Direct Answer
IBM was founded as the Computing-Tabulating-Recording Company (CTR) on June 16, 1911, in Endicott, New York, through the merger of three companies. Thomas J. Watson Sr. joined as General Manager in 1914 and renamed the company International Business Machines Corporation on February 14, 1924. Under Thomas Watson Jr., IBM launched the System/360 mainframe in 1964, the most important product in its history, and the IBM PC in 1981. Louis Gerstner's arrival as CEO in 1993 saved IBM from breakup by pivoting to services. The $34 billion acquisition of Red Hat in 2019, the largest in IBM history, transformed IBM into a hybrid cloud and AI platform company.
Origins
IBM traces its origins to the Computing-Tabulating-Recording Company (CTR), incorporated on June 16, 1911, in Endicott, New York. CTR was formed through the consolidation of three companies: the Tabulating Machine Company, the International Time Recording Company, and the Computing Scale Company. The Tabulating Machine Company, founded by Herman Hollerith, had developed the punch card tabulating system used in the 1890 U.S. Census. Thomas J. Watson Sr. joined CTR as General Manager in 1914 and transformed it from a loose industrial holding into a focused business-machine enterprise. On February 14, 1924, Watson renamed the company International Business Machines Corporation, reflecting the company's ambition and international reach.
Key milestones
| Date | Event |
|---|---|
| June 16, 1911 | Computing-Tabulating-Recording Company (CTR) formed in Endicott, New York, through merger of the Tabulating Machine Company, International Time Recording Company, and Computing Scale Company |
| 1914 | Thomas J. Watson Sr. joins CTR as General Manager |
| February 14, 1924 | CTR renamed International Business Machines Corporation (IBM) |
| 1928 | IBM introduces the 80-column punch card format, which becomes an industry standard for decades |
| 1935 | IBM wins Social Security Administration contract, one of the earliest large-scale data processing engagements |
| 1943 | Thomas Watson Jr. joins IBM |
| 1952 | Thomas Watson Jr. becomes President of IBM, beginning the transition into electronic computing |
| 1953 | IBM 701 introduced as IBM's first commercial scientific computer |
| 1956 | IBM 305 RAMAC introduced as the world's first computer with a moving-head hard disk drive (5 MB capacity) |
| 1956 | Thomas Watson Sr. dies; Thomas Watson Jr. becomes CEO |
| April 7, 1964 | IBM System/360 mainframe announced: a compatible family of computers spanning a wide performance range; approximately $5 billion development investment; the most important product launch in IBM history |
| 1969 | IBM unbundles software from hardware, establishing software as a separately priced product and helping create the commercial software industry |
| 1971 | Thomas Watson Jr. retires |
| August 12, 1981 | IBM Personal Computer announced using the Intel 8088 processor and Microsoft DOS, establishing the PC hardware standard |
| 1985 | John Akers becomes CEO |
| 1990 | IBM revenues approach $69 billion; PC commoditization begins to erode profitability |
| 1992 | IBM posts approximately $5 billion loss, one of the largest in U.S. corporate history at the time |
| 1993 | Louis V. Gerstner Jr. becomes CEO, the first outsider to lead IBM; rejects calls to break up the company and pivots to integrated services |
| 2002 | IBM acquires PricewaterhouseCoopers Consulting for $3.5 billion, expanding IBM Global Services |
| 2004 | IBM announces sale of ThinkPad laptop business to Lenovo for $1.75 billion |
| 2005 | IBM completes sale of its PC division to Lenovo |
| 2012 | Virginia M. Rometty becomes CEO, the first woman to lead IBM |
| 2014 | IBM launches Watson as a commercial AI platform |
| 2015 | IBM sells x86 server business to Lenovo |
| July 2019 | IBM completes acquisition of Red Hat for approximately $34 billion, the largest acquisition in IBM history; establishes IBM's hybrid cloud strategy around Red Hat OpenShift |
| 2020 | Arvind Krishna becomes CEO; announces plan to spin off managed infrastructure services |
| November 2021 | IBM spins off Kyndryl as a separately traded public company covering managed infrastructure services |
| 2024 | IBM agrees to acquire HashiCorp for approximately $6.4 billion (transaction closed 2025), adding cloud infrastructure automation capabilities |
CEO timeline
| CEO | Tenure |
|---|---|
| Thomas J. Watson Sr. | 1914 to 1956 (joined as General Manager 1914; held varying titles; led company through its formative and mainframe years) |
| Thomas J. Watson Jr. | 1956 to 1971 |
| T. Vincent Learson | 1971 to 1973 |
| Frank T. Cary | 1973 to 1981 |
| John R. Opel | 1981 to 1985 |
| John F. Akers | 1985 to 1993 |
| Louis V. Gerstner Jr. | 1993 to 2002 |
| Samuel J. Palmisano | 2002 to 2012 |
| Virginia M. Rometty | 2012 to 2020 |
| Arvind Krishna | 2020 to present |
Four eras of IBM history
Tabulating and business machines era (1911 to 1952)
CTR's core business when Watson Sr. joined in 1914 was punched-card tabulating equipment: machines that sorted, counted, and tabulated data encoded on paper cards. Watson focused the company on this business, pushing out of unrelated product lines, and built an aggressive sales culture that became IBM's defining organizational trait. The 1924 renaming to International Business Machines signaled Watson's intent to build a global enterprise rather than a domestic industrial supplier. IBM's 80-column punch card format, introduced in 1928, became the standard storage medium for business data for decades. The 1935 Social Security Administration contract illustrated IBM's capacity for large institutional accounts. By the end of World War II, IBM had served as a supplier of tabulating equipment to the U.S. government and military, and Watson Jr. returned from the war with the conviction that electronic computing would replace electromechanical tabulators.
Computing era (1952 to 1981)
Thomas Watson Jr. became President in 1952 and led IBM's transition from punched-card tabulators to electronic computers. The IBM 701 in 1953 was IBM's first commercial scientific computer. The IBM 305 RAMAC in 1956 introduced the first moving-head hard disk drive, with a 5 MB capacity, establishing the architecture that every subsequent hard drive would follow. The System/360, announced on April 7, 1964, was the pivotal achievement of the Watson Jr. era. Rather than selling separate, incompatible computer lines, IBM announced a family of compatible computers spanning a wide range of prices and performance levels, all running the same software. The development cost approximately $5 billion, the largest private R&D investment in history to that point. The System/360 defined the mainframe industry's software and hardware architecture for decades. In 1969, IBM unbundled its software from hardware, charging separately for software that had previously been included with hardware. This decision helped create the commercial software industry as an independent market, with consequences IBM could not fully anticipate. Watson Jr. retired in 1971 following a heart attack, ending the Watson family's operational control of the company they had built.
PC era and services pivot (1981 to 2012)
IBM announced the IBM Personal Computer on August 12, 1981, using the Intel 8088 processor and Microsoft's DOS operating system. IBM chose to build the PC from off-the-shelf components and to license the operating system rather than developing a proprietary platform, a decision that allowed the PC to spread rapidly but that IBM could not control. Clone manufacturers adopted the same architecture, and IBM found itself competing in a market it had created but did not own. By 1990, IBM's revenues approached $69 billion, but the commoditization of PC hardware was compressing margins across the business. IBM posted approximately $5 billion in losses in 1992, one of the largest annual losses in U.S. corporate history at the time. The IBM board hired Louis V. Gerstner Jr. in 1993, the first outside CEO in the company's history. Gerstner rejected proposals to break IBM into separate companies and instead invested in IBM Global Services, which grew into IBM's largest revenue segment. The 2002 acquisition of PricewaterhouseCoopers Consulting for $3.5 billion accelerated the services pivot. IBM sold its PC division to Lenovo in 2005 and its x86 server business to Lenovo in 2015, divesting the commodity hardware businesses that had put pressure on margins during the 1990s. Virginia M. Rometty became CEO in 2012, the first woman to lead IBM, and continued the services and software strategy while investing early in Watson AI capabilities and cloud computing.
Hybrid cloud and AI era (2012 to present)
IBM launched Watson as a commercial AI platform in 2014, building on the system's 2011 Jeopardy victory as a demonstration of natural language processing capabilities. Under Arvind Krishna, who had led IBM's cloud and cognitive software division, IBM completed the acquisition of Red Hat in July 2019 for approximately $34 billion, the largest acquisition in the company's history. Red Hat is the leading provider of enterprise open-source software, including Red Hat Enterprise Linux and OpenShift, which became IBM's primary hybrid cloud platform. In November 2021, IBM spun off its managed infrastructure services business as Kyndryl, a separately traded public company, refocusing IBM on higher-margin software and consulting. IBM's current strategy centers on hybrid cloud computing using Red Hat OpenShift, the watsonx AI platform for enterprise AI applications, and IT consulting delivered through IBM Consulting. The 2024 agreement to acquire HashiCorp for approximately $6.4 billion, which closed in 2025, added cloud infrastructure automation to the platform.
Frequently Asked Questions
When was IBM founded?
IBM traces its origins to the Computing-Tabulating-Recording Company (CTR), formed on June 16, 1911, in Endicott, New York, through a merger of the Tabulating Machine Company, the International Time Recording Company, and the Computing Scale Company. Thomas J. Watson Sr. joined as General Manager in 1914. On February 14, 1924, the company was renamed International Business Machines Corporation (IBM).
What was the IBM System/360 and why was it significant?
The IBM System/360 was a family of compatible mainframe computers announced on April 7, 1964. It was significant because it introduced the concept of a compatible family of computers spanning a wide range of performance levels, allowing customers to upgrade from one model to another without rewriting software. IBM invested approximately $5 billion in its development, one of the largest commercial R&D investments to that point. The System/360 defined the mainframe industry's architecture for decades and is widely regarded as the most important product launch in IBM's history.
How did IBM avoid bankruptcy in the 1990s?
IBM posted a $5 billion loss in 1992, one of the largest in U.S. corporate history at the time, as the PC market commoditized and IBM's hardware margins collapsed. In 1993, the board hired Louis V. Gerstner Jr. as CEO, the first outsider to lead IBM. Gerstner rejected calls to break IBM apart and instead shifted the company's focus toward services and software, building IBM Global Services into the company's largest revenue segment. He stabilized IBM's finances, restored profitability, and repositioned IBM from a hardware vendor into an integrated technology services company.
What was the significance of IBM's acquisition of Red Hat?
IBM acquired Red Hat in July 2019 for approximately $34 billion, the largest acquisition in IBM's history. Red Hat is the leading provider of enterprise open-source software, including Red Hat Enterprise Linux and OpenShift, which became IBM's primary hybrid cloud platform. Under CEO Arvind Krishna, who led the Red Hat deal as head of IBM's cloud business, the acquisition repositioned IBM as a hybrid cloud company, enabling enterprise customers to run workloads across private data centers and public clouds using Red Hat's open-source platform.