1 - 1. What factors led to IBMs success during the 1960 and...

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1. What factors led to IBM’s success during the 1960 and 1970s and its problems during the late 1980s and early 1990s? During the 1960s and 1970s, IBM’s success was mainly based their bold investment of a $5 Billion commercial project to develop the system/360 computer, which was based on an integrated semiconductor chip and offered interchangeability of components. This was the “biggest privately financed commercial project ever” and “transformed the industry and set the dominant design for decades to come” (Applegate, 7). In fact, the invention of the system/ 360 computer was so successful that its sales contributed “70 – 80% of IBM’s profits” (Applegate, 8). In addition to IBM’s success with the system/360 computer, IBM also became one of the most dominant companies during this time with a series of related IT innovations, such as the FORTRAN, the first English-like computer language, the hard disk, the floppy disk, the IBM supermarket checkout station, etc. Moreover, IBM also created a new channel to expand into third party retailers, distributors, and value added resellers (VARS). Through IBM’s investments in all of their IT innovations and new market channels, IBM succeeded in having its products be “universally regarded as sound solutions to a range of business problems” (Applegate, 7). During the late 1980s and early 1990s, IBM’s problems were contributed by the fact that IBM lost touch with the new IT innovations that were emerging in the market. Technology was rapidly moving ahead while IBM’s remained in the same place. Their products were becoming outdated and historic, causing the sales of their product to decrease. For example, sales of their main frame, “the source of almost half of IBM’s revenues”, declined due to the fact that their customers’ needs were shifting to “interconnecting the mainframe, midrange, and their mobile personal computers with distributed data sources and application” (Applegate, 8). To add to their problems was the fact that IBM was not proactive in creating any entry barriers to prevent their competitors from entering into their market. In fact,
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1 - 1. What factors led to IBMs success during the 1960 and...

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