IBM and the system 360 decision Case on IBM (A) : The System/360 Decision.
There were nine competitors in the computer industry in the 60s, with GE and RCA withdraw from the field, due to the recession and corporate crises in 1970-72, the industry was left with seven U.S computer makers.
The technology of the old computer has its limited compatibility. In the first generation of computers, there were about 2,000 components per cubic foot; the second generation uses transistors instead of tubes at 5,000 per cubic foot. The technology System/360 was to use a hybrid microcircuitry, involved 30,000 components per cubic foot. .
In 1963, IBM falls into competitor's threats when its product line was running out of steam. Major customers were seeking ways of linking separate data-processing operations on a national basis, which is not found in IBM. Honeywell was ahead of the technology development where it offers a newer, faster, and cheaper transistors, with 30% price lower and it has the reprogramming capability. Some competitors think that the concern over the new system/360 is not to its challenge. In fact, during the process of launching system/360, G.E was awarded the business opportunity from MIT, when G.E announced its 600 line of computers that has incorporated time-sharing capabilities. .
The person who spearhead the system 360 program was Learson, the VP of development and manufacturing operation, a person who has a tough, forceful personality, had a reputation as searching and persistent questioner about any proposals, who will not lost an order without exhausting all company's resources.
IBM has an image to the insiders and outsiders to be an organization, which the unexpected simply doesn't happen. They were way out ahead of their competitors in the late 50s. The company used to be an assembler of computer components and a business service organization. In late 1960s, it became a largest maker of integrated circuits, producing an estimated 150 million of the hybrid variety annually.