The dominance that IBM enjoyed over the computer industry from the mid-1950’s to the mid-1970’s was not achieved primarily through superior technology, but through superior marketing and customer service. IBM realized that customer were interested in solutions to problems rather that the technical merits of a machine. With this in mind, IBM took a total-system approach to computers, not just a central processing unit approach. Even early on, IBM realized that it was important to make its products accessible to its customers. Thus, its computers were modular in design, which made them easier to transport and set up on site.
In fact, IBM set the size of its components to fit into standard elevators. By contrast, the first UNIVAC computer spent the first several months of its life in the Philadelphia plant in which it was built because it could not be moved to the Census Bureau. However, it was IBM’s background as a supplier of integrated data-processing systems that gave it a unique advantage over its competitors. As Frank Cary, a future president of IBM put it shortly after the release of System/360, “We don’t sell a productwe sell solutions to problems.” And this is exactly what they did.
Often times, software would be custom tailored for a particular business’s needs. IBM’s greatest advantage, however, was its reputation as a service-oriented vendor. Recognizing the importance of training, the company set up programming courses to train users and established field-engineering teams to resolve problems on-site. The firm was celebrated for responding to a malfunctioning computer with a dedicated task force until the problem was fixed. This was a level of customer service that was far superior to that offered by any other computer vendor. While IBM’s products were innovative, they were not always the most technologically advanced for their time.
System/360 for example, was very innovative for it’s time with its compatible-family concept. This meant that upgrading a computer system would no longer require that all of a company’s software be rewritten and employees retrained. But, in technological terms, the System/360 was no more than competent. For example, the proprietary technology that IBM chose, known as Solid Logic Technology, was half-way between the discrete transistors of the second generation machines and the fully integrated circuits of later machines. For IBM to call this system third generation was no more than a marketing slogan that exaggerated reality.
Possibly the most serious design flaw in the System/360 was its failure to support time-sharing, which enabled a machine to be used simultaneously by many users. The system also had major software shortcomings. Technology was secondary to marketing however, as IBM was able to sell far more machines than it was able to deliver. In the first two years of production, less than half of the 9,000 orders on its books were satisfied. To meet this demand, IBM hired more marketing and production staff and opened new manufacturing plants.
Consequently, in the three years following the release of System/360, IBM’s sales and leasing revenue grew to over $5 billion and its employee head count increased by 50 percent. This placed IBM well on its way to being the dominant player in the computer industry. As a result, System/360 has been called “The computer that IBM made, that made IBM.” Technology did play a role in IBM’s dominance of the computer industry, for IBM was one of the foremost electro-mechanical developers of its time. But, technology did not play nearly as large a role as IBM’s ability to sell the products that it made and to keep its customers happy so that they would continue to buy from IBM as well as entice new customers to buy IBM products. Only IBM guaranteed a complete solution to a company’s business problem, and IBM salesmen were very likely to remind data-processing managers that no one ever got fired by buying from IBM.
Through superior marketing and service, IBM dominated the computer industry for many years.
