8 ms·

The Decline and Rise of IBM (1996)

45 points by 1970-01-01 3y ago

29athrowaway 3y ago
I think Pirates of Silicon Valley makes it clear. IBM did not think there was much money in software and they were wrong about it.
- Animats 3y ago
  Yes. There was a time in the early 1980s when a software-only company seemed unlikely to become big. Two examples I was close to: Interleaf. Interleaf was the first good commercial document processor.[1] Released in 1981. Ran on Sun workstations, quite well. Years ahead of Microsoft Word. The business model was that they would sell you four workstations, a server, and a laser printer for about $60,000. In my days at the aerospace company, we managed, with great difficulty, to get Interleaf to sell us the software alone, since we already had Sun workstations, a laser printer, and a phototypesetter. (Aerospace generates a lot of documents with diagrams.) As a software-only company, they could not have obtained funding, or, probably, generated enough revenue to operate. AutoCAD. The story of AutoCAD is well documented in The Autodesk File.[2] Autodesk was founded in 1982. A software-only company was not fundable back then. Autodesk started off with about $62,000 put in by the founders. (Market cap today, $47 billion.) The term sheets for some VC deals that didn't happen are in there.[3] "The overall flavour of the deal seemed to us totally inappropriate for a company which was, at the time of these negotiations, generating sales equal to the size of the deal every month and generating after-tax profits close to the size of the deal every quarter." Autodesk couldn't get funded on reasonable terms even after becoming wildly profitable. It was an interesting time. There was so much that obviously needed doing and hadn't been done well yet. [1] https://en.wikipedia.org/wiki/Interleaf https://en.wikipedia.org/wiki/Interleaf [2] https://www.fourmilab.ch/autofile/ https://www.fourmilab.ch/autofile/ [3] https://www.fourmilab.ch/autofile/www/chapter2_32.html https://www.fourmilab.ch/autofile/www/chapter2_32.html
  - AlbertCory 3y ago
    Wrong. Lotus 1-2-3 was launched at the beginning of 1983. They spent a million dollars on their launch, which told all the VC's that software was going to be a big business. Ashton-Tate was large. Software Publishing (PFS: File) was large. Word Perfect was large.
    - 29athrowaway 3y ago
      Dbase
      - AlbertCory 3y ago
        That's Ashton Tate.
    - Animats 3y ago
      > They spent a million dollars on their launch, which told all the VC's that software was going to be a big business. People didn't think like that back then. They wanted profits. The idea that a company's value can be measured by their burn rate is 21st century. Sevin Rosen Funds, out of Dallas, is forgotten now, but they funded Lotus and some very early software startups.
- 1-6 3y ago
  It has to occur at the same time. A pure software play isn't the best either because there's always... well, FOSS.
yardie 3y ago
When has IBM been considered on the rise? I thought they just reinvented themselves into services, sold off the "business machines", and now just suck at the teat of government contracts and consulting? They were considered pioneers in AI with Watson but have been leapfrogged in execution by OpenAI, Microsoft, and Google. So I ask again, what does IBM actually do?
- MichaelZuo 3y ago
  It says (1996) in the title? So the implication is that IBM was perceived to be on the rise again in 1996?
  - _hypx 3y ago
    By using many of the same accounting gimmicks that GE used. IBM was in near continuous decline from the late-1980s. It's pretty much a shell of what it use to be.
- Spooky23 3y ago
  In 1996 they were on the rise as compared to their implosion in 1992/1993. It’s hard to describe the impact of that time - IBM centers were eliminated or eliminated thousands of jobs. Places like Kingston, NY and Binghamton, NY just died as the mainframe business pulled back dramatically. Everyone laughs about stupid IBM, but frankly they are the only meaningful survivor of the early days of computing and find a way to stay around.
- 63 3y ago
  Are government contracts and consulting considered disreputable for some reason? A reliable and accountable third party firm for custom software development feels like a valid niche worth filling to me, and strikes me as much more moral than the other behemoth tech companies constantly pursuing surveillance capitalism and eroding the digital rights of individuals.
  - mistrial9 3y ago
    > Are government contracts and consulting considered disreputable for some reason here in California over decades, income and empires were often consumer-based products with consumer distribution chains.. huge money.. the halls of upstate New York and the skyscrapers of Manhatten were viewed as distant and out of touch. IBM and maybe others were household names, but the source of revenue and the way to participate was completely alien. So I think you have hit on a nerve, yes.. there is some disrespect
sys_64738 3y ago
Arrogance of IBM execs flowed into the DNA of IBMers. It's why those let go struggled to find employment elsewhere in the same industry. Obsolete technologies and processes that were too bureaucratic are tough to unlearn.
- cmrdporcupine 3y ago
  Damn, as an ex-Googler, I have to say... uh... I don't know anything about what might have been going on there :-)
  - TX81Z 3y ago
    Shhh…Jeff Dean is a God who designed the Perfect System, protobuffs - despite not being used by anybody but Google - are the One True Way, and setting company priorities via how well middle-management can win political battles to get inflated headcount is innovation optimal. Right? That’s why everybody is raving over how awesome Bard is!
    - cmrdporcupine 3y ago
      Disturbingly, protobufs are seemingly used a whole boatload outside out of Google, despite me finding them personally meh :-) Golang seems bigger outside of Google than inside, too. (Like the nick, BTW. Wish i'd never sold off my TX81z)
      - kuchenbecker 3y ago
        Protobuf/ Thrift turn modules into basically legos by abstracting away the infra between functions to just data.
        cmrdporcupine 3y ago
        They're a bit of an over-used hammer and people go looking for matching nails wherever. JSON is wildly imperfect, and lacks types and schema enforcement... but if I have a stream or file of it I can read it with my eyes. Protobufs are opaque blobs without the schema and a pile of code. And they use generated code which is on the whole rather annoying and of varying quality. The binary encoding of protobufs doesn't really give them much of an efficiency edge, either; in this day and age there are some very well tuned JSON etc parsers. And if you're looking for efficiency, there are other formats better than protobufs (or thrift) for that purpose. At Google I saw it rammed into places where it really didn't belong. Embedded systems, even, causing months of delays while people struggled to get them to work acceptably on a microcontroller class machine. Dogma. But at least there we had better tools inside Google to work with them than I've seen outside. TLDR they're probably more good than harm, but I don't think they're a universal good and not the universal answer for how to send messages "between things" I work in Rust and use binpack, flatbuffers, and json, or hand rolled binary layouts (often using the binary_layout crate), depending on the use case. I don't think there's a universal solution.
wslh 3y ago
IBM continues to exist. It is interesting to look at their last earnings report: "IBM Sees Modest Annual Sales Growth on Strong Second Half" [1] [1] https://www.bloomberg.com/news/articles/2023-04-19/ibm-earnings-full-year-sales-above-estimates-amid-tech-market-fears https://www.bloomberg.com/news/articles/2023-04-19/ibm-earni...
elzbardico 3y ago
Kind of funny that 40 years ago, IBM had what would be the golden dream of modern CEOs, a subscription-based business, and decided to destroy it for selling stuff outright.
- doctor_eval 3y ago
  I had a great subscription business - and when I sold it, the buyer just couldn’t care less. Body shop all the way baby. 5x the revenue - but barely broke even. The old saying that “revenue is for vanity and profit is for sanity” never rang so true.
seltzered_ 3y ago
Worth noting there is also 'The Decline and Fall of IBM' by Cringely (2014) : https://www.cringely.com/2014/06/04/decline-fall-ibm/ https://www.cringely.com/2014/06/04/decline-fall-ibm/
ninacomputer 3y ago
The scary thing is how many IBM "experts" from the quantum computing teams fled to quantum startups. I interviewed with some after interning at a FAANG, and as a female in tech with family members who have run tech companies, I like to think my BS radar is pretty good. It went off constantly with a certain "type" of "startup executive", and I noticed they were all former IBM or Intel. I'm not a negative person but found them all to be visibly political, all sounded like that didn't actually do anything really real, and talked a big game that the company outputs didn't seem to match. I guess they are costing the quantum startups (aka VCs) a lot of money for very little actual work. This is just my observation and just my experience but I'm keeping tabs because it will be interesting to see how many quantum startups fail over the next few years, and which were run by IBM execs. I have my hypotheses ready.
- thedougd 3y ago
  I’ve seen these types, and their cousins at Accenture, etc move into non-tech sectors as CIOs, CTOs and other leadership positions only to wreck the place in 2-3 years. They’ll quickly fill the upper ranks with their kind and before you know it everyone is fighting for rank, scope, and head count. No one is competent enough to lead large scale technical projects or transformations; technical capabilities will erode and then frozen as operations are outsourced.
Nursie 3y ago
As someone who's worked for big blue in a couple of countries and on two non-consecutive occasions ... Its kind of interesting. It's such a huge organisation that there's room for multiple different streams, trends and directions all the time. There's also a massive disconnect between the people producing tech products, the 'research labs' and the services arms, the latter of which seem to have the focus of upper management more than any others. The 'labs' are there AFAICT mostly to make the company look good and try to achieve headline-grabbing things like Watson. Very little of this feeds through to the trenches of the tech production lines, which tend to vary from the obvious corporate/enterprise software type setups (monstrously huge, cumbersome software which does things useful to enterprises but takes a long-ass time to adapt, gets its lunch eaten by startups, which then get bought, replace the incumbent, start to grow ... rinse and repeat), to large departments which resemble nothing so much as academia, complete with dingy corridors that haven't been redecorated since the 80s, which have miniscule output expectations and release new products with an absolutely glacial cadence. Meanwhile the real corporate focus is on selling services and consultancy. I feel somewhat fondly towards IBM, and I'm glad to have worked for one of the biggest names in our industry. They always treated me well (though make no mistake, they'll lay off thousands in a heartbeat if they think they can save a dollar). At the same time the organisation did feel a bit pathological, particularly last time I dipped my toes in, it felt like a giant in managed decline. Still vast revenues and enough money to cast about looking for lifelines, but ultimately directionless. Perhaps things have changed since 2015... perhaps the redhat acquisition has altered the focus. I'm guessing not though.

45 points by 1970-01-01 3y ago

I think Pirates of Silicon Valley makes it clear. IBM did not think there was much money in software and they were wrong about it.

Animats 3y ago
Yes. There was a time in the early 1980s when a software-only company seemed unlikely to become big. Two examples I was close to: Interleaf. Interleaf was the first good commercial document processor.[1] Released in 1981. Ran on Sun workstations, quite well. Years ahead of Microsoft Word. The business model was that they would sell you four workstations, a server, and a laser printer for about $60,000. In my days at the aerospace company, we managed, with great difficulty, to get Interleaf to sell us the software alone, since we already had Sun workstations, a laser printer, and a phototypesetter. (Aerospace generates a lot of documents with diagrams.) As a software-only company, they could not have obtained funding, or, probably, generated enough revenue to operate. AutoCAD. The story of AutoCAD is well documented in The Autodesk File.[2] Autodesk was founded in 1982. A software-only company was not fundable back then. Autodesk started off with about $62,000 put in by the founders. (Market cap today, $47 billion.) The term sheets for some VC deals that didn't happen are in there.[3] "The overall flavour of the deal seemed to us totally inappropriate for a company which was, at the time of these negotiations, generating sales equal to the size of the deal every month and generating after-tax profits close to the size of the deal every quarter." Autodesk couldn't get funded on reasonable terms even after becoming wildly profitable. It was an interesting time. There was so much that obviously needed doing and hadn't been done well yet. [1] https://en.wikipedia.org/wiki/Interleaf https://en.wikipedia.org/wiki/Interleaf [2] https://www.fourmilab.ch/autofile/ https://www.fourmilab.ch/autofile/ [3] https://www.fourmilab.ch/autofile/www/chapter2_32.html https://www.fourmilab.ch/autofile/www/chapter2_32.html
- AlbertCory 3y ago
  Wrong. Lotus 1-2-3 was launched at the beginning of 1983. They spent a million dollars on their launch, which told all the VC's that software was going to be a big business. Ashton-Tate was large. Software Publishing (PFS: File) was large. Word Perfect was large.
  - 29athrowaway 3y ago
    Dbase
    - AlbertCory 3y ago
      That's Ashton Tate.
  - Animats 3y ago
    > They spent a million dollars on their launch, which told all the VC's that software was going to be a big business. People didn't think like that back then. They wanted profits. The idea that a company's value can be measured by their burn rate is 21st century. Sevin Rosen Funds, out of Dallas, is forgotten now, but they funded Lotus and some very early software startups.
1-6 3y ago
It has to occur at the same time. A pure software play isn't the best either because there's always... well, FOSS.

yardie 3y ago

When has IBM been considered on the rise? I thought they just reinvented themselves into services, sold off the "business machines", and now just suck at the teat of government contracts and consulting? They were considered pioneers in AI with Watson but have been leapfrogged in execution by OpenAI, Microsoft, and Google. So I ask again, what does IBM actually do?

MichaelZuo 3y ago
It says (1996) in the title? So the implication is that IBM was perceived to be on the rise again in 1996?
- _hypx 3y ago
  By using many of the same accounting gimmicks that GE used. IBM was in near continuous decline from the late-1980s. It's pretty much a shell of what it use to be.
Spooky23 3y ago
In 1996 they were on the rise as compared to their implosion in 1992/1993. It’s hard to describe the impact of that time - IBM centers were eliminated or eliminated thousands of jobs. Places like Kingston, NY and Binghamton, NY just died as the mainframe business pulled back dramatically. Everyone laughs about stupid IBM, but frankly they are the only meaningful survivor of the early days of computing and find a way to stay around.
63 3y ago
Are government contracts and consulting considered disreputable for some reason? A reliable and accountable third party firm for custom software development feels like a valid niche worth filling to me, and strikes me as much more moral than the other behemoth tech companies constantly pursuing surveillance capitalism and eroding the digital rights of individuals.
- mistrial9 3y ago
  > Are government contracts and consulting considered disreputable for some reason here in California over decades, income and empires were often consumer-based products with consumer distribution chains.. huge money.. the halls of upstate New York and the skyscrapers of Manhatten were viewed as distant and out of touch. IBM and maybe others were household names, but the source of revenue and the way to participate was completely alien. So I think you have hit on a nerve, yes.. there is some disrespect

sys_64738 3y ago

Arrogance of IBM execs flowed into the DNA of IBMers. It's why those let go struggled to find employment elsewhere in the same industry. Obsolete technologies and processes that were too bureaucratic are tough to unlearn.

cmrdporcupine 3y ago
Damn, as an ex-Googler, I have to say... uh... I don't know anything about what might have been going on there :-)
- TX81Z 3y ago
  Shhh…Jeff Dean is a God who designed the Perfect System, protobuffs - despite not being used by anybody but Google - are the One True Way, and setting company priorities via how well middle-management can win political battles to get inflated headcount is innovation optimal. Right? That’s why everybody is raving over how awesome Bard is!
  - cmrdporcupine 3y ago
    Disturbingly, protobufs are seemingly used a whole boatload outside out of Google, despite me finding them personally meh :-) Golang seems bigger outside of Google than inside, too. (Like the nick, BTW. Wish i'd never sold off my TX81z)
    - kuchenbecker 3y ago
      Protobuf/ Thrift turn modules into basically legos by abstracting away the infra between functions to just data.
      - cmrdporcupine 3y ago
        They're a bit of an over-used hammer and people go looking for matching nails wherever. JSON is wildly imperfect, and lacks types and schema enforcement... but if I have a stream or file of it I can read it with my eyes. Protobufs are opaque blobs without the schema and a pile of code. And they use generated code which is on the whole rather annoying and of varying quality. The binary encoding of protobufs doesn't really give them much of an efficiency edge, either; in this day and age there are some very well tuned JSON etc parsers. And if you're looking for efficiency, there are other formats better than protobufs (or thrift) for that purpose. At Google I saw it rammed into places where it really didn't belong. Embedded systems, even, causing months of delays while people struggled to get them to work acceptably on a microcontroller class machine. Dogma. But at least there we had better tools inside Google to work with them than I've seen outside. TLDR they're probably more good than harm, but I don't think they're a universal good and not the universal answer for how to send messages "between things" I work in Rust and use binpack, flatbuffers, and json, or hand rolled binary layouts (often using the binary_layout crate), depending on the use case. I don't think there's a universal solution.

wslh 3y ago

IBM continues to exist. It is interesting to look at their last earnings report: "IBM Sees Modest Annual Sales Growth on Strong Second Half" [1] [1] https://www.bloomberg.com/news/articles/2023-04-19/ibm-earnings-full-year-sales-above-estimates-amid-tech-market-fears https://www.bloomberg.com/news/articles/2023-04-19/ibm-earni...

elzbardico 3y ago

Kind of funny that 40 years ago, IBM had what would be the golden dream of modern CEOs, a subscription-based business, and decided to destroy it for selling stuff outright.

doctor_eval 3y ago
I had a great subscription business - and when I sold it, the buyer just couldn’t care less. Body shop all the way baby. 5x the revenue - but barely broke even. The old saying that “revenue is for vanity and profit is for sanity” never rang so true.

seltzered_ 3y ago

Worth noting there is also 'The Decline and Fall of IBM' by Cringely (2014) : https://www.cringely.com/2014/06/04/decline-fall-ibm/ https://www.cringely.com/2014/06/04/decline-fall-ibm/

ninacomputer 3y ago

The scary thing is how many IBM "experts" from the quantum computing teams fled to quantum startups. I interviewed with some after interning at a FAANG, and as a female in tech with family members who have run tech companies, I like to think my BS radar is pretty good. It went off constantly with a certain "type" of "startup executive", and I noticed they were all former IBM or Intel. I'm not a negative person but found them all to be visibly political, all sounded like that didn't actually do anything really real, and talked a big game that the company outputs didn't seem to match. I guess they are costing the quantum startups (aka VCs) a lot of money for very little actual work. This is just my observation and just my experience but I'm keeping tabs because it will be interesting to see how many quantum startups fail over the next few years, and which were run by IBM execs. I have my hypotheses ready.

thedougd 3y ago
I’ve seen these types, and their cousins at Accenture, etc move into non-tech sectors as CIOs, CTOs and other leadership positions only to wreck the place in 2-3 years. They’ll quickly fill the upper ranks with their kind and before you know it everyone is fighting for rank, scope, and head count. No one is competent enough to lead large scale technical projects or transformations; technical capabilities will erode and then frozen as operations are outsourced.

Nursie 3y ago

As someone who's worked for big blue in a couple of countries and on two non-consecutive occasions ... Its kind of interesting. It's such a huge organisation that there's room for multiple different streams, trends and directions all the time. There's also a massive disconnect between the people producing tech products, the 'research labs' and the services arms, the latter of which seem to have the focus of upper management more than any others. The 'labs' are there AFAICT mostly to make the company look good and try to achieve headline-grabbing things like Watson. Very little of this feeds through to the trenches of the tech production lines, which tend to vary from the obvious corporate/enterprise software type setups (monstrously huge, cumbersome software which does things useful to enterprises but takes a long-ass time to adapt, gets its lunch eaten by startups, which then get bought, replace the incumbent, start to grow ... rinse and repeat), to large departments which resemble nothing so much as academia, complete with dingy corridors that haven't been redecorated since the 80s, which have miniscule output expectations and release new products with an absolutely glacial cadence. Meanwhile the real corporate focus is on selling services and consultancy. I feel somewhat fondly towards IBM, and I'm glad to have worked for one of the biggest names in our industry. They always treated me well (though make no mistake, they'll lay off thousands in a heartbeat if they think they can save a dollar). At the same time the organisation did feel a bit pathological, particularly last time I dipped my toes in, it felt like a giant in managed decline. Still vast revenues and enough money to cast about looking for lifelines, but ultimately directionless. Perhaps things have changed since 2015... perhaps the redhat acquisition has altered the focus. I'm guessing not though.