IBM

"This kind of team spirit in sharing hardship moved me, but it also brought immense pressure. Besides the operators, the foremen even more often asked what could be improved. Production director James Reese appeared on our production line every day, paying special attention to the progress of yield. Reese was one year older than I was, with an MIT bachelor’s degree in electrical engineering and a Harvard MBA. He quickly became a good colleague and good friend of mine. At that time, the nearly seventy of us were producing almost all scrap every day, yet every week he still wanted to add a few more people. I didn’t understand and argued with him. He said we should first hire enough operators and train their basic skills; once the yield made a breakthrough, we would have large quantities of product. Later developments proved he was right. A few months later the yield leapt forward, and we already had enough well-trained operators on the line. So in a short time, we not only made up the deliveries that should have been made but were not during the low-yield period, we also smoothly met IBM’s rapidly increasing demand."

"The yield on IBM’s own benchmark line was low and unstable, but averaged about 5%; our yield, however, was “zero and stable.” “Zero and stable” were exactly the words the two engineers used when reporting to me on my first day at work. Humor even in difficulty."

"After the yield breakthrough for the NPN diffused type, IBM breathed a sigh of relief, because a major bottleneck in their computer production was removed. TI was even happier, because the customer was satisfied, and when pricing had been negotiated, the assumed yield was very low (close to the yield of IBM’s benchmark line). Now the actual yield was several times higher, and profits were also several times higher than expected. Luce’s gamble—fully staffing up when the yield was zero—also paid off."

"When I joined Sylvania in 1955, there were already twenty or thirty companies engaged in the semiconductor industry, which could roughly be grouped into two categories. The first category was large companies already in the electronics industry or closely related to it. At that time the largest electronics businesses were radios and televisions, but the computer industry was about to emerge. Companies in this category included GE, RCA (Radio Corporation of America), IBM, Motorola, Sylvania, Sperry, and so on."

"Of course, in earlier business history there were quite a few successful examples of “the small taking on the big,” but those successes were achieved only after long struggles, and most were cases where big companies made serious mistakes that gave small companies opportunities. TI’s large competitors, however, had not made serious mistakes, yet TI surpassed them in only a few short years. Why was this? Ultimately, the pace of technological progress clearly accelerated after World War II, and “technological inflection points” emerged one after another. When each “technological inflection point” appears, big companies are not necessarily stronger than small ones; small and big companies have almost equal opportunities. Over the past decades, cases of small companies outperforming big companies have become too numerous to count. The most famous example in the past ten-plus years is Microsoft beating IBM. But as far as I know, TI established the earliest model."

"We might, to take one possibility, sense that customer preferences are changing (for example, due to products that have been introduced while our project was in development or to the changing economic environment) from what we originally expected, and so we make a shift in the market niche we are aiming for. IBM’s shift of focus from…"

"Consider the original Apple ad for the Mac that ran during the 1984 Super Bowl—it helped create a cadre of loyalists that have kept the company alive for 20 more years, despite the fact that for years, Apples were slower and more expensive than comparable PCs from Dell, HP, or IBM.96 It is not uncommon to read postings on the Mac Internet forums urging people to buy some accessory or software “to help support Apple.” Similarly, many people drive the 300 mile roundtrip from my home in Atlanta to Birmingham, Alabama, to fly Southwest Airlines, and…"

"Even before Paul Allen and I started the partnership, we were saying: A computer on every desk and in every home. IBM and other people—with resources and skill sets way beyond ours—weren’t aiming for that goal. They didn’t see it as a possibility, so they weren’t pushing as hard to make it a reality. But we could see that it would happen. Moore’s law would make things cheaper and get the software industry to critical mass. Those were big, big goals, and they started early for us. That was our biggest advantage: We aimed higher."

"CAA had four commandments: (1) Never lie to your clients or colleagues. (2) Return every call by end of day (or at least have your assistant buy you a day’s grace). (3) Follow up and don’t leave people guessing. Every desk phone at CAA bore the message COMMUNICATE. After our Fred Specktor heard me use that word in every speech I gave, he stuck the plaques on Ron’s phone and mine—and when we admired them, he stuck them on everyone’s phone. It was our version of IBM’s famous imperative to THINK."

"In order to raise some cash one day, Jobs decided to sell his IBM Selectric typewriter. He walked into the room of the student who had offered to buy it only to discover that he was having sex with his girlfriend. Jobs started to leave, but the student invited him to take a seat and wait while they finished. “I thought, ‘This is kind of far out,’” Jobs later recalled. And thus began his relationship with Robert Friedland, one of the few people in Jobs’s life who were able to mesmerize him. He adopted some of Friedland’s charismatic traits and for a few years treated him almost like a guru—until he began to see him as a charlatan."

"Buffett, after a long period of relative inactivity stretching back to the immediate aftermath of 9/11, has had one of the most active periods of his long career. Since the fourth quarter of 2008, he has deployed over $80 billion (over $15 billion of it in the first twenty-five days after the Lehman collapse) in a wide variety of investing activities: • Purchased $8 billion of convertible preferred stock from Goldman Sachs and General Electric • Made a number of common stock purchases (including Constellation Energy): $9 billion • Provided mezzanine financing to Mars/Wrigley ($6.5 billion) and Dow Chemical ($3 billion) • Bought various distressed debt securities in the open market: $8.9 billion • In Berkshire’s largest deal ever by dollar value, bought the 77.5 percent of Burlington Northern that he didn’t already own for $26.5 billion • Acquired Lubrizol, a leading, publicly traded lubricant company for $8.7 billion • Announced a sizable ($10.9 billion) new investment in IBM stock Over the same period, John Malone has been quietly conducting an extended experiment in aggressive capital allocation across the disparate entities that were spun out of TCI’s original programming arm, Liberty Media. In the depths of the financial crisis, Malone: • Implemented a “leveraged equity growth” strategy at satellite programming giant DIRECTV—increasing debt and aggressively repurchasing stock (over 40 percent of shares outstanding in the last twenty-four months). • Initiated a series of moves across the former Liberty entities, including the spin-off of cable programmer Starz/Encore and a debt-for-equity swap between Liberty Capital (owner of Malone’s polyglot collection of public and private assets) and Liberty Interactive (home of the QVC shopping network and other online entities)."

"Ross Perot is given credit for inventing the computer services indus¬ try, but IBM was in the business in a modest way before he founded Elec¬ tronic Data Systems. Perot’s great insight was to recognize services as a sensational growth opportunity, rather than just an adjunct to the sale of computer mainframes. After failing to bring IBM management around to his point of view, he went into business for himself. Perot, in short, did not have to create an entirely new concept to become a billionaire. Know¬ ing how to turn an idea into dollars was sufficient."

"Many of the United States’ most storied companies have been ailing. Detroit’s automakers, having limped along for decades, are now stumbling through the transition to electric vehicles. US Steel, General Electric, and IBM are shadows of their past selves. Intel, mired in cycles of blown product timelines and layoffs, went from a semiconductor trailblazer to a clear laggard behind Taiwan’s TSMC. After two of Boeing’s 737 MAX jets crashed in 2017, the company promised strenuous efforts to guarantee the safety of its aircraft. Then a door blew off midair in 2024. Boeing, like Intel, is constantly delaying the launch of long-planned products."

"What I remember is a story about Thomas Watson. This is what we have followed at Southwest Airlines. A vice president of IBM came in and said, “Mr. Watson, I’ve got a tremendous idea.” (Of course, this was long ago; the original Mr. Watson.) “And I want to set up this little division to work on it. And I need ten million dollars to get it started.” Well, it turned out to be a total failure. And the guy came back to Mr. Watson and he said that this was the original proposal, it cost ten million, and that it was a failure. “Here is my letter of resignation.” Mr. Watson said, “Hell, no! I just spent ten million on your education. I ain’t gonna let you leave.” That is what we do at Southwest Airlines.8"

"Even her careful preparation was insufficient, however. Starting when the system went live at the beginning of June and continuing throughout the rest of the month, as many as 20 percent of customer orders for servers stopped dead in their tracks between the legacy order-entry system and the SAP system.36 HP was not the only company selling servers—customers could easily turn to Dell or IBM. So, as backlog piled up, HP started to lose business. In her conference call with analysts HP CEO Carly Fiorina later stated that this snafu resulted in a $160M financial hit. The HP experience perfectly exemplifies not only the high Switching Costs (considerably more than the software itself) an ERP migrator can expect, but also the intimidating uncertainty which surrounds the planning for such a migration."

"Switching Costs Multipliers Switching Costs are a non-exclusive Power type: all players can enjoy their benefits. IBM and Oracle are competitors to SAP, and they also benefit from high customer retention rates and Switching Costs. As a market matures, the Benefit of Switching Costs becomes transparent to all players and they are able to calculate the value of an acquired customer. More often than not this leads to enhanced competition to grab new customers, which arbitrages out the Benefit for new customer…"

"A more helpful insight came from a participant who spent much of his professional life on the road. He approached with dread his evening hotel ritual of downloading the day’s flood of e-mails on his laptop. It was a chore that inevitably involved hours of reading and replying. “If I just had a tool to help me with my volume of e-mail on the road, I’d pay anything,” he said. Convenience, not urgency, was a more potent marketing pitch. This was a device that could free customers to catch up on office communications on their terms. Idle time between meetings or lost time in taxis and airport lounges could be productively spent processing e-mails. Employers would be able to reach staff any time of the day and employees would not have to be tethered to computers. Bosses would never know e-mails were coming from baseball games, the golf course, or family homes. The next step was positioning the service in the crowded technology market. Lazaridis was so captivated by the concept he argued RIM should sell the Leapfrog as a new product category: e-mail pagers. Castell and RIM’s marketing vice president, Dave Werezak, disagreed. Too many other innovative communicators, such as IBM’s Simon or the EO Personal Communicator, had failed in part because they tried to define new categories and consumers didn’t appreciate or understand what the products offered. RIM managers were influenced by management guru Geoffrey Moore, who argued in his influential book Inside the Tornado that innovative technologies had a better chance of success if sold within a proven product category.1 The most popular handheld device going in 1998 was the Palm Pilot, sold as a personal digital assistant, or PDA. Palm Pilot was a huge hit because it allowed busy professionals to easily store and update calendar and contact information on a pocket-sized device. If the e-mail-enabled Leapfrog came with calendar and contact applications, Castell urged Lazaridis, then RIM could position its product as the most comprehensive PDA on the market. Lazaridis, who used a Palm, worried RIM would be seen as a weakling against the Silicon Valley darling. Castell’s pitch, however, was compelling: “If you want addresses and calendar, go for Palm. If e-mail is important, we’re the PDA to choose.” Lazaridis was swayed. His busy engineers were handed another impossibly short deadline to add calendar and contact applications to the device."

"And this is a corporation that, since its inception as a four-person software outfit selling one program, has acquired and integrated unto itself no fewer than forty-two companies at a cost of some $2 billion, a corporate entity so revolutionary in its management and so successful in nearly every aspect of its being that one would think it would be at least as well-known and admired as IBM or Digital Equipment Corp. (DEC) or Microsoft or Lotus or Campbell’s soup."

"CA’s hardheadedness in sales and marketing is paralleled in its pragmatic approach to software development itself. Unlike most companies, CA has been able not only to make decisions quickly—how and why, we'll get into shortly—but also to im- plement quickly. Its genius at software development is not the genius of inspiration but of putting together the right people to do the right jobs now so that it can all be ready next week, not next year. This is not academic but industrial, not science but engineering. When a new basic principle of thinking machines is discovered, CA will not be the one to do the discovering but will instead have a dozen commercially attractive products or enhancements to existing products up and running on com- puters as diverse as IBM mainframes and Apple Macintosh desktops, and many capable of working at the same time with different types of software. “Not invented here” is not a problem at CA. Maybe it wasn’t invented here, but hell, it works."

"sheet, but one indication is salary. CA’s average annual salary of $48,000 is at least a third higher than that of highly stratified companies like IBM. Unlike IBM, CA does not bother with a salary schedule—you get what you’re worth. A rookie program- mer starting at $30,000 may see his salary double in a year. And CA is almost certainly the only company in the world willing to pay an engineer not yet out of his twenties a salary, before bonuses, of close to $200,000."

"WITHOUT the green light given at the end of 1935 by the patriarch of Clermont, the Bull Machine Company would have died a natural death, four years after its birth. And French computing would have had to take other paths to begin its launch. In the autumn of 1935, the main shareholders of the Bull Company, specialized in the production of punched card accounting machines, are worried. At Avenue Gambetta, at the headquarters, the directors meet in a conclave to decide whether, failing to reach a balance in their accounts within a reasonable time frame, they should ask the State for help or simply sell the business to IBM. A minimum of six million francs is needed to bail it out."

"During his time at IBM, he studied negotiation like it was both an art and a science. Later, describing tricks of the trade, he likened negotiations to “verbal jujitsu” and reflected on his ability to convince adversaries that his ideas were their own. He understood the power of emotion and could feign anger, disbelief, or frustration at will. One time he even took his shoe off and threw it against the wall. Sometimes he’d just quietly peer at an opponent, comfortable in the silence as they grew awkward. “If you just stare someone directly in the eye, with a very concerned look, sometimes their imagination runs wild on what you’re thinking, and they’ll migrate to what might be the worst possible outcomes for themselves,” he recounted in 2024."

"SCI’s founder CEO Olin B. King then did something that would set a template for an entire industry. Adding to his knowledge of circuit boards, he had SCI take on adjacent tasks: it learned more about assembly operations, caught up with the latest methods in distribution, and started to win orders for subassembly and, later, to build entire computers—including for the PC clones that mimicked IBM. When SCI was building only circuit boards, it was just a supplier; when it started making another company’s designs, it gave birth to a new industry: electronics contract manufacturing."

"“SCI really is what made it operate—it was really the essence, the glue, of what made the computer run,” says Jay Elliot, who worked at both IBM and Apple in the 1980s. “They really introduced automated manufacturing.”"

"Cook departed into a senior position at PC wholesaler Intelligent Electronics, bringing order to a distressed business with bloated costs and wasted assets. In 1997 he graduated into a vice president position at Compaq—a dream role. Compaq, whose origins trace back to three friends scribbling their business plans on a napkin in a Houston pie shop, was the first company to clone the IBM PC in 1982. By 1997 it was King of the Clones, with $34 billion of revenue. Cook had been there only a matter of months when recruiters from Apple began calling. He demurred, so they delivered what was quickly becoming a signature move: They offered a personal interview with Steve Jobs."

"Tall, with resolute eyes, exhibiting a stiff posture and exuding a quiet confidence, Tim Cook looked like an IBM executive right out of central casting. He was a small-town Alabama boy, born in 1960 as the second of three sons. Cook had no obviously discernible genius, but he made up for it with an industriousness more suited to characters of fiction. After years of being voted “Most Studious” by his high school classmates, he went off to Auburn University to study industrial engineering."

"The dotcom crisis reshaped tech manufacturing for years to come. In the prior decade, leading contract manufacturers had begun to purchase factories from major brands including IBM, Texas Instruments, Ericsson, Siemens, and Lucent. The deals were often seen as a win-win, with the big brands saving on costs. Negative media headlines could be avoided, since factories were not being shuttered so much as being put under new management. When Apple sold its Fountain, Colorado, factory in 1996, most of its 1,100 employees simply got a new uniform. But the result was a huge transfer in practical knowledge from the computer brands to the contract manufacturers."

"The Apple-Samsung partnership was more intimate than is widely known. The Korean company even had separately badged engineers working full time at Apple’s Infinite Loop campus, on the bottom floor of De Anza 3. The top two floors housed Apple’s semiconductor team, led by Johny Srouji, a chips savant who’d worked at IBM and Intel before Apple hired him in 2008. The two companies jointly worked on the design of the subsequent iPhone chips, so when Samsung then copied the iPhone with an Android-enabled device, Apple wanted to distance itself."

"‘Jobs liked to see himself as an enlightened rebel, a Jedi warrior or Buddhist samurai fighting the forces of darkness’ – such as IBM."

"Ren Zhengfei has always been low-key. His understated style of doing things may only be comparable to IBM’s former CEO, Lou Gerstner. Ren Zhengfei issued a strict order to Huawei’s senior management: “Unless it’s an important customer or partner, all other activities are not up for discussion. Whoever persuades me will have their position revoked.” He avoids various interviews, meetings, and selections—whether they directly benefit Huawei’s image, government activities, or media events, he rejects them all."

""Tex handled it better than I did," Mr. Watson says. "Like him, I wanted to avoid extremes that don't seem to work, like cutting the kids' water oflF entirely or drowning them with too much income. So I decided to give each of my chil- dren just enough shares of IBM stock in their own right so that they could pay all of their normal expenses in school and college from the dividends. It backfired on me, though. By the time they were grown, IBM stock had gone up about fifty-to-one. The modest incomes I'd planned for them went right out the window. They were loaded.""

"Prodigy was an early player looking to connect personal computers on a private subscriber network. Prodigy’s owners were IBM and Sears. IBM, the largest computer maker in the world at the time, and Sears, one of the biggest retailers, were offering news, sports, weather, entertainment, and home shopping through Sears and other retailers. Members could “message” one another only on the proprietary, closed Prodigy network. The biggest of these new networking services was AOL, followed closely by CompuServe, owned by H&R Block Inc. and General Electric Company. They were all clunky, closed-off networks or “walled gardens.” Simple connections took a few minutes and required special software and modems, and some services charged per minute for usage!"

"First, he invented in the sixties a new mode of economic development by doing exactly the opposite of all other member countries, like Singapore, of the non-aligned movement. These countries were taking protective measures against multinationals, considered as “supporters of Western imperialism.” For example, India not only shut the door to Coca-Cola but also to IBM, which delayed the development of the Indian software industry."

"Behind his back, some of McCaw's deputies grumble about his taking frequent yachting trips while they toil without vacations. They say he's the nomad, pondering the desires of average folk, while they remain at their desks, keeping a furious pace set by his companies. Iron- ically, McCaw is the first to say he could never survive in a typical busi- ness environment. He avoids meetings, dislikes paperwork, speaks in parables, and sometimes gives orders he never expects to be followed. If he worked at IBM, "they'd throw me out," he admits."

"There's the IBM person in a white shirt or a Ross Perot person who came from the military. We want people who are not absolutely conventional. Who cause trouble because they are willing to break some of the boundaries and challenge us or someone else, or chal- lenge an idea. You need a certain amount of brewing in the pot. [Otherwise,] the tendency for people is, well, let's all just get along. I don't want the organization to settle in to lattes and talking about what we did over the weekend."