System/360: Watson Jr.'s 'Riskiest Decision'
As Tom Watson Jr. took the reins of IBM in 1956, technologies were in flux, with vacuum tubes giving way to transistors and punch cards giving way to magnetic storage. In 1962, Watson decided to totally revamp the company's product strategy, backing the development of the System/360, ultimately introduced in 1964. Watson said it was the riskiest decision he ever made because the S/360 was incompatible with previous IBM machines, demanding major new investments by customers. IBM sunk some $5 billion into development of a modular family of products that could share the same programming instructions but be flexibly adapted and scaled for many applications. They were the first computers based on Solid Logic technology, a precursor to integrated circuits. Monthly rental rates exceeded $100,000 for a large, multisystem configuration.