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Frank T. Cary 1920 - 1973-1980 – 2006

 IBM CEOs: Leadership ⇔ Challenges ⇔ Transformations in the IT Century

Frank T. Cary 1920 - 1973-1980 – 2006
(Highlights – Milestones – Excerpts)

Antithesis of Watson: professional not visceral; calm not fierce; Stanford MBA, not the elder son of the former chairman

Cary, like Watson before him, decided to surround himself with people who would tell him what was really going on and weren’t afraid to confront

Cary had to spend much of his time fighting the U.S. Government antitrust lawsuit that lasted from 1969 to 1982 dropped without merits!  

Cary never flinched, he just said: “Okay, what do we do now?”

He did not look for scapegoats when it was his turn: “No, this is my problem, not yours.” 

Cary – a master strategist (Buck Rodgers) made a plan to build vast new automated plants facing the PCMs and the Japanese

Cary had led the company into minicomputers in the late 1960s;

Minicomputers, 1965-1974 – more than 20 strong competitors: the force that drove them began with the ICs in 1959

The chip and its impact - 1970-1990: Supercomputers – Mainframes – Minicomputers – Microprocessors – Grosch’s Law under pressure

Customer complaint management: I was forwarded a letter of complaint from an IBM electric typewriter customer that had been sent to Frank Cary, IBM Chairman & CEO. … the typewriter had not performed satisfactorily. In the meantime, the dealer had gone out of business.
I prepared a draft letter pointing out the arms length relationship between IBM and the dealer and stressing that IBM’s price to the dealer was based on the dealer completely assuming any and all “after sales responsibilities”.
In answer to Frank Cary’s question, I confirmed that the matter had been reviewed by the lawyers.  They agreed that IBM had no legal responsibility. Frank said, “Gordon, your letter is correct and I agree with the logic of your position. However, give the man a new typewriter!”
Frank’s position was that IBM’s reputation with the customer was worth much more than the cost of a typewriter. He went on to say, “If you can’t make decisions like this there is no use being chairman.” (“Memoirs of my years with IBM by Gordon Williamson published in 2008). 

1973: Equal Opportunity: part of IBM's business strategy, including an accelerated career - development plan for minorities and women

March 1973: IBM 3340 disk unit - “Winchester” – introduced

October 19, 1973: The publication of the Honeywell v. Sperry Rand decision: “Issue 3.1.2 Eckert and Mauchly did not themselves invent the
automatic electronic computer, but instead derived that subject matter from one Dr. John Vincent Atanasoff.”

April 1974: Intel announcing the 8080 - the first of the microprocessors whose instruction set and memory addressing capability approached those of the minicomputers of the day.

July 26, 1974: Arthur K. Watson died.

September 1974: IBM announced the Systems Network Architecture (SNA) - basis for networking large computer systems into the 1990s.

Price Performance of 1700 typical operations 1955-1975: 375 versus 4 seconds – 14,54 versus 0,20 dollars (unadjusted for inflation)

Predictions 1971: cost of basic computer technologies would drop rapidly. To maintain the company’s long term revenue growth a new “Future System”(FS) just as revolutionary as the IBM System /360 under Opel’s direct supervision was required.

Fred Brooks about the FS architecture in 1973: “Incomprehensible - Complexity is the fatal foe.”

February 1975: The Future System project was quietly abandoned. FS reappeared in part with the IBM System S/38 in 1978.

1975: IBM encouraged divisional rivalries – two new major divisions - DP led by SVP Paul Rizzo, GBG led by SVP George (Spike) Beitzel.  

April 1975: IBM System /32 announced – low end office computer for SMBs.

IBM 3350 direct access storage announced – withdrawn from marketing in September 1994.

IBM culture view outside-in: “The Sun never sets on IBM” by Nancy Foy published in 1975.

September 1975: IBM 5100 Portable Computer announcement

November 16, 1976: IBM Series /1 announced.

IBM 370 line divided into 30xx Series and 43XX Series - March 25, 1977: IBM 3033 – “The Big One” – eclipsed IBM 370 Model 168-3.

Amdahl had installed some 50 units – in the end Cary had what amounted to a victory.

April 1977: IBM System /34 multi-user and multi-tasking midrange computer announced – succeeding the single-user System S/32.

Low-cost approach to distributive data processing (DDP) for businesses of all sizes. 

October 1977: Processor complexes 3031 and 3032 announced.

October 1978: IBM System S/38 announced. The president of IBM's General Systems Division (GSD) said at the time: "The System/38 is the largest program we've ever introduced in GSD and it is one of the top three or four largest programs ever introduced in IBM.“

Autumn 1978: IBM DDP 8100 announced.

Cary had good reasons for optimism judged by the steady stream of new products coming out of DP and GS.

Cary called IBM System /38 “one of the best products we’ve ever had because it is so easy for the customer to use” - “the 8100 is our networking product”.

IBM 4300 Series introduced in 1979 – midrange systems compatible with the IBM System  /370 architecture.

November 1, 1979: IBM 5520 Administrative System announced to increase office productivity by combining advanced text processing and electronic document distribution.  

Leading Database Systems in 1979: History of Software Industry 2003.

Challenges 1980s: At each turn of the wheel IBM had faced new challenges and different sets of competitors.

“IBM appeared either as a giant among pygmies or, in one view, the runner-up to American Telephone & Telegraph.”

The chip and its impact - 1970-1980-1990: Supercomputers – Mainframes – Minicomputers – Microprocessors – Grosch’s Law under pressure.

January 10, 1980: IBM GSD announces the IBM 5280 distributed data-system, a new low-cost product family.

IBM 5120 Computer System introduced in February 1980 “as the lowest-priced computer to date.”    

IBM's Office Products Division announced the Displaywriter in June 1980 as an easy-to-use, low-cost desktop text processing system.

“The deluge of antitrust litigation that hit us in the ‘70s has been reduced to a trickle” said an IBM report issued a few months prior to the Greyhound settlement. “We have completed six trials, and we have won them all. Ten Federal Judges have ruled completely in our favor. It’s a relic of the ‘60s that is now dragging into the 80s-a case that turns on the same issues that we have won time and again.”

PC Market 1973-1980: “History of Modern Computing” by Paul E. Ceruzzi published in 2003.

MITS Altair 8800 January 1975 – Bill Gates and Paul Allen; Apple II June 10, 1977 – Steve Wozniak and Steve Jobs; WordStar, the first microcomputer word processor, June 1979 – Seymour Rubinstein and John Barnaby; VisiCalc spreadsheet October 1979 – Daniel Bricklin, Robert Frankston and Dan Fylstra;  Industry began to wonder: What is IBM doing about small computers?

Frank T. Cary, a brilliant man, was frustrated and asked: “Where is my Apple?” Although he was a mainframe man through and through,
Cary understood the economics of the electronics business: that ever more powerful microprocessors would be built for lowering costs in the coming years.

IBM PC Task Force and their recommendations: the original “Dirty Dozen.” under the leadership of Bill Lowe (“Blue Magic” by James Chposky and Ted Leonsis published in 1988).   

The next MCM took place in early July 1980. Then Cary interrupted, asking, “Can you do it in a year?” Lowe assured him that he could.
“Then I will pay for it,” said Cary. Get a dozen guys working on it! Come back in 30 days and show me a working prototype.” (“Big Blues” by Paul Carroll published in 1993).

A similar version: “Take 40 people and put them there. And pick somebody good to run it because he’ll report directly to me. You have a month. Go off and get organized and report back to me.” (“Forbes – Greatest Technology Stories” by Jeffrey Young published in 1998). 

In early August 1980, Bill Lowe returned to IBM HQ in Armonk, to lay out his plan to the chairman and the MC. Although everyone in the room agreed that relying on outsiders could eventually create some problems, no one took them very seriously. Any problems, they thought, could always be dealt with later. Cary approved Lowe’s plan.

IBM obviously decided to use “open architecture” because it did not have time to design its own proprietary parts and get the PC out in a year.
In mid-August 1980, Lowe accompanied by Eggebrecht, and a working prototype of the IBM PC, took a flight to CHQs for the critical demonstration to the MC. Lowe’s presentation was a hit, and the project was upgraded to a Project Development Group, which meant the team could have code names and, more important, special funding. The project came under the direction of IBM’s CEO, Frank Cary.

Upon Lowe’s departure, many of the guys on the project, especially those in the inner circle, thought they might get the chance to take over.
Lowe had another person in mind: Don Estridge – “known as the Father of the IBM PC.”, IBM’s idea of a “wild duck”. Estridge didn’t do things by the book, and he didn’t care what anyone thought. Lowe believed Estridge was the perfect leader. And Lowe was right. (“Forbes – Greatest Technology Stories” by Jeffrey Young published in 1998).

September 4, 1980: Lowe announced Estridge as the manager of entry-level small systems.

Paul Allen – IBM PC operating system: late September Jack Sams, mid-level IBM executive, asked us if we could provide a 16-bit operating system. …  Five weeks later (November 1980), the contract between IBM and Microsoft was signed. (“The Idea Man” by Paul Allen, published in 2011). No DOS source-code rights for IBM – Gates played hardball with the source-code. It was the beginning of a uniquely symbiotic relationship between IBM and Microsoft. A relationship IBM had never had before.

Sams was taken off Project Chess and given another assignment. But this was toward the end of October 1980. Estridge replaced Sams on the Project Chess team.

November 12, 1980: IBM 3081 Processor Complex announced -  a cost-effective growth solution for users who require the power and performance of a large data processing system with instruction execution rate of up to 21 times that of a 3033UP

Estridge went outside the company to buy almost all the parts for his PC, including a processor he got from Intel, so he managed to slap together some PC prototypes by early December 1980 to ship to Microsoft.

Once the PC became clearly defined as a business machine in 1980, IBM reacted with surprising speed.

The original IBM PC forecast showed a five-year volume, which was achieved in the first year of operation. (“ThinkPad – A Different shade of  Blue” by Deborah Dell and Gerry Purdy published in 2000).

The Microsoft  contract for the development of the MS DOS operating system required IBM to develop two major pieces of system software:
1.) The “boot” sequence that would start up the computer, check system status, and then load the operating system and
2.) a basic input output system (BIOS) to provide all drivers to control the hardware as directed by “system-level calls” from the operating system during operation. The industry used the term BIOS for both the boot and driver system-level software.
Microsoft wanted to keep the operating system independent of any underlying hardware.
IBM copyrighted the BIOS code, preventing other companies from using it. Consequently, the IBM BIOS became proprietary.
With these restrictions on the BIOS code, it became one of the most difficult challenges to those companies that wanted to develop a computer compatible with IBM.
Their choices: license the BIOS from IBM, write a clean BIOS from scratch, or license it from a third party that created its own clean BIOS code. IBM’s approach to this core element of the PC dramatically affected the course of the PC industry. 
This strategy convinced IBM’s executive management to invest in PCs. Little did they know that this decision would change the
course of not only the industry, but also IBM. (“ThinkPad – A Different shade of Blue” by Deborah Dell and Gerry Purdy published in 2000).      

IBM had brilliantly implemented its PC strategy, unfortunately it was the wrong strategy for IBM.
IBM used a computer chip from Intel and an operating system from Microsoft and in the process gave away control of the leading-edge product of the future. (“Broken Promises” by Prof. D. Quinn Mills, G. Bruce Friesen published in 1996). 

Frank Cary relinquished his post as CEO and turned over leadership of the corporation to John Opel on Jan. 1st, 1981.

Thomas Watson Jr. about Frank T. Cary: 
By 1980 IBM had almost quadrupled in size from the time I ran it, to 26 B$ in sales.
The business was now so huge that I found it hard to imagine how any chief executive could ever manage.
But Cary had done fine in his quiet, competent way, and he was scheduled to hand the company over to John Opel that spring.

1980: Revenue 26.21 B$. Net Earnings 3.39 B$. Employees 341.279. 

Frank T. Cary Chief Executive Officer, IBM Oil on canvas 52" x 44