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International Business Machines Corp. (IBM), Seagate Technology PLC (STX), Western Digital Corp. (WDC): The Birth of Big Data

On this day in economic and business history…

International Business Machines Corp. (NYSE:IBM) unveiled the world’s first hard-disk-drive-equipped computer on Sept. 13, 1958. IBM’s 305 RAMAC had a 3.75-megabyte internal hard disk drive with 50 magnetic disks that could spin at 1,200 revolutions per minute, and it was able to retrieve data in about 600 milliseconds. The computer was so large that it had to be moved by forklift.

International Business Machines Corp. (NYSE:IBM)

The 305 RAMAC was rented to businesses in need of real-time accounting for a monthly fee of $3,200, which would amount to approximately $310,000 per year in current dollars. International Business Machines Corp. (NYSE:IBM) built more than 1,000 of these systems between 1958 and 1961. However, the RAMACs were never essential to IBM’s business: In 1962, all 1,000 RAMACs rented year-round would have generated only about 1.5% of the company’s total revenue.

The internal hard disk International Business Machines Corp. (NYSE:IBM) pioneered would become one of the two core technologies of the PC revolution once manufacturers figured out how to shrink them down to a more reasonable size. Today, Seagate Technology PLC (NASDAQ:STX) and Western Digital Corp. (NASDAQ:WDC) have effectively conquered the entire industry, but competition between the two continues to drive progress forward. Just take a look at how advanced Seagate’s modern hard disk drive is when compared to the RAMAC’s drive:

Specification IBM 350 Seagate Barracuda Improvement
Physical size 60 in. x 68 in. x 29 in. 1 in. x 4 in. x 5.8 in. See below
Total displacement 821.67 cubic feet 23.2 cubic inches 99.98% decrease
Drive space 3.75 megabytes 3 terabytes 83,885,980% increase
Disk speed 1,200 rpm 7,200 rpm 500% increase
Data seek time 600 milliseconds 9 milliseconds 98.5% decrease
Cost (1 year)* $310,000 $125 99.96% decrease

Source: IBM and Seagate press releases. *Adjusted for inflation.

Seagate Technology PLC (NASDAQ:STX) shipped its 2 billionth HDD in 2013, just four years after reaching the 1 billion-unit milestone. The entire HDD industry now ships nearly 600 million units per year, with a total annual storage capacity estimated at roughly 300,000 petabytes. A petabyte is roughly a billion megabytes, so in cumulative terms, the HDD industry now produces about 300 trillion times the capacity of one RAMAC HDD every year. That’s enough space to store about 150 billion high-definition movies — or about ten complete sets of Peter Jackson’s Tolkien films.

Harold and Kumar’s favorite restaurant

The first White Castle opened on Sept. 13, 1921 in Wichita, Kan. It was the first modern “fast food” restaurant in America, and true to its name, this original establishment very much resembled a white castle. Its founders had to strike out in a world still accustomed to rather slow food, although automats had helped develop the fast-food concept with meals delivered by vending machines in New York and other cities earlier in the century. To that end, they developed new methods for quickly and efficiently cooking hamburgers. The venture was greatly aided by the participation of J. Walter Anderson  who had invented both the hamburger bun and the modern grill five years earlier.

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