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John R. Opel 1925 - 1981-1984 – 2011


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

John R. Opel 1925 - 1981-1984 – 2011
(Highlights – Milestones – Excerpts)

Opel never worked in Watson’s inner circle.

IBM the very picture of a citadel under assault, a colossus in chronic stage of siege.

Thomas Watson Jr.: Opel urged me to rejoin the board: “You’re too much a part of the history of this business not to come back and pointed out that I was only 67 (1981). … A few years later, when I turned 70 (1984) I insisted on retiring from the board like any other IBM director.” 

The chip and its impact – 1980-1985: Supercomputers – Mainframes – Minicomputers – Microprocessors – Grosch’s Law under pressure

January 26, 1981: IBM and Greyhound announced an out-of-court settlement concluding the last of the important private antitrust actions.  

Philip D. Estridge named Director Entry Systems Business – he was the man who lead the team and made it work. Inner Circle. 3 men. 

Opel decides early 1981: IBM PC to be sold through dealers

IBM PC Campaign: “Charlie Chaplin” – new IBM image

March 1981: Bill Lowe named VP ISD and GM Rochester plant 

End of July 1981: Microsoft delivers final DOS version and BASIC – IBM PC now ready for CMC preview

Successful CMC pre-announcement review of IBM PC

July 1981: IBM System /23 “Datamaster” announcement – one month before the IBM PC announcement

August 12, 1981: IBM PC Announcement – "We intend the IBM Personal Computer to be the most useful system of its kind"

Gates and his group took their exclusion as an affront. A few weeks later a mainframe in the bowels of IBM cranked out a form letter to
Microsoft that said merely: “Dear Vendor: Thank you for a job well done.”

Apple saluted the IBM PC with its advertisement headlined “Welcome IBM. Seriously.” in the Wall Street Journal.  

1981: VP Michael Coleman holding a business card with his mechanical hand – he lost his hands in the Vietnam War.

1981: IBM Credit Corporation established as a wholly-owned subsidiary.

IBM PROFS (Professional Office System) was an electronic communication system for the automated office environment. Released in 1981

January 8, 1982 - US Department of Justice: IBM antitrust case dismissed “without merit!”

The BUNCH faced a depressing fate that had little to do with IBM.

Kick off meeting 1982: John Opel fixed four precise objectives that were added to IBM’s basic principles. To grow at least as fast as the rest of the industry to which we belonged. To be the leader in new technology. To be the lowest cost producer. To maintain our level of profits.

1982: IBM Australia 50th anniversary, IBM Hong Kong 25th anniversary.

February 1982: three PC projects – PC/XT, PC Jr., PC/AT – funded

The word Internet is used for the first time – TCP/IP standard ARPAnet communications software

March 31, 1982: IBM 3083 Processor Complex announced

IBM: FBI “Sting Operation” to convict Hitachi 

September 3, 1982: IBM 3084 Processor Complex announced

September 13, 1982: IBM dismissed three IBM PC key players 

IBM Projects Fort Knox and Olympiad started to develop a RISC minicomputer family and RISC workstation. 

Estridge buys red rosettes to honor his people

IBM PC volume plans: Estridge hit the 200,000 mark in a little more than a year and reached 1 million right on schedule.  

Compaq portable introduced at Fall Comdex 1982 - IBM faces strong competition

IBM buys a 12% share in Intel – December 1982.

January 3, 1983: TIME Magazine presents the PC as Machine of the Year

January 26, 1983: Lotus 1-2-3 became available – biggest boost for IBM PC

John F. Akers, Armonk, calling Dan Wilkie at 7h30 a.m.: 100 divided by 10: 9,999999999 …: PC service and support program implemented

Various IBM Announcements

March 1983: IBM PC/XT announced

May 16, 1983: IBM System /36 announced

August 1st, 1983: IBM Entry Systems Division captured 75% of the PC market – Estridge lost direct reporting line to the chairman

November 1st, 1983: IBM PC Jr. announced -  “Chicklet” keyboard – first shipped in late 1984 never well received

Employees under Estridge increased from 4000 to 10000

September 15, 1983: IBM 4361 and IBM 4381 Processor announced.

Late 1983: Gates showed “Windows” – Estridge showed “TopView”

IBM Rank and Market Share 1983 as seen by ComputerWorld

1984: Mark Dean IBM PC/AT designer – first African-American Fellow 1995

Level of indebtedness of US IT firms: IBM, DEC, HP etc.  little or no debt; under 30% debt: Burroughs, CDC etc.; over 30% AT&T, Xerox etc. 

By 1984 to all appearances IBM owned the PC market.

January 24, 1984: Steve Jobs demos first ever Apple Macintosch – Video “Find out why 1984 won’t be like 1984.”

February 16, 1984: IBM introduced a Portable PC - quietly faced out 16 months later.

Early 1984 John Akers, IBM President, appeared at Boca Raton: PC business integration – failures of the PC Jr. and Portable PC.

Compaq and Phoenix developed their own BIOS; the first Phoenix PC ROM BIOS was introduced in May, 1984

Rise of the Clones: IBM compatible PCs.

IBM introduces the 80286-based PC/AT on August 14, 1984. It turned out that the 80286 had been a poorly designed chip – “brain-damaged.”

September 26, 1984: IBM acquisition of ROLM Corporation, a telecommunications company.

President Reagan visits IBM Endicott

Estridge and Mike Armstrong decided end of 1984 a broader rewrite of DOS, a project later became known as OS/2. 

Estridge reported to Armstrong, who reported to a MC member, who reported to the IBM President, who reported to the chairman Opel.

Armstrong’s and Estridge’s superiors dropped the next-generation Intel 80386 based IBM PC plan.

Workstations versus Personal Computers – Ethernet, RISC and UNIX for scientific or engineering applications. 

DOS based PCs were late in getting networked

Opel worried about IBM’s leasing policy and the Japanese PCMs; he changed IBM’s pricing policy and encouraged customers to buy rather than lease.

Revenues soared: 29 B$ in 1981 to 46 B$ in 1984. Earnings doubled from 3.3 B$ to 6.6 B$ making IBM the most valuable company    

Opel invested as though he was guaranteed at least 15% growth a year – expenses increased 13% a year.   

Opel: “If I were to take IBM and divide it up into a lot of little companies and put them on the market and offer investors the opportunity, I could probably quadruple the market value of IBM”, he said in an interview, but quickly added “It’s just a thought I had.” (“Big Blues” by Paul Carroll published in 1993).

Fortune Magazine: nearly 6000 business executives rate the largest companies in the US on eight criteria. Year after year IBM came top.
Opel: “I think this is the finest industrial enterprise in the world.”

The 1982-1984 marked the peak of IBM’s perceived global power. (“Waves of Power” by David Moschella published in 1997).

The Computer Industry in 1980-1985: The Japanese computer industry had all but destroyed the U.S. memory chip business, shutting down the main facilities of Intel, Advanced Micro Devices, and National Semiconductor, the core enterprises of the Silicon Valley nexus.
However, the introduction of the microprocessor at the same historical moment swiftly recast the industry worldwide.
It permitted the U.S. industry to meet the Japanese challenge and to retain its position of global dominance. (“Inventing the Electronic Century” by Alfred D. Chandler published in 2001).

IBM’s after-tax profits in 1984, the year the PC hit full stride, were just short of 7B$ a stunning 15% of sales. No other company before or since has ever earned as much, and IBM’s rate of return was never so high again. The year 1984 was a turning point.

IBM 3rd in profitability after Shell and BP.

Maisonrouge: 1984: John Opel’s four objectives met. 

John Opel 1984 predicts IBM growth to 100 B$ in 1990 - 185-200 B$ Revenue in 10 years.

John Akers followed John Opel.

1984: Revenue: 45.94 B$. Net Earnings: 5.48 B$. Employees: 394.930.