Technology is a pretty brutal sector of the economy. Billion-dollar behemoths can have the rug pulled out from beneath them by a couple of kids in a garage. Today’s biggest and best supercomputer is liable to be as good as the smartphone (or smart brain implant, perhaps) of tomorrow’s children. Scale doesn’t really matter. If you can out-innovate the leader today, you can out-scale them tomorrow.
Yet, somehow, International Business Machines Corp. (NYSE:IBM) is still here. Most of the tech companies you think of as “old” are younger than your parents, or got into the tech game decades after their founding. Since its earliest days, way back in the late 1880s, International Business Machines Corp. (NYSE:IBM) has been all about developing and profiting from technology. The company’s been on top of the tech world for so long that it’s now paid dividends for almost 100 years — three payments in 1913, and then quarterly distributions since 1916.
How has International Business Machines Corp. (NYSE:IBM) stayed so consistent and so profitable for so long? It all comes down to three basic principles:
The market matters more than the machine.
Don’t be afraid to try something new, even if it threatens you.
Cutting-edge technology will only take you so far, as I’ve already mentioned, but it can take a company pretty far while it retains a technological edge. International Business Machines Corp. (NYSE:IBM)’s foundational technology, from which its predecessor, the Computing-Tabulating-Recording Company, derives the middle part of its name, was Herman Hollerith’s tabulating machine:
Pretty old-school, isn’t it? This little gizmo cut the time it took to process the United States census from eight years to one year, with the national population total of 62.9 million reported after only six weeks of work. Hollerith’s Tabulating Machine Company was soon recognized as the best and most defensible business of the four merged to create C-T-R in 1911, which established International Business Machines Corp. (NYSE:IBM)’s identity from the start as a provider of technological solutions for businesses (and sometimes for governments).
The man behind the machines
The man who recognized the importance of the machines would be the one who laid down International Business Machines Corp. (NYSE:IBM)’s three core principles: Thomas J. Watson, brought aboard as general manager in 1914 and made the company’s president less than a year later.