[epc]

OS/2: decent OS, ahead of Windows for awhile, but IBM was never going to go to the mattresses enough to get it the install base it would need to compete with Windows. IBM's dysfunctional PC division didn't help. It would have been nice if IBM kept OS/2 up as a specialty operating system, but I think the overhead costs were too much and Gerstner was, by 1996-1997, very much in a kill-anything-that-isn't profitable mode.

Prior to Gerstner, IBM had a variety of esoteric products which were solely designed as loss leaders, never earned a profit, and relied on subsidies by other parts of the company to stay alive. Post 1993, really starting in 1994-1995 these got killed off or sold off, rapidly.

It wasn't enough to break even, one number I recall being thrown around was that we had to get to a 12% Expense-to-Revenue ratio, ignoring SG&A which was a corporate-wide number. Growth products, products in new markets were exempted entirely or given better targets, but old-line products were held to this magical 12% ratio (I was in the mainframe division at the time, which was grotesquely profitable and even today subsidizes much of the rest of IBM).

[rdtsc]

Interesting stuff. Thanks for explaining.

I was surprised that IBM even had physical stores at some point and today average consumer probably has absolutely no idea what IBM does.

[epc]

I don't think the physical stores lasted long, they eventually were sold off to ComputerLand, possibly as part of a consent decree (before my time). A lot of bad business decisions at IBM start with the various consent decrees it operated under as a result of various antitrust cases, and the utter fear of yet another antitrust case developing.

[rdtsc]

Yeah it didn't seem like they were really big and would have lasted, but it was kind of a contrast with today where a young person on the street would probably have not idea what IBM does.

[scholia]

IBM was big, really big. At one time, it had more than 70% of the computer business, so it was twice as big as every other computer company added together.

In fact, IBM was really big before computers even arrived. It dominated data processing based on punch cards and was sued for monopoly abuse in the 1930s. It was the original Evil Empire.

Microsoft -- founded in 1975 -- has been spectacularly successful, and IBM's performance has been mediocre for the past 15 years. Even so, Microsoft has only just overtaken IBM in revenues. (Both are now around $93 billion. On any reasonable growth path, IBM would be well over $200 billion.)

See the graph at http://www.zdnet.com/article/tiny-microsoft-overtakes-the-mi...

Indeed, Microsoft would probably be nowhere without IBM. It was IBM that set the PC standard with the IBM Personal Computer in 1981, and Microsoft was lucky to be part of it. In IBM terms, Microsoft stole a small part of IBM's rightful monopoly. IBM's response was to try to kill it with OS/2 EE and the MCA bus in PS/2 computers, as part of SAA.