IBM was founded in 1911 when three small firms joined to make tabulating machines and clocks, and it took the name International Business Machines in 1924.
In the 1950s to 1960s, IBM built huge mainframes widely used by banks, governments and large companies while COBOL is the programming language. Many banks still rely on that old pair today.
In 1981, IBM launched its personal computer and asked Bill Gates and Microsoft to write the operating system. Microsoft did not have one ready, so Gates bought a program called Quick and Dirty Operating System for US$75,000 (HK$585,000), modified it, and gave it to IBM as MS-DOS.
Here is the catch: he did not sell that software only to IBM but kept the right to sell the same system to anyone.
Therefore, other firms such as Dell, Compaq and HP then built similar boxes with an Intel chip and the same Microsoft software, which is the de facto standard.
Those machines cost about half as much as IBM's. Companies also began to use PCs linked to a server – client-server architecture – instead of one giant mainframe and, as a result, IBM hardware sales fell hard. In 1992, the firm lost about US$5 billion, a record loss for a US company at that time, and almost went bankrupt.
In 1993, Lou Gerstner was appointed the chief executive and he moved IBM toward consulting. Staff helped customers connect computers, software and networks into one working system, and that consulting strategy saved IBM.
Today software is the largest part of IBM income after it acquired Red Hat in 2019, an enterprise Linux company that now sits at the center of IBM software sales. Consulting comes next while mainframes still bring in money.
What's next? I would bet quantum computing. IBM has a clear plan and real machines people can use over the internet. It also built Qiskit, a programming tool that many teams already use the way other firms use CUDA for Nvidia chips. The company is shipping quantum chips with 156 qubits and aims to deliver a more reliable quantum computer around 2029. That mix of Red Hat software and quantum computer is the newest chapter after a long and hard history.
Allen Au is a tech startup founder, AI architect, and YouTuber
