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What is IBM?

IBM stands for International Business Machines, or I’ve Been Moved among relocated employees. It is a multinational corporation based in Armonk, New York, USA, that sells mainframe computers and enterprise software, alongside cloud and consulting services. It used to sell typewriters, calculators, and personal computers. Now, not so much.

Founded in 1911, IBM once ruled the technology industry. In the 1960s and 1970s, it came to dominate the mainframe business, and despite questionable business dealings with the Nazis in the early 20th Century, still to this day dominates that technology segment, with a market share said to be around 90 percent.

At the start of the 1980s, a few years before the corporation's 1985 peak market cap – when it accounted for 6.4 percent of value of the S&P 500 – IBM came to be known as Big Blue.

Coincidentally, it was in 1981 that IBM signed a contract to Microsoft to make the operating system for its personal computer. The contract was non-exclusive, which allowed Microsoft to sell DOS to other companies and to become the major player in the PC industry. IBM missed that opportunity.

IBM has slimmed down since its glory days. With a market cap of about $113 billion in 2023, IBM accounts for about 0.35 percent of the S&P 500, which amounts to about $32.238 trillion. The storied firm’s fitness regime also involves parting itself out: It sold its Watson Health business in 2022 and spun off its infrastructure services business to Kyndryl at the end of 2021.

In addition to getting rid of business units, IBM has spent much of the past decade getting rid of employees. Its headcount in 2023, about 260,000, is down from about 430,000 at the end of 2013. And a disproportionate number of those laid off during the 2013-2018 period were older workers, according to a US Equal Employment Opportunity Commission finding in 2020.

IBM files a lot of patents. In 2022, the IT giant announced it received more patents than any other US company each year for the past 29 years. Many of these have been associated with significant inventions like the rewritable optical disk, the RISC instruction set, the floppy disk, and the UPC barcode system, to name a few.

The company’s financial performance over the past decade, however, suggests the biz hasn’t managed to profit from recent innovation. It did however start selling the first commercial quantum computer in January 2019. So there’s that.