For years, IBM got no respect from the younger firms sprouting up in the productive corridor between San Francisco Bay and the Santa Cruz Mountains. Bill Gates famously spoke of “riding the bear,” referring to Microsoft’s rise to power on the back of its relationship with IBM, which belatedly got into the PC business after Cupertino’s Apple showed that selling small computers to people was big business.
Aside from Microsoft, IBM helped launch Intel into a position of sustained leadership in Santa Clara. IBM made Intel’s processor architecture the standard for the PC industry. But IBM, which celebrated its 100th anniversary in 2011, was much less nimble than more youthful competitors like Compaq and Dell. Eventually, IBM dropped Intel altogether, selling that business in two big slices to Lenovo, the PC clients in 2005 and the PC servers 2014.
Thus, the story of IBM since the turn of the millennium has been one of declining revenues, as it stepped away from businesses in which it could no longer compete. In addition to dropping PCs, the company sold its hard drive business to Hitachi, its printer organization to Ricoh, and its chip factories to GlobalFoundries (if you can call that last one “selling” when IBM had to wrap $2 billion around the deal to get GlobalFoundries to take the loss-making fabs away).
