IBM PS/2 – with a dot matrix printer. Yes, I paid a premium BUT IT WAS AN IBM. Like choosinkg between a Toyota and a Mercedes – that’s how powerful and revered the IBM name was.
The one legacy from the PS/2 that remains – the keyboard. They modeled the keyboard on another IBM Gold Standard – the Selectric Typewriter. The keys have a nice tactile feeling to them as apposed to a cheap Chinese made keyboard with no feel. (still have the keyboard that came with my HP Elite Desk – unused – anyone want it? ;-) )
Anyway with the PS/2 gone a company rose up to make these special keyboards – under license?
Hmm, the company that made these in Lexington KY I can’t find – they are no more? But here is another
The bucking spring
https://arstechnica.com/gadgets/2023/04/new-buckling-spring-keyboards-recreate-ibms-iconic-model-f-for-modern-computers/
I also bought an IBM PC with no hard drive. The hard drives at the time had 12 megabytes memory. I think I paid $4,000 with the printer. I kept it on my desk in the office and would use it to search PubMed, which then required a subscription. It was useful as a sort of marketing device. If I had a patient with an unusual condition I would do a search, print off some of the articles and give them to the patient. They liked that. It made them feel they were getting up-to-date information. It also helped me keep track of new ideas.
I knew Ross Perot Jr and his sister when they were students at Vanderbilt. Ross Jr told the story of how his father, the top salesman at IBM, decided to start EDS. His customers were always asking for help with how to use the machines. He kept asking the company to expand into software to meet the customers’ needs. IBM refused. IBM was a hardware company.
Perot was making huge annual incomes off his commissions. IBM responded by putting a cap on what any salesman could earn. The first year with the cap Perot his max in about a month. He then spent the rest of the year looking at ways to meet his customers’ needs. The next year, he topped out as soon as the year started. After another year working on his idea, he was ready to start EDS.
I read somewhere that Perot was once asked if he had anticipated that the hardware/software split for revenue in the industry would go from 80/20 to 20/80. He said no, he’d have been quite happy competing for his share of the 20%
Anyway, two bad decisions by IBM led to EDS. First, the failure to expand into processing. And second, the silly decision to cap salesmen’s commissions because Perot was making more than some very senior executives.
There is a far more more interesting, and less self serving, other side of the story. Found here.
https://www.amazon.com/Big-Blue-IBMs-Abuse-Power/dp/0330302930
Watson Snr was fired by NCR because it looked like he was going to jail for the many examples of outright criminal behavior while selling cash registers etc. Thats how he ended up at IBM. Over the decades IBM had exactly the same kind of predatory attitude towards the law as Microsoft. They broke the law with deliberate contempt and lost pretty much every lawsuit brought against them. Their legal tactic was to try to bankrupt the other side with legal costs.
It was only timing, and the election of Reagan, thats saved IBM from being broken up like AT&T in the 1970’s. In fact the evidence against IBM was for stronger. But IBM’s chief council in the anti trust case was made head of DOJ Anti Trust Division in 1981. Who promptly shutdown the case.
Did not do them much good as the company was quickly run into such a dead end by Akers that 10 years later it was on the point of collapse. Only saved, to everyones surprise, by a complete outsider Lou Gerstner. Not that it made much difference in the end because the PWC acquisition proved as fatal to IBM as the McDonald/Douglas acquisition to Boeing. Toxic management from the smaller company destroying everything that was good about the bigger company.
So IBM. A zombie company for the last decade. Killed by the usual suspects.
I read Gerstner’s book, he said that when he first came to IBM, people were far more interested in competing with their rivals within the company than with actual external competitors. As an experienced executive, he must have seen this kind of thing in other companies, but evidently it was worse at IBM than what he had seen before.
From 1980 to 1990, IBM went from being THE computer company to being A computer company. And outside of main frames where they were in a virtual monopoly position, not an important or innovative one. The trouble was that nobody at IBM noticed. They’ve been running on inertia ever since.
It’s not like the gnomes didn’t deliver. OS2 is arguably the best microcomputer operating system in existence. It lives in the controllers running most of the big retail stores in the country but failed everywhere else. Timing is everything.
Interesting about Ross Perot. It certainly is foolish to cap a star salesman’s salary – I think a cardinal rule of sales when I was in it – is that maybe 10% of your sales force do a good 70%-90% of your sales. To cap that – the only reason I can see is jealousy by the upper mgt? It is certainly short sighted and encourages your stars to find other avenues.
I don’t car whether it is cars, TVs (a manager at Best Buy smiled when I complimented the fellow who sold my big screen TV last week – smiled when I told him that rule – he agreed – .
EDS was known as a taskmaster for programmers. But their programmers were top-notch.
A funny side story – when I graduated from (what was then) one of the country’s top programming schools in San Diego, EDS interviewed some of us.
The recruiter told us we would be sent anywhere they desired, and your hair had to be short (< 2" I am sure), and they had a strict dress code. I guess you could say it was the IBM culture still.
One of my class mates, a former Army Drill Sgt, said that if he wanted that he'd re-up in the Army!
IBM had a strict dress code too for men – a blue or gray suit, and they were known for sending people home to change if they were not dressed according to code.
One thing IBM did that I admired was have a group of people whose job it was just to dream up possibilities for the future – they called them the "wild ducks". I wonder how many innovations came from those wild ducks? (IBM invented the disk drive IIRC).
I think too that Gerstner saved the company – funny that they are doing now what Perot suggested 50 years ago.
And someone once suggested – with hindsight – since IBM's endorsement of Microsoft made Microsoft – what if they had demanded a chunk of their little company in exchange for that endorsement?
At the time though who could foresee where the future would go?
They were the mighty IBM.