Few products in American history have had the massive impact of the IBM ® System/360—on technology, on the way the world works or on the organization that created them. Jim Collins, author of Good to Great, ranks the S/360 as one of the all-time top three business accomplishments, along with Ford’s Model T and Boeing’s first jetliner, the 707. It set IBM on a path to dominate the computer industry for the following 20 years.
Most significantly, the S/360 ushered in an era of computer compatibility—for the first time, allowing machines across a product line to work with each other. In fact, it marked a turning point in the emerging field of information science and the understanding of complex systems. After the S/360, we no longer talked about automating particular tasks with “computers.” Now, we talked about managing complex processes through “computer systems.”
At the time, however, success was far from clear. Thomas Watson Jr.’s decision to pursue this vast, US$5 billion investment in something that would cannibalize the company’s existing product lines was an epic “bet the business” move—one that emerged as much from Watson’s determination to prove he could live up to the legacy of his father, IBM’s legendary founder Thomas Watson Sr., as from changes in technology. Within IBM, the S/360 project sparked an extraordinary period of technological and business creativity, internal conflict and self-reflection for thousands of IBMers. When the S/360 was announced on April 7, 1964, it not only changed computing forever, but also IBM. The company learned, in Watson Jr.’s words, that “there was nothing IBM couldn’t do.”
The S/360 replaced all five of IBM’s computer product lines with one strictly compatible family, using a new architecture that pioneered the eight-bit byte still in use on every computer today. The announcement was revolutionary in concept and unprecedented in scope. Six processor models were announced, covering a fifty-fold range in performance, as well as 54 different peripheral devices. These included several types of magnetic storage devices, visual display units, communication equipment, card readers and punches, printers and an optical character reader.
Orders rapidly exceeded forecasts. More than one thousand orders were received during the first four weeks after the announcement. Another one thousand orders were received during the next four months.
The System/360 announcement changed the way customers thought about computer hardware. Companies for the first time could buy a small system and add to it as they grew. Companies other than IBM found they could make peripheral equipment that worked with the S/360. An entire industry was soon created, consisting of companies making and supplying plug-compatible peripheral products (a phenomenon that would be echoed 20 years later, when IBM’s decision to allow clones of its PC spawned the personal computer industry). Led by Telex with tape drives in 1967, and Memorex with disk storage units in 1968, this industry enjoyed dramatic growth. In 1972, the Soviet Union and its Eastern European allies announced production had begun on their System/360-compatible Ryad computers.
In 1989, a quarter of a century after IBM System/360 debuted, products based on S/360 architecture and its extensions accounted for more than half of IBM’s total revenues. They also accounted for more than 50 percent of the US$260 billion worldwide inventory of all computers made by all companies and priced over US$100,000 each.