The IBM/360 is the first mass computer, designed as a general-purpose computer affordable for mid-sized businesses yet powerful enough for large enterprises.
In 1962, IBM’s revenue was $2.5 billion. CEO Thomas Watson Jr. believed in the vision of a general-purpose computer that supports timesharing, the ability of a computer to do multiple things at once. Thereafter, he invested a staggering $5 billion ($42.5 billion adjusted to 2019), double the company’s annual revenue, to develop the IBM/360. Indeed, more than 100,000 people scattered over 165 cities worked together to create the IBM/360.
One key feature of the IBM/360 was forward and backward compatibility, along with upgradability. Before the IBM/360, businesses purchased a computer and, when they outgrew it, purchased a new computer. In contrast, the IBM/360 enabled extra peripherals, increasing the capacity of the computer. Additionally, a significant amount of older IBM software ran on an emulator.
Prior to the IBM/360, computers were typically custom-tailored to the task at hand. Scientific computers were different than business computers. Additionally, a computer to run an accounting system was different than a computer to run inventory management. Much like Intel created a general-purpose microchip, IBM created a general-purpose overall computer.
The IBM/360 is one of the few computers that both sit in the Computer History Museum and is still in use, 55 years after its introduction. Even though the vast majority of smartphones contain more computing power and memory, the 360 oftentimes does one task, do it well, and have done it for decades. Businesses should move the tasks to newer computers but the 360 is so reliable that migration is oftentimes a low priority.
Third-Party Peripheral Market
Besides forward and backward combability with other computers, IBM allowed third-party companies to create certified peripherals for the 360. While this idea seems common now, it was a groundbreaking experiment when the 360 launched. “Half a million saved is half a million earned,” read third-party peripheral makers advertising low-cost high-quality add-on’s.
The IBM/360 was incredibly successful. IBM was unable to keep up with orders for years. Eventually, even the Soviet Union copied it and named their System/360 knockoff the “Ryad” computer. By 1989, the 360 and successor computers accounted for more than $130 billion in annual revenue.