It’s amazing to me to think that August 12 marks the 30th anniversary of the IBM Personal Computer. The announcement helped launch a phenomenon that changed the way we work, play and communicate. Little did we expect to create an industry that ultimately peaked at more than 300 million unit sales per year. I’m proud that I was one of a dozen IBM engineers who designed the first machine and was fortunate to have lead subsequent IBM PC designs through the 1980s. It may be odd for me to say this, but I’m also proud IBM decided to leave the personal computer business in 2005, selling our PC division to Lenovo. While many in the tech industry questioned IBM’s decision to exit the business at the time, it’s now clear that our company was in the vanguard of the post-PC era.
I, personally, have moved beyond the PC as well. My primary computer now is a tablet. When I helped design the PC, I didn’t think I’d live long enough to witness its decline. But, while PCs will continue to be much-used devices, they’re no longer at the leading edge of computing. They’re going the way of the vacuum tube, typewriter, vinyl records, CRT and incandescent light bulbs.
PCs are being replaced at the center of computing not by another type of device—though there’s plenty of excitement about smart phones and tablets—but by new ideas about the role that computing can play in progress. These days, it’s becoming clear that innovation flourishes best not on devices but in the social spaces between them, where people and ideas meet and interact. It is there that computing can have the most powerful impact on economy, society and people’s lives.
The story of IBM’s involvement in the PC market and foray into the post-PC era illustrates one of the core traits of our company: we’re always on the lookout for the next big thing. We anticipate changes and try to get out ahead of them—rather than waiting and reacting defensively. IBM has been on a path of constant transformation ever since we launched our turnaround in the mid-1990s. It’s one of the reasons the company is performing at its all-time peak level in our centennial year.
Today, IBM brings value to customers and society through an integrated family of businesses and technologies. We conduct fundamental scientific research, design some of the world’s most advanced chips and computers, provide software that companies and governments run on, and offer business consulting, IT services and solutions that enable our clients to transform themselves continuously, just like we do. Our Smarter Planet agenda, launched three years ago, elevated our game. We now see our mission as helping to solve the world’s most complex problems—making the world work better.
An essential part of our continuous transformation is a strategy of leaving commodity businesses and expanding in higher-value markets. Over the past 10 years, in addition to leaving the PC business, we also exited disk drives and printers. We invest heavily in R&D, about a $6 billion per year–producing major breakthroughs such as the question-and-answer technology in the Watson computer, which in February defeated former champions on the game show Jeopardy! At the same time, we’re building up our service and software capabilities through acquisitions, especially in analytics. Since 2001, IBM bought more than 127 companies for a combined total of $33 billion.
In addition, the company is transforming itself into a globally integrated enterprise, which has improved productivity and is driving our expansion in the world’s fastest growing markets.
This on-going transformation has had a profoundly positive effect on the company’s performance. IBM’s pre-tax income margin was 11.1% in 2004, the last full year in which we owned the PC business, and rose to 18.9% last year. Debunking conventional wisdom, IBM’s growth market businesses produce profit margins that are equal to or better than those in mature markets.
Just as I recently traded in my PC for a tablet computer, I have also changed my role at IBM. After more than a decade in IBM Research, I am now the chief technology officer for IBM Middle East and Africa, based in Dubai. I’m focused, in particular, on bringing new IBM technology solutions to bear in Africa and helping to develop the continent’s IT skills and computer science workforce. While the PC revolution has had a tremendous impact on the world, I believe that the work that IBM and others are doing in Africa could have an even bigger impact over the long haul.
These days, many of the people of Africa are empowered by a sense of hope. Thanks to improvements in the national economies and a flood of investment, more than one billion people have a chance for a better life, and corporations like IBM can help them achieve their dreams. I feel lucky that I got a chance to play a role in the PC revolution. I’m doubly lucky that I have a second shot at changing the world—by helping Africa fulfill its potential and helping Africans to gain the opportunities they deserve. That’s what progress is all about.