Reasonably Priced Business Computer (IBM/360)

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.

Time-Sharing/Multitasking Computer

Early Computers

Early computers stored programs and data on punch cards. Most cards contained 80-characters, which is why early terminal programs were typically 80-characters per line. Punch cards are exactly what they sound like, physical cards. Each card is one line of a computer program or one piece of data. As users typed, a machine punched a hole representing a letter or number. Programs were a literal pile of cards, with the data after the program.

Image result for 80 column punch card

For example, if a user wanted to compute the average, median, high, and low figures in a set of data they would write a program on a set of cards telling the computer to analyze the data. Next, they would add the data cards physically on top of the program. The whole stack was then put into a special card reader that read the cards, one after another, then the data. Finally, the computer performed calculations and printed results.

Besides being clunky and loud and wasting a massive number of paper cards this system wasted an enormous amount of expensive computing power. Computers, which cost millions of dollars in the 1960s, sat idly around slowly reading a program. In the meantime, they could not do anything else until the card reading process finished. This problem was especially pronounced in Universities because many students shared one computer. Therefore, students waited in line while, in the meantime, the expensive computer wasn’t doing anything. Students and the computer were both idle.


In response, companies and University’s built computers and operating systems that did more than one thing at a time. To get around the card reader issue, these new computers used terminals. While one person was typing a program, using little processing power, another could be running their program, which requires more computing power.

The computer could still only do one thing at a time. However, by switching back and forth between tasks, it appeared to do multiple things at once. Rather than the CPU sitting idle it was almost always humming away doing something, whether waiting for keystrokes, compiling a program, or running a piece of software.

IBM OS/360, Unix, VMS

This new type of operating system, that supported multiple people doing multiple things at once, is called a time-sharing system. IBM released the first modern time-sharing operating system, the IBM OS/360, in 1966. Engineer Fred Brooks was lead engineer and wrote a seminal project management book about building the operating system, The Mythical Man Month.

Other systems soon followed including, notably, Multics and its successor, Unix. Later, DEC’s VMS operating system was also especially good at multitasking. Unix eventually morphed into Linux, powering today’s internet, and BSD, which became the core of Mac OS. Eventually, Microsoft hired away many VMS engineers to create Windows NT.

An evolution of timesharing remains the reason that servers, personal computers, and even phones can do multiple things at once.