International Business Machines (IBM) is a multinational US technology and consulting frm.

It manufactures and sells computer hardware and software and offers infrastructure, hosting and consulting services in areas ranging from mainframe computers to nanotechnology.

Throughout its history, IBM has operated at the forefront of computing technology.

In the 1930s, IBM’s tabulating equipment enabled its customers to process unprecedented amounts of data. In the 1950s and 1960s, IBM developed self-learning programmes to play draughts (IBM 704). It also developed FORTRAN, a scientifc programming language, and built a reservation system for American Airlines called SABRE. IBM’s computing power even helped NASA track space fights and provided support to the NASA moon missions. In 1973, IBM developed the Universal Product Code, also known as the barcode, which can still be found on virtually every product in the world. The development of mainframe computing, which allowed businesses to upgrade their computing power and run more sophisticated applications, proved pivotal to IBM’s performance. IBM was able to build a strong and virtually unchallenged competitive position, primarily due to its innovative capacity, its focus on process optimization and its control over the supply chain.

298 Alliance networks Due to its internal focus, IBM failed to recognize the change in the markets in the 1980s. One critical threat to IBM’s position was the partnership between Sun and Hewlett Packard, which developed an alternative operating system called UNIX; this was the frst real alternative to IBM’s mainframe operating systems. The public started to become interested in personal computers, and, despite IBM’s conviction that mainframes would remain the primary source of computing power for business and enterprises, the company entered the ‘microcomputer’ market in 1981. IBM did not enter the PC market using its standard vertically integrated approach; instead, it used external sources to provide components and operating software that ft IBM requirements. However, due to their open architecture, Intel and Microsoft were able to achieve market dominance. In addition, Intel and Microsoft both supplied new hardware manufacturers like Fujitsu and Compaq in the early 1990s. In addition, in response to increasing complexity, customers were looking for system integration, which was an indication that the IT market was about to change from being technology-oriented to service-oriented. IBM’s once comfortable competitive position was fading rapidly. This required IBM to change its internal focus and adopt an external focus.

In 1991/1992, IBM forged a total of 55 alliances, 23 of which focused on further developing its operating system and another 23 of which focused on improving its microprocessor technology. In addition, 42 of the 55 alliances were related to research and development activities, whereas nine partnerships involved joint ventures and research consortia. An example was IBM’s long-term alliance with Intel to develop microprocessors and its collaboration with Microsoft to cross-license Windows New Technology. IBM also developed software for third parties, including a fight reservation system and CAD/CAM applications. IBM was also engaged in ten alliances with Apple, primarily aimed at developing microprocessors and software architecture. These bilateral partnerships enabled IBM to advance its existing technologies. However, to remain competitive, IBM had to discover new markets and technologies.

Questions 1 Explain how IBM’s network and partnering strategy and position changed as a result of changes in its strategy (e.g. hardware, service, cloud).
2 Explain how, at diferent points in time, IBM’s alliance network helped or hindered it in realizing its strategic objectives.