6 Fascinating Things You Didn't Know About IBM

Many people are familiar with International Business Machines (NYSE: IBM) and its wide variety of mainframe computers, business servers and consulting services. Investors are probably also familiar with their latest incursions into data analysis, cloud computing, and cognitive computing solutions, represented by their Watson-based supercomputer AI.

There are, however, a series of innovations that forever changed the technological landscape and paved the way for the great societal and demographic changes that followed.

IBM has a long and fascinating history of innovation. Image Source: Getty Images.

1. An icon is born

IBM began its life in June of 1911, like CTR - The Computing-Tabulating-Recording Company. Charles Flint, a financier in New York, organized the merger of several companies that developed time clocks, calculation scales and tabulating machines. In 1914, Thomas Watson Sr. was brought in to lead the company, and the combined entity was renamed International Business Machines in 1924.

Arriving at IBM as part of the merger, the tabulation machine captured data on holes drilled in a 3 by 7 inch card, which revolutionized the data and tabulated the results of the 1890 Census. It was one of the first cases of processing data. This use of electromechanical counters continued to be widely used until the arrival of the first computers in the 1950s. Perforated cards continued to instruct computers until the early 1970s.

The tabulation machine revolutionized the capture of census data. Image Source: IBM.

2. The magnetic stripe

In the early 1970s, the imminent popularity of credit cards and air travel caused traffic jams at ticket counters and pay lines. At that time, the use of a credit card required several labor-intensive and time-intensive steps (by today's standards) that included making a phone call to authorize the transaction, placing the card on a metal tray and printing the numbers Card in a Carbon for the signature of the client. Both banks and airlines were looking for a way to speed up customer transactions.

An IBM team developed a machine-readable magnetic strip that is still used on most credit and debit cards today. It could store the necessary information that could be transmitted over telephone lines to a computer for approval. This led to the development of ATMs and self-service kiosks to dispense boarding passes.

3. The UPC Code

The first patent of the UPC code was published in the early fifties, but it was not until 20 years later, with the advent of lasers to read them, which found practical application. The grocery industry, looking for ways to speed up paylines and automate inventory, looked for solutions for computer companies. IBM applied the UPC, or bar code, to the problem, as well as developing the scanner to read it.

In June 1974, a packet of Wrigley Juicy Fruit chewing gum was the first item to be "swept" using the new system in Troy, Ohio. The process soon became the standard of the grocery industry, and the technology formed the basis for point-of-sale systems that are still in use today.

IBM's UPC code and scanners revolutionized the supermarket industry. Image Source: IBM.

4. The floppy disk

In 1967, an IBM team was working on a method to power instructions on their massive computers. To install updates or perform data entry, the legacy cards or magnetic tape transmitted the data. The team developed an inexpensive 8-inch Mylar disk that could be inserted into a slot in the computer, and a magnetic layer on the disk carried the instructions. The problems with the dust led to locking the discs in a durable envelope that wiped the disc as it turned.

This early innovation proved useful, if impractical, with the advent of personal computers in the early 1980s, which in turn led to the development of the 5 1/4 inch diskette drive and finally 3 1 /2 inches. This was indeed the birth of the software industry, because programs could be written, packaged and sold to users, who could install them on their own.

The diskette resulted in the birth of the software industry. Image Source: Getty Images.

5. LASIK Eye Surgery

Ocular laser surgery assisted by keratomileusis in situ, better known as LASIK, was developed as a result of a test on surplus Thanksgiving turkey. In the early 1980s, the excimer laser, which produced pulses of ultraviolet light, was commonly used to etch plastic. When tested on turkey, it broke the molecular bonds in a thin layer of meat surface without burning the surrounding tissue.

After years of research, and with the approval of the US Food and Drug Administration in 1995, LASIK has become the most popular form of vision correction surgery worldwide. Through the remodeling of the cornea, vision is improved, with the use of the laser that offers a combination of rapid healing and minimal pain.

6. The Deep Blue Chess Champion

In 1997, an IBM computer nicknamed Deep Blue was the first computer in history to defeat a world champion in a game of chess. In a six-game match, the supercomputer beat Garry Kasparov, the unbeaten Russian Grandmaster. Using a technique called brute force, the computer was able to evaluate 200 million chess positions per second to determine its next move. The process was largely mathematical and processing speed. Pieces were assigned point values, and Deep Blue was programmed with 100 years of games played by the great masters.

At a seminal moment in the party, Kasparov was enervated by a move he considered too sophisticated for a computer to do. Years later, one of the designers of Deep Blue revealed that the computer could not determine its next move, so the fundamental movement was one that chose at random.

Legacy continues

In a nod to long-term buy-and-hold investment, here is another thing about IBM that you probably did not know: an IBM stock in 1915, adjusted for all divisions and stock dividends, would equal 11,880 shares today.

IBM continues to be at the forefront of innovation, applying a combination of data analysis, cognitive computing, and cloud solutions to a variety of business applications. Since its 2011 victory at Jeopardy!, IBM's artificial intelligence supercomputer, Watson, has become the public face of the company's cognitive computing efforts and a key focus of the company's strategic growth initiatives. These have been applied to everything from medicine to cybersecurity.

IBM has reinvented itself many times over the last century, and while the market and even the famous investor Warren Buffett are beginning to doubt the company's ability to remake itself once again, I would not bet on Big Blue.

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