Computer IBM Entered the Computer Term Paper

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To some users of personal computers, who state, never trust a computer that you cannot lift; the IBM has been viewed, more often than not, as an enemy, and according to Byte, the computer magazine, this was because of the fact that the IBM company rose to fame mainly on the basis of its mainframe computers, that were large and forbidding, and overwhelmingly bulky. This was probably why, when the rest of the world was eyeing the emerging opportunities in the minicomputer market, the IBM never paid any attention, and even though IBM did succeed in capturing a large chunk of that market, it did not happen until Digital had captured the minicomputer market and had grown into a large corporation.

In the past few years, IBM has agreed to change the ways in which it conducts its business, and adapt to the changing times when the prices of computers have been declining steadily. Therefore, it has started to indulge in mass marketing techniques, and has opened a few retail stores of its own, and has also showed a willingness to buy parts, or even the full and finished product from others, like for example, the low priced copier that IBM sells, that was bought form Minolta. In addition, IBM also made a major decision that would enable private vendors to sell IBM products, especially personal computers, and while in the past, IBM had manufactured its products and also its software in such a way that it would be completely incompatible with other vendors', in the case of personal computers, IBM has decided that this would not be the case. (Pollack, 1981)

It is an interesting fact that it was during the late 1800's that computer technology began to be developed in the United States of America, and it was not until the 1950's that IBM's dominance in the field started to be recognized. There were a number of methods that the company used in order to maintain its dominance, and some of these were: IBM did not sell its computers; rather, it rented them. In the beginning, the IBM computers were formidably expensive machines, and when one of these machines were rented out, one officer form the company would also be sent along with the computer, in order to take care of the machine. Another method that IBM used to maintain its domination was the method of 'bundling' wherein it would provide both the hardware and the software in one single package, and as the company began to be dependent on that software, it would need IBM software more and more, and if the user felt that they could use another computer, then they would find that they would have to buy an entirely new software system as well. IBM also made attempts to control the peripherals of the computer, or in other words, the various ancillary devices that a computer would generally use. What IBM did was to control the connections between the mainframe and the peripherals and make it so very complex that no manufacturer would be able to duplicate something like it, and herein lay IBM's power. (Triebwasser, 1998)

There are some individual who feel that IBM did in fact resort to unfair business practices at time, like for example, when another computer manufacturer made a computer that was better than the IBM and of a lesser cost. What IBM did was to state that it would also manufacture a similar computer, and at a similar price and the fact is, IBM never did and in the meanwhile the other manufacturer lost out on his sales of his computer because customers were waiting for the IBM. In the early 1980's, the desktop computer was introduced, and this was when IBM started to face some problems. This was because of the fact that while in a mainframe computer the software for the computer would be generally supplied by the hardware company, in a desktop computer, much of the software would be written by others. This factor made it impossible for the IBM Company to maintain its stringent standards of control over the personal computer market, like it did in the mainframe computer market. IBM had a policy that it would encourage independent software developers to develop software and also at times, ancillary hardware for its personal computers, and this meant that IBM would allow other manufacturers to imitate the IBM desktops.

This happened to create an open specification, and this eventually led to the development where many manufacturers managed to make clones of the IBM computers. It was Microsoft that had developed the basic operating system for the IBM computers, and although the system was used in all the personal computers manufactured by IBM, other manufacturers used the same program as well, and this meant that the IBM had to lose a share of the personal computer market to other manufacturers. (Triebwasser, 1998) IBM, when it engaged outside writers for their software programs contributed in no small measure to its initial success, but in the long run, the same transparency happened to make IBM a victim of reverse engineering, and engineers started to manufacture a different hardware which would be capable of running software that was actually written for IBM, and they found that they could sell such programs for less that the IBM's rates, and this meant that they could successfully undercut the IBM. (Triumph of the Nerds)

IBM's share in the personal computer market has since that time been gradually eroding and decreasing dramatically, until finally, in the year 2005, IBM had to literally exit the business by selling out to Lenovo, which was a Chinese company, getting a share of the equity in return. These are some of the opinions voiced by experts on what would happen now, that IBM has sold off its share of the personal computer market. One opinion was that with IBM selling off its share, the entire personal computer market of the world is in fact headed for a major 'shake-up', wherein the Lenovo Group of China, which bought he company for the amount of $1.25 billion, plus the $500 billion debt of IBM, has become all set to become the third largest personal computer manufacturer in the world. Why, did IBM sell off its personal computer business? There are several good reasons why IBM did what it did, and some of them are: the company had, in fact, been outsourcing most of its manufacturing several years ago, and it had in fact sold off its last personal computer manufacturing plants in the year 2003. The IBM was not able to set its market prices at a rate above that of the general market prices, perhaps because of the fact that IBM used the Microsoft operating system in its desktops, and also in its Intel chips, and the only thing that was actually unique about the IBM personal computer was that it was unique and original in its design. (Who's the No. 1 PC maker now?)

The CEO of IBM also said that the reason why IBM was being sold off was because it had become too much like consumer electronics, which in fact relies for the most part on individual customers and on the economics of sale and demand. Selling IBM's personal computer manufacturing to another company did bring "a huge benefit to their profitability," states another report. (Who's the No. 1 PC maker now?) When IBM entered the personal computer market, there was a virtual explosion in sales, and in the year 1980 alone, about 25 fledgling computer companies sold more than 724,000 personal computers for the amount of $1.8 billion, and when IBM happened to join the industry in the year 1981, almost 50 different companies happened to sell more than 1.4 million personal computers for about $3 billion. By the time it was 1982, about a hundred companies had sold about 2.8 million personal computers for about $5 billion. (From Bits to Boom, IBM PC turns 20)

These figures show that IBM's entry, although it did not make 'the' difference, it did manage to make a great difference in the sale of personal computers across America, and started the trend of one computer for one user, perhaps a family, or a business. It was also felt that when IBM did make its entry, what it did was not just 'flex its marketing muscle', but also used a particular specific business strategy that many analysts even today, find difficult to understand whether it was a gross miscalculation, or a masterstroke. What IBM did was this: it licensed the operating system from Microsoft, and the chips needed from Intel, so that all the various bit players would be able to sell their products to various other companies. When this happened, not only did Bill Gates and Andy Grove become phenomenally…[continue]

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