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Issue No.04 - October-December (2008 vol.30)
pp: 42-58
Corinna Schlombs , University of Pennsylvania
ABSTRACT
US computer manufacturers—including IBM and Remington Rand—expanded into Europe after World War II. The companies overcame resistances and adjusted to different market conditions; how they did this, and why IBM succeeded more than others, is examined here. This article argues that IBM adeptly managed—or engineered—relationships with foreign governments and stakeholders through a European-wide manufacturing system and European research laboratories.
INDEX TERMS
Computer industry, computing milieux, computes and society, IBM 650, IBM 1401, Univac, markets
CITATION
Corinna Schlombs, "Engineering International Expansion: IBM and Remington Rand in European Computer Markets", IEEE Annals of the History of Computing, vol.30, no. 4, pp. 42-58, October-December 2008, doi:10.1109/MAHC.2008.66
REFERENCES
1. "Council of Europe, Consultative Assembly, Committee on Science and Technology, Report on the Computer Industry in Europe: Hardware manufacturing, (Rapporteur: Mr. Lloyd) Doc. 2893," 1971, p. 9, 21, Market share value here is measured as either the value of yearly deliveries or as that of the stock of installations.
2. "IBM had 20.4 percent of total industry sales in 1947, 24 percent in 1949, and 23.7 percent in 1951; Remington Rand had 23 percent in 1947, 17.8 percent in 1949, and 20.2 percent in 1951. Among the other office machine companies, NCR followed with a sales share of just under 20 percent, Burroughs came in as a distant fourth with about 10 percent, and other competitors had about 5 percent or less. However, IBM was about twice as big in assets as Remington Rand, with $242 million versus $126 million, while Remington Rand had 50 percent more employees, with 29,182 versus about 20,000 employees. J.W. Cortada," Before the Computer: IBM, NCR, Burroughs, and Remington Rand and the Industry They Created, 1865–1956, Princeton Univ. Press, 1993, p. 225, 256, Although the companies had a similar share in office machine sales, Remington Rand commanded more diverse sources of revenue and IBM's focus on the rental market froze assets in rental equipment.
3. "These first two computers were an IBM 650 for the Allianz Insurance Co. in Munich, and a Univac computer for Remington Rand's European Computing Center in Frankfurt, Germany, respectively."
4. "C. Hammer, oral history interview by J.B. Ross, 15 Apr. 1983, OH 56, Charles Babbage Institute (CBI)," Univ. of Minnesota, p. 21.
5. A. Chandler, The Visible Hand: The Managerial Revolution in American Business, Harvard Univ. Press, 1977.
6. T.J. Misa and J. Schot, "Inventing Europe: Technology and the Hidden Integration of Europe," History and Technology, vol. 21, no. 1, 2005, p. 9, Eden Medina's article in this issue of the IEEE Annals of the History of Computing is an excellent example of how IBM managed the ramifications of political regime changes in a Latin American country.
7. M.J. Hogan, The Marshall Plan: America, Britain, and the Reconstruction of Western Europe, 1947–1952, Cambridge Univ. Press, 1987.
8. M.-L Djelic, Exporting the American Model: The Postwar Transformation of European Business, Oxford Univ. Press, 1998, pp. 4-7.
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11. "Michael Hogan and Geir Lunestad both argued that Marshall's primary objectives were economic recovery and European integration rather than defense against the Soviets. M.J. Hogan, The Marshall Plan, and G. Lunestad, Empire by Invitation? The United States and Western Europe, 1945–1952," J. Peace Research, vol. 23, no. 3, 1986, pp. 263-277.
12. "Office work also played a negligible role in the Productivity and Technical Assistance Program's educational program; for example, of the 400 industrial films initially considered for distribution in Europe through the program, only one focused on office work: J.W. Brown, List of Films Recommended for Use in Europe n.d., box 6, entry 1203, Mission to Germany, Audio-Visual Aids Section, Records Relating to the Film Program, 1950-56, RG 469, National Archives II. Similarly, of the European study groups brought to the US through the program, only a small number focused on issues such as accounting or office organization. Rationalisierungs-Kuratorium der Deutschen Wirtschaft, Studienreisen [Study Trips], 1 June 1953, box 7, entry 1203, RG 469, National Archives II."
13. M. Campbell-Kelly, ICL. A Business and Technical History, Clarendon Press, 1989, H. Petzold, Rechnende Maschinen: Eine Historische Untersuchung ihrer Herstellung und Anwendung vom Kaiserreich bis zur Bundesrepublik [Computing Machines: A Historical Analysis of their Production and Application from the German Empire to the Federal Republic of Germany], VDI Verlag, 1985; and E. Black, IBM and the Holocaust: The Strategic Alliance between Nazi Germany and America's Most Powerful Corporation, Crown Publishers, 2001.
14. K. Maney, The Maverick and His Machine: Thomas Watson, Sr. and the making of IBM, Wiley, 2003, and T.J. Watson Jr. and P. Petre, Father, Son &Co. My Life at IBM and Beyond, New York, 1990.
15. F.M. Fisher, J.W. McKie, and R.B. Mancke, IBM and the U.S. Data Processing Industry. An Economic History, Praeger, 1983, p. 15.
16. "Remington Rand, for example, sold 46 machines of its first computer model, the Univac I," Univac I—Deliveries and Scheduled Deliveries, folder 15, box 8, Sperry Rand Corporation; Engineering Research Associates Division, Hagley Museum and Library, Wilmington, Delaware.
17. E. Pugh, Building IBM: Shaping an Industry and Its Technology, MIT Press, 1995, p. 182, Fisher et al., IBM and the U.S. Data Processing Industry, p. 17.
18. G.H. Müller, "Produktion im Wandel [Manufacturing in Flux]," Datentechnik im Wandel. 75 Jahre IBM Deutschland: Wissenschaftliches Jubiläumssymposium, [Data Processing Technology in Flux: 75 Years IBM Germany; Scientific Anniversary Symposium], W.E. Proebster, ed., Springer, 1986, pp. 218-219.
19. G.H. Müller, "Produktion im Wandel," pp. 220-221.
20. "Similarly, the company soon no longer had to pay tariffs for trade between EFTA (European Free Trade Association) countries, the free trade zone founded in response to the Common Market. Member countries of EFTA were Britain, Sweden, Denmark, Norway, Austria, Switzerland, and Portugal. However, tariffs still applied to trade between the two trade zones."
21. "Remington Rand also prided itself for having the largest direct distributing organization in the world with more than 1,800 salesrooms. Remington Rand," Remington Rand Inc., 1927.
22. "In 1955, Remington Rand merged with Sperry Corporation, changing its name to Sperry Rand; for easier recognition, I will refer to the company as Remington Rand."
23. Univac I—Deliveries, Sperry Rand, Hagley
24. H. Lukoff, From Dits to Bits: A Personal History of the Electronic Computer, Robotics Press, 1979, p. 139.
25. "The idea of a computing center was nothing new at the time: Both Remington Rand and IBM already entertained service bureaus in the US, and IBM opened one in Europe that same year. Remington Rand's marketing strategy in Europe relied solely on the computing center; the company initially did not sell or lease its machines to European customers."
26. M.N. Rand, "Univac Europe—The Future in Remington Rand," Inauguration of the Remington Rand Computing Center Europe: Speeches, Frankfurt/Main, 1956, folder 40, box 14, C. Hammer Papers (CBI 3), CBI. In his address, Rand acknowledged the Cold War division of Europe—and reserved the services of the computing center for the western part only.
27. "Concluding words by C. Hammer in Remington Rand," Inauguration, C. Hammer Papers (CBI 3), CBI
28. "Address by M. Sanguineti in Remington Rand," Inauguration, C. Hammer Papers (CBI 3), CBI
29. "Grossrechenanlage Univac Europa [Large-scale Computer Installation Univac Europe]," Rationelle Büro, vol. 12, 1956, p. 597.
30. "Ein Jahr Rechenzentrum Univac Europa [One Year Computing Center Univac Europe]," Rationelle Büro, vol. 11, 1956, p. 476.
31. R.S. Tedlow, The Watson Dynasty: The Fiery Reign and Troubled Legacy of IBM's Founding Father and Son, Harper, 2003, pp. 173-174.
32. K.E. Ganzhorn, "IBM Boeblingen Laboratory: Product Development," IEEE Annals of the History of Computing, vol. 26, no. 3, 2004, p. 22.
33. "Aside from Council of Europe, Computer Industry in Europe, see J.J. Servan-Schreiber, Le Défi américain [The American Challenge]," Denoël, 1967, this book was also published in an English translation: J.J. Servan-Schreiber, The American Challenge, Atheneum, 1968. G. Stoltenberg, "Die amerikanische Herausforderung" [The American Challenge], in G. Stoltenberg, Hochschule Wissenschaft Politik [University, Science, Politics], Frankfurt am Main, 1968, pp. 150-156; and Organisation for Economic Co-Operation and Development. See also Gaps in Technology—Electronic Computers: Report Presented at the Third Ministerial Meeting of OECD Countries, March 1968, OECD, 1969.
34. "Council of Europe," Computer Industry in Europe, p. 20.
35. "Council of Europe," Computer Industry in Europe, p. 21.
36. "In the US, IBM developed its own version of welfare capitalism in the 1930s with above-average payment, benefit packages, and facilities such as well-lit and ventilated workplaces, subsidized meals, a free hospital, educational programs, and profit sharing. D.L. Stebenne, IBM's 'New Deal': Employment Policies of the International Business Machines Corporation, 1933–1956," The J. Historical Soc., vol. 5, no. 1,Winter, 2005, pp. 47-77.
37. "T.V. Learson to L.H. LaMotte, World Wide Accounting Machine memorandum, 23 Apr. 1956, folder 8, box 287, RG 3 Technology History Project References, IBM Corporate Archive. Market estimates suggested that in actual numbers, the size of the US market was five to six times that of the European market."
38. K.E. Ganzhorn, "The Buildup of the IBM Boeblingen Laboratory," IEEE Annals of the History of Computing, vol. 26, no. 3, 2004, pp. 9-11, K.E. Ganzhorn, The IBM Laboratories Boeblingen: Foundation and Build-Up; A Personal Review, Sindelfingen, 2000, p. 29; C.J. Bashe et al., IBM's Early Computers, MIT Press, 1986.
39. "B.C. Christensen to L.H. LaMotte, memorandum, WWAM Program 10 Oct. 1957, folder 9, box 287, RG 3, IBM Corporate Archive."
40. "T.V. Learson to L.H. LaMotte, memorandum, World Wide Accounting Machine 23 Apr. 1956, folder 8, box 287, RG 3, IBM Corporate Archive."
41. M. Campbell-Kelly and W. Aspray, Computer: A History of the Information Machine, Basic Books, 1996, pp. 131-135, P.E. Ceruzzi, A History of Modern Computing, MIT Press, 2000, pp. 75-77.
42. "The records of Remington Rand's Univac Division are available at the Hagley Museum in Delaware. They contain sales brochures, employee and customer magazines, and annual reports but lack the kind of managerial correspondence such as project reports and memos that would allow a similarly rich analysis of Remington Rand's activities as of IBM's."
43. "The Frankfurt Univac remained the only Univac ever to be shipped across the Atlantic; Remington Rand never sold another machine to a customer in Europe or elsewhere outside of the US."
44. "Technischer Überwachungsverein Frankfurt am Main e.V., Prüfungsbuch für den Druckbehälter Fabrik-Nr. 3847 [Bluebook for Pressure Tank Serial No. 3847], Schachtel 005, Remington Rand Firmenarchiv, Deutsches Museum, Munich."
45. "C. Hammer, OH 56," CBI, p. 34.
46. "First Large-Scale Computer Center to Open in Europe," Systems Magazine, Jan–Feb 1956, p. 9.
47. "Correspondence; for example, O. Bentson to C. Hammer, 16 Apr. 1957; C. Rolando to C. Hammer, 3 Apr. 1957, and D. Kaye to C. Hammer, 25 Mar. 1957, folder 36, box 14, Hammer Papers (CBI 3), CBI."
48. "C. Hammer, OH 56," CBI, p. 22, 33-34.
49. "General Douglas MacArthur's appointment as president of Remington Rand epitomizes the company's close military ties; although MacArthur served in the Pacific theatre during WWII, the prominent role of a high-ranking former military officer in the company may have caused resentment among Europeans."
50. "For example, The Hickok Electrical Instrument Company, Operating Instructions. Transconductance Tube Tester. Model 539B; Tektronix, Cathode-Ray Oscilloscopes. Auxiliary Instruments and Accessories; I-T-E Circuit Breaker Co., Low Voltage Switchgear Instructions. Overcurrent Trip Devices Type OD-1 and Type OD-2. IB-5413A Schachtel 005, Remington Rand Firmenarchiv, Deutsches Museum."
51. "Remington Rand, High Speed Printer Manual Schachtel 024, Remington Rand Firmenarchiv, Deutsches Museum."
52. "The technical drawings are now at the Deutsches Museum. Remington Rand Firmenarchiv, Deutsches Museum."
53. "Trauerfeier zur Auflösung des Univac-Rechenzentrums [Funeral Service for the Closing of the Univac Computing Center], folder 36, box 14, Carl Hammer Papers (CBI 3), CBI."
54. John Diebold Associates, Inc., A Study of the European Market for Computers;, Remington Rand, Diving of Sperry Rand Corporation, June 1960, p. 24, 38.
55. John Diebold, European Market, pp. 3-4.
56. John Diebold, European Market, p. 37.
57. M. Campbell-Kelly and W. Aspray, Computer, pp. 131-137, P.E. Ceruzzi, Modern Computing, pp. 67-78; S.W. Usselmann, "IBM and Its Imitators: Organizational Capabilities and the Emergence of the International Computer Industry," Business and Economic History, vol. 22, no. 2, 1993, pp. 1-35.
58. S.W. Usselmann, "IBM and its Imitators," pp. 1-35.
59. "With regard to high-speed printers, Remington Rand was a step ahead of IBM. Although historians of computing have hailed IBM for offering the first high-speed printer which printed 600 lines per minute, the IBM 1403, Remington Rand already developed a high-speed printer of the same speed, Univac's Uni-Printer, in 1953/4, that is five years earlier. Schachtel 006, Remington Rand Firmenarchiv, Deutsches Museum."
60. "The size of the two companies' customer base is difficult to assess, particularly in the European market. According to the European Council, IBM held some three-quarters of the world punch card equipment market before entering electronic computer markets. Council of Europe," Computer Industry in Europe, p. 15, However, this rather general statement is contradicted by financial statistics from the early 1950s; these figures render such an international market dominance by IBM unlikely. For example, IBM's British licensee, BTM, had £487,000 worth of tabulating machines on hire in 1945, while Remington Rand's British subsidiary, Powers, had a similar amount of annual factory output of £483,000 in 1945, and doubled its output to £1,142,000 in 1946. In 1950, BTM and Powers generated similar assets—£4,796,000 and £4,445,000 respectively—and Powers had significantly higher pre-tax profits with £701,000 over £464,000. M. Campbell-Kelly, ICL, p. 107, 127-8. Given these comparable amounts of machine stock and assets, it seems more likely that IBM and Remington Rand rather evenly divided markets between them at least in some European countries in the early postwar years.
61. A. Akera, "IBM's Early Adaptation to Cold War Markets: Cuthbert Hurd and His Applied Science Field Men," Business History Review, vol. 76, no. 4, 2002, pp. 767-804.
62. "Apart from benefiting from the creation of an early US market for electronic computers through public funding, IBM received large development contracts for the Defense Calculator/IBM 701 and SAGE, and Remington Rand similarly benefited from defense spending. According to the European Council, Sperry Rand received double that for IBM ($96 million) in defense spending between 1949 and 1959. Council of Europe," Computer Industry in Europe, p. 14, It is not clear, however, whether this information applied to Sperry Corporation and Remington Rand together, given the merger of the two companies in the middle of the period accounted for. However, rather than funding research that then led to commercial applications, defense contracts sometimes tied resources that could have otherwise been used for commercial developments, and in many cases military contracts benefited from techniques developed for commercial machines. S.W. Usselman, "Learning the Hard Way: IBM and the Sources of Innovation in Early Computing," pp. 317-363 in N.R. Lamoreaux and K.L. Sokoloff, eds., Financing Innovation in the United States, 1870 to the Present, MIT Press, 2007.
63. "After the 1955 merger, the company's product palette comprised four areas: instrumentation and controls often for military use such as guided and ballistic missiles, airplane control systems, and ship stabilizers; hydraulic machinery and electrical apparatus; farm equipment; and business machines."
64. A.L. Norberg, Computers and Commerce: A Study of Technology and Management at Eckert-Mauchly Computer Company, Engineering Research Associates, and Remington Rand, 1946–1957, MIT Press, 2005.
65. "The Marshall Plan had homogenizing effects in that it made some European economies more similar to the US; at the same time, it had heterogenizing effects because some economies resisted the American model, contributing to larger diversity between European economies. For example, while the German and French economies became more similar to the US, this was not the case in Italy. M.-L. Djelic," Exporting the American Model, pp. 4-7, More recently, McKenna has shown that US management consulting companies also played a role in the transformation of European firms. C. McKenna, The World's Newest Profession. Management Consulting in the Twentieth Century, Cambridge Univ. Press, 2006, pp. 165-167.
66. A.D. Chandler, Scale and Scope: The Dynamics of Industrial Capitalism, Harvard Univ. Press, 1990.
67. A.D. Chandler, Inventing the Electronic Century. The Epic Story of the Consumer Electronics and Computer Industries, Harvard Univ. Press, 2005, p. 87, For an overview on recent studies in international business see: G. Jones and T. Khanna, "Bringing History (back) into International Business," J. Int'l Studies, vol. 37, 2006, pp. 453-468.
68. Council of Europe, Computer Industry in Europe, p. 32.
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