COVER STORY
Big Blue uses salesmanship and innovation to bestride the computer world
IBM. Three of the most famous letters in American business. For years the International Business Machines Corp. towered over the office-equipment industry. Then in the 1970s, besieged by Government antitrust charges and challenged by ambitious new rivals, the giant seemed to be staggering, and those three famous letters lost a bit of their luster. Was IBM's dominance in jeopardy?
Not a chance. Under the direction of John Opel, 58, who became chief executive officer in January 1981, the firm has been acting like its brashest competitors—entering new markets, chasing the latest technology, trimming organizational fat and selling more aggressively than ever. In 1982, IBM had profits of $4.4 billion on sales of $34.4 billion, making it the most profitable U.S. industrial company. Says Stephen McClellan, author of an upcoming book on the computer industry: "In the 1970s, IBM was a battleship in mothballs. Today it is a fleet of killer submarines."
Nowhere was the company's lean new stance more evident than in the way it plunged into the personal-computer market in August 1981. Tackling the mass market for computers for the first time, the company broke many of the traditions that had made it so successful in the past. Yet its new machine, the Personal Computer, generally known simply as the PC, has done nothing less than trans form the industry. IBM has already captured 21% of the $7.5 billion U.S. market for personal computers, a staggering feat in so short a time, and is virtually tied with pacesetter Apple Computer, which had a four-year head start.
Big Blue, as IBM is nicknamed for the corporate color it puts on many products, is a mighty competitor in a range of products from electric typewriters that sell for $800 to data-processing systems that can cost more than $100 million. It commands some 40% of the worldwide market for computing equipment and produces some two-thirds of all mainframe computers, which are big and medium-size business machines. So great is IBM's pre-eminence that rivals often seem to be running in a different race. Digital Equipment, the No. 2 computermaker, has less than one-fifth of IBM's sales. Says John Imlay Jr., chairman of MSA, an Atlanta-based software company: "IBM is simply the best-run corporation in American history."
At a time when American business sometimes seems to be slipping, IBM's triumphs have served as a reminder that U.S. industrial prowess and know-how can still be formidable. Struggling U.S. steel and automakers have been severely hurt by Japanese and European imports, but Big Blue's competitiveness is unquestioned. The company is the leading computer firm in virtually every one of the some 130 countries where it does business. "IBM is like your papa," says a Swiss computer-marketing specialist, "because it's so big and it's always there." Even in Japan, which has six major domestic computermakers and restricts access to its markets, IBM is easily the dominant producer of large computers and is fighting Fujitsu for the overall title. Last year IBM sold $1.9 billion worth of equipment in Japan to Fujitsu's $2.1 billion.
For all of its success, IBM has been rethinking some of the ways it does business. In a dramatic departure