Betting on the mainframe pays off for IBM

Big Blue's 360 computer series, developed in the 1960s, far exceeded the firm's expectations. Karlin Lillington visits 360's grandchildren at the company's campus in Co Dublin.

IBM chairman Thomas J Watson literally bet the company on a mainframe computer launched 40 years ago next month.

The computer - called the System/360 after the degrees in a circle and meant to be "emblematic of the comprehensive functionality" of the computers in that line, according to IBM - also changed the face of computing by introducing many features that are still a vital part of modern computers.

But the machines - which boasted a minimum, and for the time mind-boggling, 24K of memory - had no guarantee of a market, especially when they could cost up to $5.5 million. In addition, IBM had spent a phenomenal $5 billion ($30 billion in today's money) developing the mainframes, at a time when company revenue for 1964 was $3.2 billion for the entire year.

In 1964, Forbes magazine described the project - in the whole 1960s decade,second only to the US Apollo space program in total cost for a single technology project - as IBM's "$5 billion gamble".

It paid off. By 1966, when the largest machines in the 360 family were finally shipping, IBM was exceeding its hoped-for orders. Double the number originally projected were shipped by 1966 - 143 million units, compared to the 62 million the company believed might be sold.

In the Republic, IBM estimated it might have 40 possible customers for its new machine, with perhaps 25 likely to buy, according to an IBM Ireland spokesman. The first delivery was to Aer Lingus; other customers for the machines - which could be leased at $2,700 a month for a basic configuration up to $115,000 for a big multi-system set-up - included banks and other financial institutions, utility companies and insurance companies.

In the April 7th, 1964, press release for the System/360, the company described its new mainframe as "the new equipment".

In the release, Mr Watson stated: "System/360 represents a sharp departure from concepts of the past in designing and building computers. It is the product of an international effort in IBM's laboratories and plants, and is the first time IBM has redesigned the basic internal architecture of its computers in a decade. The result will be more computer productivity at lower cost than ever before. This is the beginning of a new generation, not only of computers but of their application in business, science and government."

The 360 established the 8-bit byte as a standard, with IBM refusing to bow to financial pressure to reduce it to four or six bits; this allowed for more complex computing tasks.

The 360 also introduced new ways of managing memory, and an extensive use of 40 types of peripheral equipment, "which store information and enter it into and retrieve it from the computer", according to the 1964 release.

However, IBM was wary of the then brand new integrated circuits - silicon semiconductor "chips" with many interconnected transistors, on offer from Fairchild Semiconductor, from which Intel would soon be born - because their reliability was unproven.

IBM opted instead for what it called SLT, or Solid Logic Technology, glass-encased diodes and transistors placed on a ceramic base and mounted on a printed circuit board. The modules then plugged into sockets on the back wall of the mainframe.

But the biggest breakthrough for IBM, at least in marketing terms, was to offer a number of computer models across the same family, says recently retired Robert Poynton, a career IBM man from Dublin who, along with his twin brother, joined the company in 1967 (his brother is still there).

This meant a company that might want to start out on a lower-end, cheaper mainframe could eventually upgrade to a more sophisticated computer in the family, boosting sales significantly, according to Mr Poynton.

IBM's first System/360 sale was to Aer Lingus, who wanted to install two of them to manage its reservation system. Mr Poynton, a recent Trinity College graduate in business and philosophy, was brought in as a systems engineer and to train in users, following a course of training at IBM headquarters in upstate New York. He also helped install the mainframes at the EBS and AIB in the 1960s.

He says the fact that you could write a program for the 360 and run it on any computer in the family was a huge computing breakthrough, opening the door to the modern software industry. Until the 360 series, programs could only be written for an individual computer.

"I joined IBM because I was interested in the potential of computers," he says, noting that, despite all the subsequent technology developments over the years, his affections have stayed with mainframes. A lot of the selling we did by showing people what the future could be."

What kept him at IBM for an entire career?

"The sheer excitement of the new technologies that kept coming. You just kept getting this new injection," he says.

He also enjoyed the combative nature of sales: "One always likes to win." And, like an old pro, he adds: "And the sense of satisfaction at seeing businesses achieve their goals."

Fast forward to the present day, and IBM is making refrigerator-sized mainframe servers, nicknamed T-Rex, that could hardly have been imagined in 1964.

In an airplane hangar-sized building on IBM's Mulhuddart campus this week, a technician was piecing together a machine with memory modules containing 16 gigabytes of RAM - just the core memory, not the storage memory for the computer.

The memory modules, or "books", are the size of a large home computer CPU. Cables for the liquid cooling system needed to keep such components from meltdown snake downwards to the top of the books and the technician points out that there are two of everything - cooling cables, power supplies, memory units - to make sure the entire system is not redundant in case any one part happens to fail.

Such systems typically cost "up to a few million euro", according to Mr Fernand Sanchez, campus vice-president at Mulhuddart. Companies that buy or lease them haven't changed much from the System/360 market - financial institutions, utilities, insurance companies, universities.

Today's big servers run rings even around the computers IBM offered 12 years ago, he said. In bulk alone, 1990s mainframes took up 20 times the space of today's machines and had far less capability, he said:"You would need almost a football field of machines to deliver the power of one of these machines today."

IBM - which employs 3,700 people in the Republic, with half that number at the Mulhuddart campus - ships "tens of thousands" of these "zSeries" servers every year, Mr Sanchez says, with the Republic producing computers for all markets except the Americas.

Each of those mammoths is hand-built to particular customer specifications and, like its ancient System/360 ancestors, can be upgraded to a higher model.

"We're not just selling a box," says Mr Sanchez.

The IBM System/360 mainframe computer - named after the degrees in a circle - was unveiled April 7th, 1964.

$5 billion of R&D went into it - $30 billion in today's dollars.

IBM revenue in 1964 was $3.2 billion.

Chief architect of the 360 was Gene Amdahl, who went on to found Amdahl Corporation, in competition with IBM.

The entry-level 360 model had 24K of memory.

The Apollo moon mission was the most expensive project of the 1960s; the 360 was the second most expensive.

IBM shares were worth $588.25 on April 7th, 1964, and the company had 150,000 employees.

IBM chairman Thomas J Watson called the launch of the System/360 the most important product announcement in IBM's history.