Why the UK's IBM Failed
Asianometry・27 minutes read
ICL was formed in 1968 to compete with American and East Asian companies, struggled to stay competitive, and was eventually sold to Fujitsu, marking the end of its prominent role in the computing industry and showcasing the challenges faced by companies trying to rival giants like IBM.
Insights
- ICL, formed in 1968 through a merger of British computer companies, faced challenges in competing with global giants like IBM due to missed opportunities in the mini-computer market and escalating R&D costs, leading to its eventual acquisition by Fujitsu in 1990.
- The evolution of the British computing industry, from punch card technology to the transistor revolution, highlighted the struggle of companies like BTM and ICT to keep pace with IBM's innovations, emphasizing the importance of adaptability and strategic decision-making in a rapidly changing technological landscape.
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What was the impact of the IBM 1401 computer?
It revolutionized data processing with transistors.
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Summary
00:00
Evolution of British Computing Industry
- In 1968, the British government merged three computer manufacturers to form International Computers Limited (ICL) to compete against American and East Asian companies.
- ICL struggled to compete and was eventually sold to Fujitsu.
- The British computing giant's history is traced from its punch card era to its closure in 2000.
- Hermann Hollerith invented an electromechanical tabulating machine for the 1890 U.S. census, revolutionizing data processing.
- Punch card technology evolved in the 1920s to perform basic mathematical operations and data storage.
- The British Tabulating Machine Company (BTM) was founded in 1907 with an exclusive license from Hollerith for punch card technology.
- BTM struggled to compete with IBM in the British Empire due to sales incompetence and a high royalty rate.
- During World War II, BTM and Power Samas halted R&D to produce military equipment, leading to a decline in punch card machines.
- IBM introduced electronic calculators like the IBM 603 and IBM 604 in the late 1940s, which sold well.
- In 1949, IBM and BTM dissolved their sales agreement, leading to open competition and BTM's merger with Powers to form International Computers and Tabulators Limited (ICT).
16:55
IBM 1401: Revolutionizing Computing History
- In 1956, IBM introduced the IBM 1401, a revolutionary computer that replaced vacuum tubes with transistors, making it cheaper, faster, and more reliable.
- The IBM 1401 offered a complete data processing system, selling more units in five weeks than expected in its lifetime, becoming IBM's most important product by 1962.
- Companies in Britain faced the decision of either challenging IBM or dropping out of the computer industry, with English Electric and Elliott Automation staying in the business.
- In 1961, ICT acquired GEC Computers, followed by EMI in 1962, and Ferranti in 1963, acquiring key products for its future like the Ferranti Packard 6000.
- By 1964, the British computing industry was dominated by English Electric and ICT, leading to a wave of consolidation that left both companies struggling with compatibility issues and a technology gap.
- The transistor revolution in 1964 prompted computer manufacturers to replace vacuum tube products, leading to a software crisis due to the need for new software with each hardware upgrade.
- IBM's response to the software crisis was the development of the System 360, a range of computers and peripherals offering a scalable architecture that eliminated software compatibility issues.
- ICT introduced the ICT 1900 series by reworking the Ferranti Packard 6000, while English Electric licensed RCA's architecture to create the System 4, both successful products.
- The British government established Mintec to support the computer industry, leading to the merger of English Electric and ICT in 1968 to form ICL, the world's largest non-American computer manufacturer.
- ICL faced challenges in the mainframe industry, missed out on the mini-computer boom, and struggled with rising R&D costs, eventually leading to a partnership with Fujitsu and its acquisition in 1990, marking the end of its prominence in the computing industry.
33:24
Computer industry splinters, niche products dominate market.
- Predictions of the computer industry becoming vertically integrated like telecom proved inaccurate as competitive intensity and market size led to its splintering, with individual companies focusing on niche products like software, raising competition levels beyond what large combines like IBM could sustain. IBM's attempt to match Microsoft's investments in operating systems and applications failed, while national champion ICL, aiming to rival IBM in mainframe computers, also faltered due to insufficient resources, facing the same market challenges that led to IBM's decline in the 1990s.
