Why is IBM not a major computer company anymore?

[bluejay]

IBM started the MS-DOS computer era and although it wasn't always the best choice (Compaq and Tandy) it made the true ancestor of the modern computer. But from some point, IBM started making cash registers instead of computers, and became a boring company(not that it wasn't in the first place). Why did this happen? Did other companies like Compaq, AST, and Samsung destroy the company in the mid-late 90s as Sega and Nintendo did Atari in the mid 80s? What is the reason I can't buy an IBM computer at best buy today?

[krslam]

They weren't cost competitive.  As Microsoft showed, the real money in computers is in the OS and other software.  IBM tried to grab that slice of the pie with OS/2 but was unsuccessful, and PC clone makers undercut them on price. They were always a business machine company, like thier name says, and have pretty much gone back to those roots. Selling to home users, except the failed Pcjr, was never thier market.

 

[carlsson]

IBM still is a major computer company, except they're entirely into servers and software services. As you might know, they sold off the desktop and laptop divisions to Lenovo quite a couple of years ago. Basically as the IBM PC was an open system except for the BIOS ROM, it opened up for cheaper competitors, manufacturers who knew that customers rather want an inexpensive computer instead of top notch build quality. Also as the development of the PC platform continued, I feel that IBM had less and less to dictate, and the system no longer was theirs, too many add-ons and industry standards set by others.

[Flojomojo]

Profit margins on commodity PCs are way smaller than on software and services. Most manufacturing is overseas. Lenovo (Chinese company) makes Thinkpads if you want something with some IBM roots. 

[The Usotsuki]

They sold their PC division to Lenovo.

 

Though honestly, Lenovo is bigger than IBM was when they did that.

[bluejay]

Definately have to agree in IBM not being cost competitive... Even today. Apple and IBM stuff was, is, and will be way too expensive. Even used Apples and IBMs are overpriced these days.

[Flojomojo]

IBM's lasting contribution was to make the PC an open standard, not proprietary and locked in like Apple. 
 

I guess that's why Apple is still profitable, albeit with a much smaller market share for computers. 

[DragonGrafx-16]

I have a Lenovo laptop... it's so bad I had to install Lubuntu on it to make it usable... I got it for free so I can't complain and I'm sure their high-end stuff is just fine but man is it bad.

[ChildOfCv]

IBM made tanks.  The clone companies made plastic toys.  The market said the toys were more cost effective than the tanks.

 

IBM also finished shooting themselves in the foot by attempting to make a new line of closed-standard systems (PS/2 line).  Nobody saw the benefits of chaining themselves back to IBM with such a huge market of open-standards computers to choose instead.

 

These days they sell PowerPC servers, but it seems that even that line is beginning to crumble.  AIX is certainly going the way of the dodo.  They bought up RedHat in an attempt to keep some form of UNIX-like behavior alive though.

 

But as noted, their main focus these days seems to be services, especially cloud services.  Even with servers, yeah you'll pay tens of thousands for a decent server, but the service contract is where they really scoop up the $$.

[Flojomojo]

I keep forgetting that they sold off BigFix, a huge ($1.8B) security product, to an Indian company. There are probably other examples of high profile sell offs. It's just that the consumer-facing stuff is the most visible to us. 
 

HP talked about doing the same, and I think they've already split their services from their printer and PC device manufacturing. Hardware is a tough business. 

[mr_me]

The PC clones in the 1980s were not plastic toys, at least not the ones I've used.  I started to see some cheap consumer level models in the 1990s like the IBM PS1.  Lots of competition and shrinking profit margins; not a great business to be in unless you could provide value added service.

 

Doesn't IBM still make super computers. 

Edited December 29, 2019 by mr_me

[Flojomojo]

I think it's somewhat funny that Acer ate all the low-end brands like Packard Bell, Gateway, Ti, and eMachines, and old Compaq is part of HP Inc (which is now separate from Hewlett-Packard). Much consolidation. 

[high voltage]

During the 90s, I've owned an IBM ThinkPad 760, that laptop was awesome.

[roots.genoa]

If I understood it right, IBM didn't want to enter the home market in the first place; they were pushed to do it. It took around ten years for the PC platform to become successful as a standard, and it was mainly thanks to other companies that released compatible micro-computers.

[spacecadet]

1 hour ago, roots.genoa said:

If I understood it right, IBM didn't want to enter the home market in the first place; they were pushed to do it. It took around ten years for the PC platform to become successful as a standard, and it was mainly thanks to other companies that released compatible micro-computers.

All of that is debatable at best. The people who pushed IBM to enter the microcomputer market were IBM employees, so it's a little weird to say they were "pushed to do it" as if it was some outside influence. There were people inside IBM who didn't want to do it, and other people who did, and in the end the people who did won out. It was an internal debate, as happens with every major decision at every company.

 

The PC was highly successful right from the start. There's a reason those clones existed, after all. Nobody's going to clone a machine that's a failure in the marketplace. IBM could not make enough machines to satisfy demand; it was sold out everywhere for about the first six months after launch (when IBM finally ramped up production; it's not that sales dropped off). There were actual waiting lists to get it.

Edited December 29, 2019 by spacecadet

[roots.genoa]

28 minutes ago, spacecadet said:

The PC was highly successful right from the start

That's why I wrote 'as a standard'; I meant that it really became the main standard for micro-computers in the 90s. Before they were competing with Commodore, Atari, and a lot of companies. I was told that companies like Amstrad did a lot to make it more affordable to the masses, but maybe it was wrong or only applicable to Europe - I'm not sure.

English is not my native language and I didn't mean to bash IBM or anything. But they have always been a B2B company mostly.

[ChildOfCv]

4 hours ago, mr_me said:

Doesn't IBM still make super computers.

I suppose, though high-performance computing is a niche where some research group with deep pockets puts out an RFQ, and then chooses one of the bidders to create the next king of the hill compute cluster.  They don't typically call up IBM and say "One supercomputer, please."

 

IBM had a line they called BlueGene, but there have not been any new installations in years.  The current top system is a supercluster of purpose-built Power9 systems with Infiniband interconnects, which is more in line with the traditional supercomputer arrangement.  That is, they'll take a server product, make some changes to support clustering, and build a limited run with that configuration for that specific contract.

[ChildOfCv]

5 hours ago, mr_me said:

The PC clones in the 1980s were not plastic toys, at least not the ones I've used.

They definitely trended that way though.  Think of the Laser computers, for instance.  I had the IBM PC as a kid, which had hardly any plastic.  My second computer was a Dell 486 which had hardly any metal.

[mr_me]

In the 1990s, there were over a dozen pc compatible manufacturers and then the no-names.  There were top tier manufacturers (e.g. compaq), mid-tier (e.g. ast), and bottom tier (e.g. acer).  All three examples made all metal computers, differences were largely with their support structures.  My no-name 386sx had an all metal chasis and cover, and heavy duty power supply.  My vga monitor was identical to an ibm model.  IBM sourced parts from third parties and anyone else could source the exact same parts.

 

The IBM PC wasn't meant for the home market.  The plastic IBM PCjr was, and so was the ibm ps1.  In the 1980s cheap 8-bit computers were still popular in the home market.  But by the mid 1980s the business PC market was bigger than the home market.

 

The IBM PC became the standard in the 1980s.  At first, 16-bit competitors didn't care about compatibility and tried to make better computers to distinguish themselves.  It became apparent that only 100% software compatibility was acceptable.  IBM tried to break the standard they established with OS2 and MCA but they both failed.  IBM PC compatibles started outselling the commodore 64 around 1984 and increased market share every year.  When home computers became mainstream in the 1990s commodore and atari were out of the market and the windows/intel platform dominated.

Edited December 29, 2019 by mr_me

[ChildOfCv]

Even the PCJr was more robust than a lot of home computers.  That's one likely reason for its price tag.  It certainly wasn't due to cutting-edge technology.

 

Even among the name brands (Dell, Lenovo, HP), they still have the disposable consumer/small business class, and the real business class.  Guess which one sells more?  If it weren't for the big companies, we wouldn't even have the upper tier to buy.  On the good side, they are at least available to us peons for purchase.  On the bad side, powerhouse servers and the like typically have zero support (not even drivers or parts) without a service contract.  The contract is where they make their money.  But on the third hand, if they offer support, that means they have to keep adequate stock of replacement parts on hand for a number of years, unlike the Gigabytes and Asus's who retire a system within months.

 

Anyway, the average schlub will just look for the lowest price tag, and may not even notice that the laptop has only 64GB of flash storage, soldered onto the motherboard and sandwiched into the case with a glued-in battery.

[Serguei2]

The problem with IBM PC is, IBM used other manufacturers hardware to build PCs.

 

These same manufacturers also provided the same hardwares to build PC compatibles.

 

At first, it's fine for IBM to sell its computers at high price. But since compatibles appeared, IBM should sell computers at lower price.

 

Also, IBM should be aware Intel released Intel 386 and someone (Compaq) (might) use(d) it.

 

If IBM made computers with its own chips, its computers would be more expensive.

[mr_me]

Ibm did make a 16-bit pc using their own processor.  The ibm 5120 cost $13500 in 1980.  They knew it couldn't compete.

 

And Compaq beat ibm with the first 32-bit pc based on the backward compatible 80386.  This is when ibm started to take a backseat in the PC business.

Edited December 29, 2019 by mr_me

[carlsson]

20 hours ago, bluejay said:

Even used Apples and IBMs are overpriced these days.

I'm not sure about the 8-bit line from Apple, but I have a distinct memory that the obsolete models in the Macintosh line held practically no value at all until Steve Jobs passed away, and all Apple fanbois over night became sentimental collectors and the prices on old Mac models rose like a space shuttle.

[ChildOfCv]

5 hours ago, Serguei2 said:

Also, IBM should be aware Intel released Intel 386 and someone (Compaq) (might) use(d) it.

Yeah, Compaq released the Deskpro 386-20 in 1988, for a base price of $7500.  IBM had already released the PS/2 model 80 in '87 which had a 386DX, but it also had the MCA virus, and therefore wasn't seen as viable.  Its base price was $8,500.  So it's not so much that IBM wasn't aware of the 386's existence, as that they wanted to herd the masses back onto their expensive, proprietary ranch, so you couldn't buy a 386 from IBM without MCA.

[Flojomojo]

Yikes. That's like $19,000 today, for a 386. 
 

Of course the world is different today. Not every household (let alone every individual) wanted or needed a computer. IBM's middle name is literally "Business" and that's how most of these things were used.