IBM AND THE COMPUTER INDUSTRY

Dominance

By the mid 1960s IBM so dominated the computer industry that business insiders often spoke of "IBM and the Seven Dwarfs," which referred to IBM and the other major computer manufacturers. Its supremacy had been established in the early 1950s when it surpassed computer pioneer Remington Rand (later merged into Sperry Rand). IBM continued to eat up the market share, as the industry went through several generations. The first computers were giant machines using vacuum tubes. Vacuum tubes gave way to transistors in the second generation

IBM AND THE SEVEN DWARFS-THE COMPUTER INDUSTRY BY MARKET SHARE IN 1965

Company	Market Share
IBM	65.3
Speny Rand	12.1
Control Data	5.4
Honeywell	3.8
Burroughs	3.5
General Electric	3.4
RCA	2.9
NCR	2.9

Source:

Robert Sobel, IBM: Colossus in Transition (New York: Times Books, 1981).

of computers, but it was the third generation that really gave IBM the edge.

The 360 Series

IBM's 360 line of computers debuted in 1965 after a $5 billion investment. This new series used integrated circuits instead of transistors and revolutionized the industry for the next several years. The new circuits made miniaturization possible and allowed for a tremendous increase in the computational power of the machines. Accordingly, historian Robert Sobel suggested: "In the history of computers, everything is pre-360 or post-360." Improvements such as the 360 series led to greater use of computers in the business community. In 1965 nearly $3 billion worth of computer equipment was sold; five years later the figure reached $5.7 billion. Technology advanced rapidly, however, and by 1971 another development ushered in a new generation of computers that would drastically expand their use.

The Silicon Microchip

In 1971 Intel pushed the industry forward with the invention of the microprocessor—an entire central processing unit (CPU) of a computer was placed on a single silicon chip. Advertised as a "computer on a chip," these microprocessors were approximately the size of a capital letter on this printed page. By the mid 1970s a single microchip could process as much information as a giant, room-sized computer of the late 1940s. The microchip, in turn, led to the development of the personal computer in the late 1970s and the rise of a new powerhouse in the industry, Apple Computer.

Sources:

T. R. Reid, The Chip (New York: Simon 5c Schuster, 1984);

Joel Shurkin, Engines of the Mind: A History of the Computer (New York: Norton, 1984);

Robert Sobel, IBM; Colossus in Transition (New York: Times Books, 1981).