IBM is a technology corporation that has been at the forefront of some of the biggest advancements in technology.
It was there selling personal computers which made owning your own personal computer a mainstream thing.
It launched a famous AI computer named Watson which won a game of Jeopardy against Ken Jennings.
While IBM’s future seemed bright, it often posts falling stocks and revenues.
An assortment of problems with its business model and competitors are only some of the problems that IBM has faced, but here are a few more things that happened to IBM in detail.
What Happened To IBM?
When thinking about the big technology corporations today, you usually think of Google (aka Alphabet), Amazon, Apple, and Microsoft.
A few decades ago, you might have considered IBM among their number, too.
For some people, that isn’t the case anymore.
IBM used to be the technology corporation at the head of the pack.
It has since started to shrink.
Considering it was such a powerhouse of technology manufacturing, you may wonder what went wrong.
Here are a few things that happened to IBM that made it lose ground to the other technology corporations in the market.
1. Sold PC Business To Lenovo
IBM got its start as a tabulating business known as International Business Machines in the early 1900s.
It rose to prominence in the 1950s with the introduction of computers.
At the time, computers were something mainly used in offices.
They weren’t something that you used at home.
IBM helped changed that.
While they still sold computers to businesses, NASA being a famous example, they focused on bringing computers into households.
As the years went on, computers became more of a commodity.
Microsoft and Intel ended up getting a monopoly of sorts on things like PC hardware, software, and chips.
With personal computers now becoming a commodity, they no longer fit IBM’s business model.
IBM has long practiced a model of getting into a market, coming up with a high-quality product, then selling the business off at a profit.
It did this by selling its PC business to Lenovo.
The problem with this is that it also got rid of a potential revenue stream for them.
In some ways, it helped IBM.
For example, Kodak failed to make the switch to digital and ended up folding.
IBM made the switch and came out with a tidy profit.
However, that also means that they abandoned a revenue stream that could they could have relied on if they had developed it for a niche audience like PC gamers.
It also meant that IBM had to find a new revenue stream and quickly.
That costs money.
It can also confuse the employees who might lose some coworkers or gain new ones who need to go through the onboarding process of working at IBM.
There’s no question that one significant decision by IBM which may have hurt the company was selling off their PC business.
2. Slow To Action
Another problem that has led to IBM’s decline is its inability to move quickly.
IBM has a business model that makes it develop a business, take in some profits, then sell the business and move on to the next big thing before it’s too late.
While this can help a business outlast its competitors and remain innovative, it isn’t great for large businesses.
That’s because there’s a lot of infighting among executives about whether to pursue a particular market or not.
While they’re fighting and deciding, the clock is ticking.
Once they come to the decision, then they need to learn about the market.
That takes time, too.
After the research is done, they can then focus on a product or service that they can sell in that market.
That also takes time since they have to spend time researching and prototyping the product or service.
At long last, they’re able to start marketing and selling the product.
By that point, because they’re such a large company, smaller companies who had similar ideas may have already flooded the market.
As a result, IBM invested a lot of money into something that isn’t giving them the revenue that they thought it would.
While the company may be quick to get out of a market, they’re not as quick about getting into a market.
This allows their competitors the chance to sneak in and start acquiring customers right from under them.
Because IBM isn’t the fastest company to get started in a market, it has caused them to miss out on opportunities that could have earned them a nice profit.
3. Changing Employees
Another problem that IBM’s business model has which has contributed to its overall decline is the fact that it had to keep changing employees.
Any time they sold a business to someone else, the employees associated with that business were either relocated or let go.
The employees who were savvy about potentially losing their jobs may have been able to act quickly to get into a position that was a bit more stable.
Others weren’t so lucky.
Those who had to market PCs or build them or sell them, for example, might have lost their jobs.
Then, when IBM starts a new business, it has to find new employees.
This can become a problem because those new employees need some form of onboarding.
They don’t know the culture at IBM.
This can then slow things down in terms of productivity.
When a business has slow productivity, it’s not making as much of a profit as it could.
It also creates feelings of insecurity among some workers at IBM.
They may be unsure if they can expect to have that job long-term.
If IBM drops out of certain markets every few years, they may not be able to rely on the company to keep them on until retirement.
This might make some employees wary of working at IBM at all.
The problem with that is IBM risks losing stellar employees.
They could have ended up with someone who could provide a solution or service to something that could change how they operate.
If employees feel that working at IBM is too risky, then they might choose to work for another, more secure company.
The constant shifting of employees at IBM has likely also impacted its dominance and revenue.
Perhaps one of the biggest flops that have impacted IBM’s revenue and stock is Watson.
Just a few years ago, IBM was singing Watson’s praises.
They marketed the AI as being able to answer any question asked of it.
There were pitches about having it in hospitals and helping doctors treat patients.
They marketed Watson as being able to recommend untapped markets to entrepreneurs.
There were tons of things that Watson was supposedly able to do.
To further demonstrate how intelligent Watson was, IBM even had a famous match of Jeopardy that pitted Watson against Ken Jennings.
Watson ended up beating Jennings.
The problem with Watson was that the scientists primarily designed him for the show.
He is, at his best, a natural language processor.
He can read or hear words and understand them to a point.
Beyond that, he doesn’t have much of a purpose.
At the time, IBM’s executives primarily came from sales backgrounds.
They didn’t understand or didn’t want to hear the scientists who were telling them that Watson wasn’t able to do what they were promising in the marketing for the AI.
When businesses started to buy Watson, primarily in the healthcare industry, they came to realize that it was nothing more than a waste of money.
Not only did this impact IBM’s reputation, but it also meant that the company had spent tons on Watson only for him to have a very specific use.
Watson’s fate remains uncertain.
IBM has scaled back its goals for the AI supercomputer.
They still sell it to business owners who can find uses for it from an assistant standpoint.
They’re still working on Watson and trying to find ways where they can apply him in markets.
There’s no question that tight competition has also played a part in IBM’s decline.
Back in the day, IBM only had to compete with fellow PC makers.
That all changed when Google and Amazon rose to prominence.
One of IBM’s biggest revenue streams is cloud services.
IBM offers both cloud and hybrid cloud services and consultations.
The company is also doubling down on the cloud by making the service one of the pillars of its company.
AI and quantum computing are the other pillars.
The problem with cloud services is that the competition is stiff.
All the major players offer cloud services of some sort.
Some of them do so for free while others have cheap prices.
If IBM wants to compete, then they’ll need to offer something that the other major companies aren’t doing.
Another problem is that IBM is entering the market relatively late.
It didn’t get into cloud services as quickly as Microsoft, Google, or Amazon, for example.
As such, it has needed to play catch-up with them while also defining itself in the market.
This can be difficult to do when customers are already happy with the services that they get from Amazon and Google, for example.
IBM is gambling a good deal by focusing on cloud services.
If they keep moving fast, they might be able to firmly establish themselves in the space.
Otherwise, its decline may continue.
What Happened To IBM’s Computer Company?
IBM really came into the market with its PC hardware company.
While it had already been an established company beforehand, it was in the 1990s and 2000s that IBM made itself known in people’s households.
It launched the ThinkPad which was one of the first laptop computers.
They wanted to make mobile computers so that people at home or work could take their computers with them.
The original ThinkPad was an extremely bulky laptop compared to today’s designs.
However, it was also extremely successful.
IBM kept developing the ThinkPad brand until 2004.
By that point, making PCs was becoming too expensive for them because PC hardware had turned into a commodity.
They were looking to sell this part of their business.
A company that became interested was Lenovo.
At that time, Lenovo was a Chinese company that was taking some strides but was looking for something to launch them to the next level.
They believed that the ThinkPad brand was exactly what they needed.
In 2005, IBM sold its PC hardware business to Lenovo.
Over the next few decades, Lenovo became a powerhouse in selling computers.
It’s difficult to say if IBM would have had the same success if they had held onto their PC hardware business.
Either way, Lenovo has become a household name when it comes to PCs and other products thanks to its deal with IBM years ago.
Why Did IBM Stop Selling PCs?
Considering Lenovo’s success with PCs, you may wonder why IBM chose to get out of the market.
Even outside of Lenovo, other PC makers have also seen a good deal of success in selling computers and laptops.
Some have even focused on the gaming community and started making specialized computers that sell well.
The primary reason that IBM stopped selling PCs is that it was no longer as profitable as it once was.
IBM didn’t just sell PCs.
They also sold services that came with PCs.
Their main focus was on selling the services.
Since PCs were relatively cheap to make, they sold them for extra profit.
However, the market began to change as certain companies took hold of the chip industry.
It no longer became as profitable to sell PCs.
Instead of spending money on investing in their PC business, IBM decided to sell it off and focus on its services.
It wanted to use its profits to fund and invest in another market that might yield higher profitability.
IBM may have been able to find more success with their PCs if they had continued to invest in their business, but they were more interested in finding the next big thing.
Selling their PC business allowed them to generate enough profit to start getting involved with the next business opportunity that they had in mind.
Does IBM Exist Anymore?
Yes, IBM does still exist.
It can be easy to forget about IBM since it isn’t as prevalent as Amazon, Google, or Microsoft.
It’s also relatively quiet in its marketing compared to what it used to be.
A large part of that is because of the lessons it learned when marketing and promoting its AI, Watson.
Many who aren’t sure what’s happened to IBM these days likely remember when IBM was constantly in the news due to Watson.
Whether it was because of the Jeopardy win against Ken Jennings or the celebrity interviews that Watson gave, for a time, he was everywhere.
The IBM name was everywhere, too.
However, the company began to realize that, while Watson was great for a game of Jeopardy, he wasn’t great for much else.
This was a problem because IBM had spent tons of money on marketing saying that Watson could change the world.
One popular example was that Watson could quickly diagnose a patient with cancer and suggest a treatment that would likely get rid of it.
When applied in this way, it became clear very quickly that Watson could not actually do that.
All the money that IBM had spent on marketing Watson went to waste.
They had to lower their expectations and revamp him into something that was actually usable.
Watson became involved in business services instead.
Since then, IBM has been a bit more restrained in its marketing and goals.
The company still exists, but you’ll find them to be a bit quieter and more humble these days.
What Is IBM Known For?
IBM, which stands for International Business Machines, has a history of producing some of the most important technological inventions in the modern era.
One of its first big inventions was the floppy disk which allowed people to store data on a device that they could then remove and take with them.
They also invented the hard disk drive which further empowered PCs.
The UPC barcode has also changed retail and the world of online shipping.
One of its most recent inventions was a new microchip that could significantly yield longer battery life in smartphones and other devices.
As such, IBM is best known for its work in PC hardware, software, cloud computing, and data analytics.
IBM was once a titan in the PC and technology world.
Certain issues have made it stumble in its growth which has made it a little less prevalent compared to Google, Microsoft, or Amazon.
That said, with its focus on cloud services, IBM might be able to reclaim its place as one of the top technological powerhouses in the world.