IBM, every mention
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Verbatim, from the transcripts: the passages where IBM comes up
Microsoft Volume II: The Complete History and Strategy of the Ballmer Years (Audio) · Acquired
- ▶ 10:42 David Rosenthal And Microsoft, just like they had done in entering the PC software market in partnership with IBM, they're gonna partner with these big consumer cable companies.
- ▶ 35:52 David Rosenthal The internet is the most important single development to come along since the IBM PC was introduced in 1981.
- ▶ 1:39:35 Ben Gilbert They were fighting Sun, IBM, Oracle.
- ▶ 1:39:38 David Rosenthal Yes, really IBM.
- ▶ 1:42:44 David Rosenthal In 1998, Microsoft takes SQL server, and it was the first real enterprise ready database that can rival IBM and mainframe databases, Oracle databases.
- ▶ 1:42:58 David Rosenthal And of course, unlike IBM, it runs on x 86
- ▶ 1:43:17 David Rosenthal Don't pay IBM tons of money for their mainframes.
- ▶ 1:44:07 David Rosenthal And Lotus gets acquired by IBM for three and a half billion in 1995.
- ▶ 1:44:11 David Rosenthal You're buying Lotus Notes from IBM.
- ▶ 1:46:52 David Rosenthal In the IBM era that came before this in the enterprise, there were no users.
- ▶ 4:31:18 Ben Gilbert And so in the IBM days, you know, you had Windows and OS II, and in the internet era, you had, like, the web browser versus all the interactive TV stuff, or Longhorn, which was supposed to be little and iterative, versus Blackcomb, which…
- ▶ 4:39:25 Ben Gilbert As we know, IBM made a lot of money for a long time, but even without the whole DOJ thing, Microsoft probably would have visted themselves.
- ▶ 4:40:09 David Rosenthal Because Microsoft is not IBM today.
Starbucks (with Howard Schultz) · Acquired
- ▶ 16:13 Howard Schultz I mean, Xerox and IBM were the two pillars of technology and high-tech companies.
Microsoft Volume I: The Complete History and Strategy of founding through Windows 95 (Audio) · Acquired
- ▶ 13:50 David Rosenthal It is pretty much, we'll come back to the pretty much in a minute, a hundred percent dominated by IBM.
- ▶ 13:59 David Rosenthal IBM
- ▶ 14:00 David Rosenthal Big blue
- ▶ 14:01 David Rosenthal , you know, big iron is what it was referred to, like the products that they would produce.
- ▶ 14:06 David Rosenthal They were the industry.
- ▶ 14:20 Ben Gilbert IBM was the tech company, and everybody else was IBM's customers.
- ▶ 14:27 Ben Gilbert IBM built the hardware, at that time the System.
- ▶ 14:30 Ben Gilbert They wrote the software, including the operating system and the application, and provided services, including training, ongoing maintenance, and custom line of business software.
- ▶ 14:40 David Rosenthal Yeah, system three 60 was a line of solutions, I would say, offered by IBM, and it consisted of the thing, the room size thing, the mainframe and the software, which was system three 60 and the consulting and the implementation.
- ▶ 14:40 David Rosenthal Yeah, system three 60 was a line of solutions, I would say, offered by IBM, and it consisted of the thing, the room size thing, the mainframe and the software, which was system three 60 and the consulting and the implementation.
- ▶ 15:09 Ben Gilbert But an important thing that was also happening this year, in 1968, was that IBM was undergoing some antitrust scrutiny over that huge bundle that I just told you about.
- ▶ 15:24 Ben Gilbert They do everything from the hardware to the software to the operating system, the service, the support.
- ▶ 15:28 Ben Gilbert They are the whole market.
- ▶ 15:30 Ben Gilbert They're starting to get concerned, and so proactively, they unbundled
- ▶ 15:35 Ben Gilbert Hardware, software, and services, and they started selling those separately for the first time, which was not a problem at first, but what it did was it cracked the door for customers to say,
- ▶ 15:46 Ben Gilbert oh, I can buy hardware from IBM and software from someone else, and other people were not exploiting this, but it was possible.
- ▶ 16:16 David Rosenthal IBM was facing a disruptive force at this moment.
- ▶ 16:20 David Rosenthal I think probably for the first time in its history, certainly in the computing era of IBM's history, and that was the Digital Equipment Corporation, or DEC.
- ▶ 16:40 David Rosenthal It's not an IBM product.
- ▶ 16:55 David Rosenthal DEC had been started by this guy, Ken Olson, from MIT, and what they did, he had this brilliant insight that would play out over and over and over again in technology, that I'm not gonna go compete with IBM head-on, I'm not gonna make…
- ▶ 17:39 David Rosenthal Bought lots and lots and lots of IBM mainframes and products at their headquarters.
- ▶ 18:25 Ben Gilbert And IBM's going to look at it and go, that can't do any of the things that are important to our customers.
- ▶ 18:33 David Rosenthal And specifically, why are they not going to care about it?
- ▶ 18:35 David Rosenthal I don't know exactly what an IBM mainframe system, system, three 63 70, whatever cost.
- ▶ 18:58 David Rosenthal So like an order of magnitude, maybe two below a system that you would buy from IBM.
- ▶ 21:15 David Rosenthal The software that IBM was selling was the operating system to make the machines actually function, and it was the programming languages that you could then
- ▶ 36:35 David Rosenthal So they think, okay, what's clearly going to happen here is all the big computer companies, you know, IBM, DEC, the big Japanese computing companies, they see this, they're going to get into this business.
- ▶ 47:14 David Rosenthal Bill and Paul originally thought that it was gonna be the IBMs, the DEXs, the Japanese companies who are gonna make the first microcomputers.
- ▶ 47:24 David Rosenthal MITS is about as far away from IBM as you can possibly imagine.
- ▶ 1:01:27 Ben Gilbert Before, the whole business model of computers was good luck just replicating an IBM PC and everything that comes with it.
- ▶ 1:01:48 David Rosenthal Other than the IBM accounting machinations to protect themselves from antitrust, which was just accounting, nobody had ever sold software before.
- ▶ 1:02:03 Ben Gilbert The other thing that's useful to know is when you're selling an IBM PC, you're literally selling a PC to a customer.
- ▶ 1:21:32 David Rosenthal The Microsoft IBM, I mean, it's crazy to even say it now, the Microsoft IBM PC partnership.
- ▶ 1:21:32 David Rosenthal The Microsoft IBM, I mean, it's crazy to even say it now, the Microsoft IBM PC partnership.
- ▶ 1:24:23 David Rosenthal So the IBM PC.
- ▶ 1:24:26 David Rosenthal Why is IBM getting into the personal computer here in 1980?
- ▶ 1:24:32 David Rosenthal A fun quote we heard in our research was that IBM was the sun, the moon, the stars of the computing industry, and that meant the hardcore enterprise mainframe computing industry.
- ▶ 1:24:49 David Rosenthal We talked to probably 10 early Microsoft people in research and preparation, and one of those folks was Steve Bomber himself, and he used those words in describing IBM.
- ▶ 1:25:00 Ben Gilbert Yes, and it's hard to imagine a better person to get their perspective on what IBM meant to the world at this point in time, because 1980 was also the year that Steve joined Microsoft.
- ▶ 1:25:17 Ben Gilbert In 1980, you've got the management team coming together with Steve and Bill and Paul Allen, and you've got the IBM thing going on, and you've got them moving to Seattle, and we haven't even talked about Charles Simone yet, but this was the…
- ▶ 1:25:40 Ben Gilbert Ok, so why is IBM the sun, the moon, and the stars of computing?
- ▶ 1:27:18 David Rosenthal And so for a company like IBM, they eclipsed the eight-bit computing cycle a long, long, long time ago.
- ▶ 1:29:19 David Rosenthal IBM has already lived through missing a computing expansion era once with DEC and the mini computer.
- ▶ 1:29:31 David Rosenthal Of course, that didn't really hurt IBM, but man, it would have been nice to also have that market too.
- ▶ 1:29:47 Ben Gilbert But I think it's a very different rate of adoption and rate of demand with microcomputers where IBM started to kind of look at and go, oh, this might be like a real market, like a really big computer market for people.
- ▶ 1:30:23 David Rosenthal So it's hard to remember today, but just to underscore this again, in 1980, IBM was the most valuable company in the entire world.
- ▶ 1:30:41 David Rosenthal Do you know what their market cap was?
- ▶ 1:31:05 David Rosenthal So, that company, the most valuable in the world, they're going to tiny little Microsoft that's just moved to Seattle for this partnership.
- ▶ 1:31:13 David Rosenthal So, when IBM decided, this is just so amazing, like, they deserve so much credit here.
- ▶ 1:31:21 David Rosenthal They got the Clay Christensen, disrupt yourself, disruptive technology thing intuitively decades before Clay writes any of this stuff.
- ▶ 1:31:30 David Rosenthal The way that they decide to compete is they're like, all the things that Clay wrote about are working against us here.
- ▶ 1:31:43 David Rosenthal We need to do something outside the company completely removed from the politics.
- ▶ 1:31:53 David Rosenthal They call it the entry level systems division.
- ▶ 1:31:55 David Rosenthal Actually, it may have existed before, but they repurpose it.
- ▶ 1:32:07 David Rosenthal And they create a secret project called Project Chess.
- ▶ 1:32:11 David Rosenthal Secret from the rest of the company, the whole world.
- ▶ 1:32:13 David Rosenthal And the goal is to develop the IBM microcomputer, or the personal computer, as people are starting to refer to microcomputers.
- ▶ 1:32:25 David Rosenthal They're gonna do it in secret with a small team with no other IBM resources, and so that means this small team, the only way they can do it is to use all off-the-shelf components from technology providers, basically play on the same level…
- ▶ 1:32:49 David Rosenthal IBM leadership tells this team in Boca
- ▶ 1:32:52 David Rosenthal They have to ship the PC to customers within one year.
- ▶ 1:33:01 David Rosenthal Don Estridge, who was one of the leaders of Project Chess, he would later say that the company realized that if you're gonna compete against people who started in a garage, obviously a reference to Apple here, you have to start in a garage…
- ▶ 1:33:15 David Rosenthal And then Lou Gerstner, who later would take over IBM, would describe this whole Boca project as, quote, the way you get an elephant to tap dance.
- ▶ 1:33:25 Ben Gilbert And the question is, are they playing from behind and thus have to adopt a flawed strategy, or is this strategy of assembling with all off-the-shelf components actually a good strategy if it works?
- ▶ 1:33:41 David Rosenthal Okay, so what do they do?
- ▶ 1:33:53 David Rosenthal Like, I think IBM can do a deal with Intel.
- ▶ 1:34:46 David Rosenthal The standardized software packaged application software doesn't happen until the 16 bit era and doesn't really, really happen until the 16 bit era and the IBM PC.
- ▶ 1:35:03 David Rosenthal IBM calls up Bill Gates, and by August, 1980, the two companies are in serious talks to partner and work together on the IBM PC.
- ▶ 1:35:03 David Rosenthal IBM calls up Bill Gates, and by August, 1980, the two companies are in serious talks to partner and work together on the IBM PC.
- ▶ 1:35:26 David Rosenthal The Microsoft team of 30, which the whole company of Microsoft pivots to, like, work on the IBM PC
- ▶ 1:36:49 David Rosenthal Now they're dealing with IBM.
- ▶ 1:36:54 David Rosenthal So back to the IBM negotiations.
- ▶ 1:36:59 David Rosenthal IBM is not just very interested in working with Microsoft.
- ▶ 1:37:17 David Rosenthal And there's some debate on whether it was the Microsoft side or the IBM side that really saw the vision of, hey,
- ▶ 1:39:37 David Rosenthal Okay, so the IBM-Microsoft discussions are going along, and IBM's like, oh, hey, yeah, we need an operating system.
- ▶ 1:40:14 David Rosenthal IBM, that team from Project Chess, flies down, I think directly from Seattle, and talking with Bill and Steve, to Monterey, California, where Digital Research is based at this point, to meet with Gary and his wife Dorothy, who run the…
- ▶ 1:40:42 David Rosenthal So the team comes down, obviously they show up, they're from IBM.
- ▶ 1:41:09 David Rosenthal Knew it was happening, but he had another important business meeting, and he didn't know that this was IBM that was coming.
- ▶ 1:41:15 David Rosenthal Regardless, it doesn't really matter, because IBM just wants the operating system.
- ▶ 1:41:30 David Rosenthal The punchline is that IBM sort of leaves this interaction
- ▶ 1:41:56 Ben Gilbert And in particular, they would have to do some customizing, but part of what IBM wants
- ▶ 1:42:02 Ben Gilbert Is a customized version of an operating system for the IBM PC.
- ▶ 1:42:10 Ben Gilbert And just to add one more stir the pot of history here, there is another version of this story where Gary does actually have a conversation with IBM, and it blows up over licensing terms.
- ▶ 1:42:27 Ben Gilbert Of every IBM PC sold and IBM walks over that.
- ▶ 1:42:27 Ben Gilbert Of every IBM PC sold and IBM walks over that.
- ▶ 1:42:30 Ben Gilbert So whether that happened or whether it's just an NDA issue, either way, I think we all know the IBM PC did not end up running the CPM operating system.
- ▶ 1:42:42 David Rosenthal We'll talk about that when we get to the business terms of the Microsoft IBM deal in a minute.
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