It started as a messy merger in 1911. Three small office-product firms banded together to form the Computing-Tabulating-Recording Co. They didn’t have a brand people recognized. They didn’t have a clear future. They just had hardware.
Thomas J. Watson Sr. changed everything. He took over in the 1920s and rebranded the company as International Business Machines Corporation in 1924. The strategy was simple. Win the office.
The office ran on punch cards. IBM made them. They dominated the tabulator market. Then they bought an electric typewriter manufacturer in 1933. Suddenly, IBM controlled both the input and the typing. It was a vertical integration play before the term even existed.
By the early 1950s, the game changed again. Computers.
IBM threw money at research. Heavy research. By the 1960s, they weren’t just playing; they were running the race. The company produced 70% of the world’s computers. Mainframes were their lifeblood. Big, room-sized machines that kept the world’s largest organizations ticking.
Then came the personal computer.
- The IBM PC launched. It was a pivot. They moved from enterprise giants to desktop boxes. They became a leader overnight. But leaders make enemies.
Competition arrived fast. Microsoft. Intel. Clone makers. They undercut IBM on price and flexibility. Market share eroded. It wasn’t a crash; it was a slow bleed. By the 1990s, IBM had to retrench. Cut costs. Refocus.
They needed software. Hardware margins were shrinking. In 1995, they bought Lotus Development Corp.
Why Lotus? Because spreadsheets were becoming the new operating system for business.
The shift from punch cards to PCs to software shows a pattern. IBM survives by buying the next layer of value. But it’s a costly game. You can’t dominate hardware forever when the software eats the margin.
What happens when there’s nothing left to buy?
