Ibm Historical Quotes

Historically, noted James Manyika, one of the authors of the McKinsey report, companies kept their eyes on competitors “who looked like them, were in their sector and in their geography.” Not anymore. Google started as a search engine and is now also becoming a car company and a home energy management system. Apple is a computer manufacturer that is now the biggest music seller and is also going into the car business, but in the meantime, with Apple Pay, it’s also becoming a bank. Amazon, a retailer, came out of nowhere to steal a march on both IBM and HP in cloud computing. Ten years ago neither company would have listed Amazon as a competitor. But Amazon needed more cloud computing power to run its own business and then decided that cloud computing was a business! And now Amazon is also a Hollywood studio.

Consider, for example, IBM’s decision to outsource the microprocessor for its PC business to Intel, and its operating system to Microsoft. IBM made these decisions in the early 1980s in order to focus on what it did best—designing, assembling, and marketing computer systems. Given its history, these choices made perfect sense. Component suppliers to IBM historically had lived a miserable, profit-free existence, and the business press widely praised IBM’s decision to out-source these components of its PC. It dramatically reduced the cost and time required for development and launch. And yet in the process of outsourcing what it did not perceive to be core to the new business, IBM put into business the two companies that subsequently captured most of the profit in the industry. How could IBM have known in advance that such a sensible decision would prove so costly? More broadly, how can any executive who is launching a new-growth business, as IBM was doing with its PC division in the early 1980s, know which value-added activities are those in which future competence needs to be mastered and kept inside? 2

Who Says Elephants Can’t Dance? Inside IBM’s Historic Turnaround.