Concept

IBM Future Systems project

Summary
The Future Systems project (FS) was a research and development project undertaken in IBM in the early 1970s, aiming to develop a revolutionary line of computer products, including new software models which would simplify software development by exploiting modern powerful hardware. Until the end of the 1960s, IBM had been making most of its profit on hardware, bundling support software and services along with its systems to make them more attractive. Only hardware carried a price tag, but those prices included an allocation for software and services. Other manufacturers had started to market compatible hardware, mainly peripherals such as tape and disk drives, at a price significantly lower than IBM, thus shrinking the possible base for recovering the cost of software and services. This changed more dramatically when Gene Amdahl left IBM and set up a company making System/370 compatible systems that were both faster and less expensive than IBM's offerings. In early 1971, an internal IBM task force, Project Counterpoint, concluded that the compatible mainframe business was indeed a viable business and that the basis for charging for software and services as part of the hardware price would quickly vanish. Another strategic issue was that the cost of computing was steadily going down while the costs of programming and operations, being made of personnel costs, were steadily going up. Therefore, the part of the customer's IT budget available for hardware vendors would be significantly reduced in the coming years, and with it the base for IBM revenue. It was imperative that IBM, by addressing the cost of application development and operations in its future products, would at the same time reduce the total cost of IT to the customers and capture a larger portion of that cost. At the same time, IBM was under legal attack for its dominant position and its policy of bundling software and services in the hardware price, so that any attempt at "re-bundling" part of its offerings had to be firmly justified on a purely technical basis, so as to withstand any legal challenge.
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