100 Years of IBM(tikalon.com)
tikalon.com
100 Years of IBM
http://www.tikalon.com/blog/blog.php?article=2024/IBM_100
61 comments
Why did former giants like IBM and AT&T became insignifiant? It's bad management, it's ossification? Are Microsoft, Apple and Google condemned to the same fate?
IMHO Google may be a good example. They shifted their entire philosophy from innovation to securing their profitability. And it seems there's nothing more boring to the media than a company that's stable.
IBM is not insignificant, it just doesn't get much attention in the headlines.
IBM is not insignificant, it just doesn't get much attention in the headlines.
Well, AT&T was so insignificant that the government broke it into 8, 7 regional phone companies and a core continental provider. The core (AT&T) then sold its tech capability (Lucent). One of the bits (South Western) then ate the core and decided to call itself AT&T once more, now it's one of the biggest (13th) companies in the USA again.
However, the internet meant dumb core, smart edge. This, and regulation meant that telecoms companies have struggled to make themselves relevant to consumers. Any attempt to do so (undermining net neutrality) generally inspires rage in everyone. Technical change has lead to the situation now of the core just being what happens in data centres and between data centres - everything else is just noise. Telcos weren't able to raise the funds to invest in cloud at the rate that Amazon, Google and MS were because they had other investment pulls (3,4,5G, FTTH) and much less free cash - and so they got shut out.
However, the internet meant dumb core, smart edge. This, and regulation meant that telecoms companies have struggled to make themselves relevant to consumers. Any attempt to do so (undermining net neutrality) generally inspires rage in everyone. Technical change has lead to the situation now of the core just being what happens in data centres and between data centres - everything else is just noise. Telcos weren't able to raise the funds to invest in cloud at the rate that Amazon, Google and MS were because they had other investment pulls (3,4,5G, FTTH) and much less free cash - and so they got shut out.
I work in a Telco Fortune500, thanks for a great argument for why telcos didn't innovate.
>I work in a Telco Fortune500
Sorry to hear that friend ;o) I hope that the pay is good/useful and your work environment is positive.
>great argument for why telcos didn't innovate.
I really think it is all down to not having the money. Regulation, legacy costs and costs required to sustain the core business have drained telcos of all cash. I think that this has been especially painful for Europe and is political - for example in the UK there was even a special tax to claw back £600m from BT at one point. Add in the costs of 3G licenses which must have been £30b or more overall then you can see why Europe doesn't have a competitive technology sector built on it's telco heritage. This all happened during the .com boom when Amazon and Google were evolving - imagine what would have happened in Europe if even 30% of that cash had been available to support innovation.
Sorry to hear that friend ;o) I hope that the pay is good/useful and your work environment is positive.
>great argument for why telcos didn't innovate.
I really think it is all down to not having the money. Regulation, legacy costs and costs required to sustain the core business have drained telcos of all cash. I think that this has been especially painful for Europe and is political - for example in the UK there was even a special tax to claw back £600m from BT at one point. Add in the costs of 3G licenses which must have been £30b or more overall then you can see why Europe doesn't have a competitive technology sector built on it's telco heritage. This all happened during the .com boom when Amazon and Google were evolving - imagine what would have happened in Europe if even 30% of that cash had been available to support innovation.
The telcos all stripped themselves in a race to the bottom. They outsourced everything that wasn't nailed down.
Everyone has outsourced anything that isn't nailed down, that's why not to pay attention to ceo's threatening to outsource you. If they can/could they will/would no matter what. The threats just mean that they can't. There is nothing special abut telco's in this regard.
Telco's don't have leverage to compete on anything but price really, they don't have the capital to innovate, they are prevented from vertical integration by regulation, customers will not pay for service... and it's expensive. So, it's bargain basement time. Their investors have piled them with debt and now are looking at them as an annuity business. One big issue is that humans only have very limited bandwidth requirements and so much networking can be done in the data center vs out on the edge now. This means that I don't really see another generation of edge networking coming along and realistically this does reduce telcos to the old utilities that they once were.
Time for renationalisation?
Telco's don't have leverage to compete on anything but price really, they don't have the capital to innovate, they are prevented from vertical integration by regulation, customers will not pay for service... and it's expensive. So, it's bargain basement time. Their investors have piled them with debt and now are looking at them as an annuity business. One big issue is that humans only have very limited bandwidth requirements and so much networking can be done in the data center vs out on the edge now. This means that I don't really see another generation of edge networking coming along and realistically this does reduce telcos to the old utilities that they once were.
Time for renationalisation?
IBM had decades of trash CEOs who focused on returning shareholder dividends at the expense of literally everything else.
You know what's really expensive? Employees! Fire the lot. Send their wages to the shareholders and cheaply outsource every job possible.
Ginny (former CEO) spent years turning this around and only just managed in her last quarter or two. Arvind (current CEO) is the first person they've had in forever who has real vision and understands the modern tech industry.
IBM is a big ship to turn but it's slowly modernising and trying to become relevant to more people besides AIX mainframe renewals. Arvind wants IBM Cloud to displace AWS/GCP/Azure which is certainly aiming for the stars. Even if they get 20% of the way there that'll be huge.
I'm not saying IBM is a guaranteed growth share but they at least seem to be out of their death spiral.
You know what's really expensive? Employees! Fire the lot. Send their wages to the shareholders and cheaply outsource every job possible.
Ginny (former CEO) spent years turning this around and only just managed in her last quarter or two. Arvind (current CEO) is the first person they've had in forever who has real vision and understands the modern tech industry.
IBM is a big ship to turn but it's slowly modernising and trying to become relevant to more people besides AIX mainframe renewals. Arvind wants IBM Cloud to displace AWS/GCP/Azure which is certainly aiming for the stars. Even if they get 20% of the way there that'll be huge.
I'm not saying IBM is a guaranteed growth share but they at least seem to be out of their death spiral.
> Arvind wants IBM Cloud to displace AWS/GCP/Azure which is certainly aiming for the stars.
Which year is this from? IBM gave up that fight years ago.
They are now one of, if not the most, valued partner of AWS/GCP/Azure.
Which year is this from? IBM gave up that fight years ago.
They are now one of, if not the most, valued partner of AWS/GCP/Azure.
So Arvind is to IBM what Nadella is to Microsoft?
Is Nadella doing anything else apart from outsourcing?
I would argue that Microsoft is the same ship as it was with Ballmer, but the times changed a bit, both the software and market matured. But essentially Microsoft still sells the same software mostly to businesses as it was in 2000. Maybe with some sprinkle on top.
Did they manage to get any new product in last 10 years? Windows phone was a failure. Xbox is older? Copilot is licensed from OpenAI?
Google allready went the "jack welch" way - there was a hit piece about it some time ago here on HN. Microsoft still tries to provide backwards compitability, since that's where they get money. But how long? Their last iterarions of products are a net loss of efficiency in the office (new dekstop layout, sharepoint - terrible losses of productivity), so they try very hard to get disrupted.
I would argue that Microsoft is the same ship as it was with Ballmer, but the times changed a bit, both the software and market matured. But essentially Microsoft still sells the same software mostly to businesses as it was in 2000. Maybe with some sprinkle on top.
Did they manage to get any new product in last 10 years? Windows phone was a failure. Xbox is older? Copilot is licensed from OpenAI?
Google allready went the "jack welch" way - there was a hit piece about it some time ago here on HN. Microsoft still tries to provide backwards compitability, since that's where they get money. But how long? Their last iterarions of products are a net loss of efficiency in the office (new dekstop layout, sharepoint - terrible losses of productivity), so they try very hard to get disrupted.
Let's see, under Nadella's tenure since April 2014, Microsoft:
- releases Windows 10 (2015)
- releases hololens (2015)
- buys Mohjang (2015)
- launches VSCode (2015)
- buys LinkedIn (2015), integrates it into Exchange
- releases Teams (2016) to compete with Slack
- launches Office 365 to compete with GSuite (2017)
- Azure IoT (2018)
- Acquires Github (2018)
- Acquires Zenimax (2020)
- X Box Seres S/X (2020)
- Chrome-based Edge
- launches Windows 11 (2021)
- Buys Activision/Blizzard (2023)
- OpenAI partnership/investment
I'm sure I'm forgetting a ton of impactful things too. We might not like what Microsoft is doing, but it's acquisitions have been brilliant, it's released a lot of impactful open source stuff like VSCode, and it has embraced linux-derived technologies.
- releases Windows 10 (2015)
- releases hololens (2015)
- buys Mohjang (2015)
- launches VSCode (2015)
- buys LinkedIn (2015), integrates it into Exchange
- releases Teams (2016) to compete with Slack
- launches Office 365 to compete with GSuite (2017)
- Azure IoT (2018)
- Acquires Github (2018)
- Acquires Zenimax (2020)
- X Box Seres S/X (2020)
- Chrome-based Edge
- launches Windows 11 (2021)
- Buys Activision/Blizzard (2023)
- OpenAI partnership/investment
I'm sure I'm forgetting a ton of impactful things too. We might not like what Microsoft is doing, but it's acquisitions have been brilliant, it's released a lot of impactful open source stuff like VSCode, and it has embraced linux-derived technologies.
New releases of Windows 11 are nothing special? Expected?
Teams is worse than Lync after so many years, the interface is still rubbish.
Hololens is one of those products without a market and rest are just acquisitions.
The quality of products (in my opinion) is down. I can see multiple ways where they negatively impact productivity.
Hololens is one of those products without a market and rest are just acquisitions.
The quality of products (in my opinion) is down. I can see multiple ways where they negatively impact productivity.
So new releases of its flagship product, buying a bunch of companies who already had their own product, a reskin of Chromium, and Teams.
You've convinced me that Microsoft are actually doing much worse than I previously thought.
You've convinced me that Microsoft are actually doing much worse than I previously thought.
There's a good podcast called Acquired. Highly recommend it. They're private equity guys who cover the history of companies and what made them great, and cover the topic very well.
For IBM and AT&T, from what I gather it seems like they missed out on multiple waves of new technologies because there wasn't a market for it, or the revenue was so low it wasn't worth their time. They were market maintainers, not makers. They also rested on the fact that they were the incumbents, so made the incorrect assumption that people would always default to them out of convenience.
Your second question basically falls back to whether FAANG make the same mistake; resting on their laurels while some small fry breaks into a market they deemed too small to serve.
For IBM and AT&T, from what I gather it seems like they missed out on multiple waves of new technologies because there wasn't a market for it, or the revenue was so low it wasn't worth their time. They were market maintainers, not makers. They also rested on the fact that they were the incumbents, so made the incorrect assumption that people would always default to them out of convenience.
Your second question basically falls back to whether FAANG make the same mistake; resting on their laurels while some small fry breaks into a market they deemed too small to serve.
I really liked their recent one on Microsoft. They cover how intertwined Microsoft was in the early days with IBM. IBM did notice the trend towards PCs and made it a skunkwork project out of Florida to remove it from the IBM bureaucracy.
Second there is a book called “The Difference between Larry Ellison and God” which was about the early days of Oracle. Oracle’s SQL database was built entirely on research from IBM and a bit from Berkeley. IBM was slow to commercialize on SQL but the reason SQL is a standard is because of IBM.
But one of the interesting things that the podcast covers is that IBM was so large and powerful they were stymied to make the big moves necessary because it would have led to antitrust action. So even though we think of it as ineptitude there was a reason that they missed the mark.
Second there is a book called “The Difference between Larry Ellison and God” which was about the early days of Oracle. Oracle’s SQL database was built entirely on research from IBM and a bit from Berkeley. IBM was slow to commercialize on SQL but the reason SQL is a standard is because of IBM.
But one of the interesting things that the podcast covers is that IBM was so large and powerful they were stymied to make the big moves necessary because it would have led to antitrust action. So even though we think of it as ineptitude there was a reason that they missed the mark.
The essence of the “innovators dilemma”
Wish I could make $60Bn and be insignificant.
“The Innovator’s Dilemma” came out in the 90’s, but I bet it would still be an ok place to start (I haven’t actually read it, but it is a famous book).
Duuuude, you honestly should read it
Seconding! It isn’t the easiest read, but there are some good lessons/concepts
Do you think its still relevant today (I also have not read it, but its on my list) ?
I definitely do. In general I’d say that many things that are old are worth reading specifically because they contain ideas that are generalizable without becoming generic and losing utility. Almost like a fable, by being able to see through the things that DONT apply to me, I can focus on the significant elements that DO, and take the lessons away
It's not the kind of book that would become irrelevant within our current economic system. It uses examples from the 19th through end of 20th centuries to illustrate its points, but they're just examples.
AT&T had free cash flow of 26.8 billion and EPS of $3.40. They run the largest 5G cell phone network in the US.
I'm not sure that's insignificant or that they can be referred to as a "former" giant.
I'm not sure that's insignificant or that they can be referred to as a "former" giant.
Companies form, grow, get old, and die. Like organisms, they start out fresh. They slowly accumulate errors, parasites, inefficiency, unable to adapt to a changing market, etc.
The persistent idea that companies naturally grow into monopolies that take over the world has never actually happened.
For a recent example, Walmart was supposed to be one of those monopolies that take over the world. Yet they've been complaining to the FTC that Amazon is competing unfairly with them.
The persistent idea that companies naturally grow into monopolies that take over the world has never actually happened.
For a recent example, Walmart was supposed to be one of those monopolies that take over the world. Yet they've been complaining to the FTC that Amazon is competing unfairly with them.
I live in a city where Walmart doesn't exist
It's that whole thing we've been talking about with Boeing, GE, etc too. The "MBA ification" of our great formerly engineering led industries.
It's because staying on top is really really hard. The default expectation should be that a company doesn't stay on top.
IBM's own video at 100.[1]
[1] https://www.youtube.com/watch?v=59haQ44b7Uc
[1] https://www.youtube.com/watch?v=59haQ44b7Uc
"They Were There"
https://www.youtube.com/watch?v=MmVCePfMXAU
https://www.youtube.com/watch?v=MmVCePfMXAU
Old school mentality of work 70 hours a week 9 - 5 and unpaid overtime chained to a desk and you’ll get promoted. Except when you don’t when we need to save cash because of you know dividends.
Technically the name of IBM is 100 years old. But the company is 110 years old now.
> But the company is 110 years old now
Almost 113 ("14th day of June 1911"): https://books.google.ch/books?id=_8tFAQAAMAAJ&pg=PA3428&redi...
Almost 113 ("14th day of June 1911"): https://books.google.ch/books?id=_8tFAQAAMAAJ&pg=PA3428&redi...
Again? They had one 12 years ago!
Yea that was on display at my onboarding in 2012. The 1940s segment skipped over the complicity towards their German partnership with the Nazis in the Holocaust so it was pretty lost on me.
pjmlp(1)
Why are there so many links to irrelevant wikipedia links, such as [wood], [woman], and [boon]? Did they just run a software to tag every noun with a wikipedia article?
Sometimes I wish Wikipedia would get more JS-y, and have no hyperlinks as such in text, but you could click on any word (or something) to go to page if it has one.
Because I've had this the other way around too, where it's not linked and I have to go there myself because I actually do want it. (And that can also be because the word was linked elsewhere on the page.)
Because I've had this the other way around too, where it's not linked and I have to go there myself because I actually do want it. (And that can also be because the word was linked elsewhere on the page.)
Seriously, I want to see those wooden IBM product mockups and ordered xenon, not a Wikipedia article on wood.
[deleted]
pinewurst(1)