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Other companies in the field have long been tempted to challenge IBM in the courts, but they have lacked the resources. They also feared that IBM—which controls many of the industry's patents, and licenses its competitors to use them—might not take too kindly to any outfit that brought it to court. IBM's gentlemanly salesmen, some of whom make $40,000 a year or more, can indeed be rugged competitors. Even so, the company's top management is known to take a somewhat protective attitude toward competition. IBM makes such profits (last year it earned $651 million after taxes on revenues of $5.3 billion) that it could trim prices and still do well. But IBM knows only too well that a general computer price cut might drive some smaller competitors to the wall. IBM is also sensitive about its size, and about the fact that the Justice Department has long had it under examination. Beginning in January, Tom Watson's new general counsel and vice president will be Nicholas Katzenbach, former U.S. Attorney General. Another vice president is Burke Marshall, former U.S. Assistant Attorney General.
Control Data filed suit partly because it became convinced that the Justice Department would not act against IBM. As expected, IBM vowed to "vigorously defend" itself against the charges brought by what it called its "spectacularly successful competitor." It said that the industry, far from being noncompetitive, includes some of the country's most powerful companies.* Then too, the history of Control Data, which was started by Norris only eleven years ago, demonstrates that IBM competitors can succeed. In about a decade, IBM noted, Control Data's assets have grown from less than $1,000,000 to $465 million; its revenues have increased to $387 million in fiscal 1968.
In his mellower moments, Norris seemed content to let Watson's IBM hold the overwhelming lead: "I want Control Data to be the Ford of the com puter industry." Though few people expect that IBM will be broken up, Control Data's suit may force the giant to back up a step or two. At the very least, it may prevent premature announcements of computers that are not quite ready to live up to expectations.
* Including Sperry Rand (Univac) with 5.8% of the $5.91 million computer market in 1967, Honeywell with 5.4%, General Electric with 4.1%, RCA with 3%, NCR with 2.4% and Burroughs with 1.8%. Control Data was in fifth place with 3.4%, while IBM held an overwhelming lead with 72.9%.