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3/25/2004
03:13 PM
Darrell Dunn
Darrell Dunn
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Modern Machinery

Decades after IBM introduced the System/360, the company still believes in mainframes

Forty years ago next week, IBM unveiled the results of a multibillion-dollar bet that transformed the world of computing. The company overcame false starts and in-fighting to usher in a new era of technology by introducing the System/360, the first IBM mainframe.

IBM gambled its future, dedicating an unprecedented $5 billion for the development and manufacture of a new line of computers that would eventually commercialize such staples of the modern computing world as system compatibility and transaction processing. The investment, which would equal tens of billions of dollars today if adjusted for inflation, exceeded what the U.S. government spent on the Manhattan Project to develop the atomic bomb in World War II.

System/360 mainframe

IBM's System/360 mainframe was introduced 40 years ago this spring. With its microcircuitry and transaction processing, it changed business computing.
Photo courtesy of IBM
The decisions made by IBM executives beginning in 1961, and culminating with the formal introduction of the 360 series on April 7, 1964, would cement the company's position at the forefront of the computer revolution of the last half of the 20th century.

"It was clear we were taking a major risk," says Erich Bloch, who led development of microcircuit technology for IBM in the early 1960s. "It was clear that this was all or nothing."

"If the 360 didn't succeed, we knew we were dead in the water," says Bob Evans, who led the project as development VP for IBM's Data Systems Division. "The competition would have rolled over us. But we also knew the market was wide open for innovation, and while IBM at the time was emerging as a leader, we certainly didn't have command of the market."

In 1961, computing remained more science fiction than everyday reality. Fewer than 30,000 computers were installed worldwide, and most of them were used by the scientific community and government agencies. Circuit technology had only recently moved beyond vacuum tubes to discrete transistors placed on boards at a density of a few thousand per cubic foot. "Supercomputers" with less capability than a modern laptop sold for many millions of dollars, and most systems were rented, not sold.


Thomas Watson Jr.

IBM chairman Watson introduced the System/360 with its compass logo in Poughkeepsie, N.Y., on April 7, 1964.
Photo courtesy of IBM
Early attempts at a high-powered machine with broad appeal were marked by internal rivalries and commercial failures. Thomas Watson Jr., who succeeded his father as chairman of IBM in 1956, gave T. Vincent Learson responsibility for IBM's computer-development and -manufacturing operations, which were divided into two divisions. The General Products Division made lower-end computing products that rented for about $10,000 a month or less, and the Data Systems Division produced higher-end systems that rented for more than $10,000 a month. The General Products Division, in Endicott, N.Y., had recently scored big with the 1401, the first computer with more than 10,000 installations. The Data Systems Division, in Poughkeepsie, N.Y., made the more-powerful, but low-volume, 7000 series. A natural rivalry between the two groups came to a head over the development of the 360 series.

The Data Systems Division designed the ambitious "Stretch" computer as its platform for the 1960s, spending about $30 million in development. At a price tag of more than $13 million each, Stretch attracted few buyers and was killed off with little to show for IBM's investment. Pressure was intense to ensure that the next effort targeting the high-end market was a success.

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