International Business Machines: From Saloon Piano to Computer

International Business Machines: From Saloon Piano to Computer


When was the last time you thought about IBM? Probably a long time ago, and that’s understandable. As far as companies go, IBM could easily win
the award for most boring business. Cause what do they actually do? Well, they make business machines. And that’s it. Boring, right? But what if I told you that IBM can be interesting. They are, for example, older than sliced bread,
Band-Aid, and the State of Arizona. You know those funny self-playing pianos they
always show in old Western saloons? It’s those pianos, specifically their paper
rolls, that gave birth to IBM. This was during the 1890s, a time when everything
was done using pen and paper. As you can imagine, administrative tasks for
the government were painfully slow. None suffered more from this than the US Census
Bureau. They had to count the population every ten
years, but doing everything by hand was so slow that the 1880 census took more than seven
years to complete. The whole thing was a nightmare, but where
most saw disaster, one man saw opportunity. That man was Herman Hollerith. He worked at the Census Bureau, and he was
so fed up with how slow it was that he spent the next ten years developing a machine to
speed it up. He ended up inventing the tabulator, the first
ever electromechanical counting machine. This is where our saloon pianos come in. Hollerith needed a way to store information,
and paper rolls were his first solution. They ended up being too fragile though, so
instead he settled for punch cards. Those might look ancient, but punch cards
actually remained the standard for data storage until well into the 1970s. Hollerith’s tabulator was the beginning
of modern information technology, and he knew it, so in 1896 he established his own company. Census bureaus around the world rejoiced,
and Hollerith ended up becoming a very wealthy man. By the time he sold his business in 1911,
it was worth more than 2.3 million dollars. That might seem cheap, but remember that this
was during a time when the average worker barely earned two dollars a day. So, who bought Hollerith’s company? This guy, Charles Flint. In 1911 he merged it with three other companies
that made clocks and scales. This was the birth of IBM. Well, it wasn’t called IBM until 1924, but
you get the idea. Hollerith’s tabulators were at the heart
of IBM’s business, but as technology improved they would greatly
expand their product range. During World War 2, they even started to build
rifles and equipment for the US military. After the war was over and everyone went back
to business, IBM were well on their way to developing the
first real computers: you know, the ones that weighed 4 tons and
could fill a room. During the 60s they collaborated with NASA
for the Apollo missions. You know, the ones that put Neil Armstrong
and friends on the Moon. The PC revolution of the 80s, however, was
their biggest challenge. By that point personal computers had already
been around for 5 years. The most popular one was the Apple II, courtesy
of Steve Jobs and Steve Wozniak. The market for personal computers wasn’t
too big yet, but it was growing fast, and many pioneering companies had already
settled in. IBM was late to the party, but they didn’t
give up, and on August 12th 1981, after a single short year of development, IBM revealed
their Trump card: The IBM Personal Computer, or PC for short. Nobody saw it coming. IBM spent a fortune on their marketing campaign
and unlike previous projects they actually supported third-party developers. This was a huge step in a time when everyone
was guarding their trade secrets. The IBM PC was such a success that in less
than two years they would be selling one PC every minute. At this point, you’re probably wondering
what happened. After all, nobody’s uses an IBM computer
in their home anymore. So where did it all go wrong? Well part of the answer lies in IBM’s decision
to borrow components from other companies. They didn’t actually develop its own operating
system or microprocessor, but instead borrowed them from Microsoft and Intel. That’s why they were so eager to give free
access to third-party developers. By doing so, IBM unwittingly surrendered the
keys to the PC industry. What they really accomplished was to make
MS-DOS and Intel processors the industry standard. When other brands started copying this model,
IBM had a hard time catching up. The flood of cheap “clones” essentially
drove IBM out of the market. They had a pretty rough time in the years
before the internet, but they actually recovered surprisingly well, despite losing the PC war
of the 80s. Their core products, after all, had always
been their mainframes: the big, heavy computers that could power
large businesses. Small personal computers could never replace
mainframes, so IBM was back in black after only a couple of bad years. The Dot-com crash in the year 2000 actually
helped IBM, since many of their tech competitors went bankrupt. The internet turned out to be a great opportunity
for them. Now they could sell not only their mainframes,
but entire packs of software and services. What they became was, essentially, the do-it-all
IT guy of the businesses world. I actually lied that no one has an IBM computer
anymore. Lots of people do because IBM sold their PC
division to Lenovo in 2005. Their defeat during the 80s taught them just
how important it is to stay on top of technological progress. They’ve actually had a huge role in the
development of modern technology. Take AI for example:
In 1997 their Deep Blue program managed to defeat world chess champion Garry Kasparov. More recently, their Watson AI won a million
dollars playing Jeopardy! in 2011. IBM’s most recent struggle has been with
cloud computing. It’s a very hot topic in enterprise technology
right now, but the idea behind it is actually very simple. Imagine a giant network of computing resources:
think big servers, powerful processors, and lots and lots of storage space. You, or your business can use this network,
and you can rent its vast resources for whatever you need. You don’t need to watch over it, you don’t
need to maintain it, you won’t even know its there. That’s the beauty of it:
a single network can provide service to thousands of companies, which only have to pay a small
fee for using it. That might sound fine and dandy, but cloud
computing is actually a huge threat to IBM. Unlike the 80s, this time they’re not up
against small tech startups. Now they’re facing the big guys: Amazon,
Microsoft, and Google. And to be honest things are not looking to
bright for IBM. Cloud computing has the potential to replace
their main source of income Mainframes and business solutions have always
been IBM’s bread and butter. They do have a presence in the cloud market,
but all their competitors have other cash cows to rely on. Compared to them, IBM doesn’t have much
to fall back to. In a world where you can rent all of your
IT needs for cheap, nobody would really bother to buy IBM’s mainframes. Now, does that mean IBM will die out in a
few years? Probably not. With the amount of money they can throw at
people, I’m sure they have the best minds working on their next move right now. Will they survive the age of cloud computing? Who knows. I guess eventually we’ll find out. Until then, stay smart. Thank you so much for watching this video. As the first one in this series, I hope you’ll
tell me what you think in the comments below. If you enjoyed the video, please like and
share it with your friends, it’ll really help me get the ball going. Feel free to subscribe, I try to post a new
video every two weeks or so, so expect more soon! Again, thank you for watching, really, and
I hope you have a great day!

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