Obituary: John Akers, the IBM CEO who lost the PC market

Obituary: John Akers, the IBM CEO who lost the PC market

Summary: John Akers, who had died aged 79, was CEO and president of IBM when the company lost control of the PC business, and made the biggest annual loss in its history.

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TOPICS: IBM, Tech Industry
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John Fellows Akers, who joined IBM in 1960 after serving in the US Navy as a jet pilot and rose to CEO and president, died on August 22 in Boston aged 79. He received 16 promotions in 23 years, becoming president in 1982 and chief executive in 1985, before retiring in 1993.

John Akers
John Akers Photo: IBM

Akers was very successful during the mainframe era, when IBM became the world's most powerful corporation following the launch of the S/360 range of mainframes in 1964. In some years, IBM made around 70 percent of the IT industry's turnover, and more than 100 percent of its profits.

However, under Akers, IBM lost the PC market. IBM's pragmatic use of Intel and Microsoft products in the IBM PC, launched in 1981, enabled these upstarts to dominate the first decades of the PC business. (Intel wasn't powerful at the time, and Microsoft was tiny, with around 40 staff.)

IBM tried to recover from what it saw as an error, and tried to throttle Microsoft, without success. Its efforts included the PS/2 range of PCs, which gave IBM control over the expansion bus, the OS/2 operating system, and SAA (Systems Application Architecture).

While OS/2 was initially co-developed with Microsoft, the success of Windows 3 created problems. In the early 1990s, the companies went through a highly publicised divorce over its future.

IBM was still an enormous, paternalistic company with a lifetime employment policy, but Akers tried to slim it down. IBM introduced a Career Transition Program (CTP), known internally as "Cash to Piss off".

Akers was pressured to step down after IBM reported the biggest annual loss in its history, and its share price collapsed. At the time, he was planning to split up the company — known as Big Blue — into a collection of Baby Blues that would be able to move quicker. However, Akers' replacement, Lou Gerstner, dropped that plan, dumped OS/2, shed more than 100,000 employees, and transformed the company.

Gerstner was the first outsider to run IBM. He had been a large IBM customer at RJR Nabisco and American Express, and he started by having a Year of the Customer at IBM. However, IBM management reverted to type after Gerstner retired.

In the feudal IBM management system, progress and senior promotions depended to a large extent on which high-flying exec's coattails you became attached to, or managed to grab hold of. Akers had been Frank Cary's executive assistant when he was a senior vice president, and benefited when Cary became CEO. (Cary had been former-CEO Vin Learson's man, and Learson had been Tom Watson Jr's man. Tom was the son of IBM's founder.) The last but one CEO, Samuel J. Palmisano, had been one of Akers’ executive assistants, before passing the baton to Virginia Rometty, the current CEO.

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Akers was born in Boston on December 28, 1934, and earned a business degree from Yale in 1956. At Yale, he'd been an all-Ivy League hockey player, and after graduating, he joined the US Navy and became a carrier pilot. On leaving the navy, he joined IBM as a salesman, so all his experience was in very large, bureaucratic organizations. It probably wasn't the best background for coping with the PC world from 1981-93, when microcomputers were starting to disrupt the minicomputer and mainframe industries.

Akers remained a smartly-dressed, rock-jawed and somewhat imposing figure, though he reminded at least one outsider (me) of a tailor's dummy. In those days, IBM presidents and CEOs fraternised with US presidents and other heads of state, to which they had similar economic power. To the rest of us, they seemed remote and unapproachable figures.

IBM's obituary quotes a 2010 interview where he said: "We were very square. We wore the blue suits, white shirts with button-down collars, striped ties, fedoras and wingtip shoes." As IBM notes, "That image came to stand for something: 'The customers felt they could count on us.'"

It's an age that hasn't quite gone. IBM currently makes $100bn a year — it's still much larger than Intel or Microsoft — and it still dominates data processing in Fortune 500 companies. That's a legacy from the Watsons, Learson, Cary, Akers and many others. But they still lost the PC business.

The computer world might be a different place if IBM had dominated microcomputing the way it dominated the mini and mainframe markets. It would probably be much worse. Akers is worth cherishing not for his successes at IBM, but for his most notable failure.

Topics: IBM, Tech Industry

Jack Schofield

About Jack Schofield

Jack Schofield spent the 1970s editing photography magazines before becoming editor of an early UK computer magazine, Practical Computing. In 1983, he started writing a weekly computer column for the Guardian, and joined the staff to launch the newspaper's weekly computer supplement in 1985. This section launched the Guardian’s first website and, in 2001, its first real blog. When the printed section was dropped after 25 years and a couple of reincarnations, he felt it was a time for a change....

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21 comments
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  • Steve Ballmer .....

    the MS CEO who lost the PC market. Fair comparison or not? History will decide.
    Economister
    • You're still not

      You're still not clinging to that Post-PC era nonsense are you?
      Buster Friendly
    • However...

      If IBM's CEOs had done as well as Ballmer while he was CEO, IBM's turnover would now be over $200 billion instead of less than $100 billion.

      So Ballmer not only beat IBM, he did it with one hand tied behind his back (close supervision by the UDS DoJ), and against "free" competition from Linux , OO.o and other software. When Ballmer took over, after the collapse of the great Bubble, the Linux fanboys reckoned Microsoft would be dead in five years....
      Jack Schofield
      • Speak for yourself

        "When Ballmer took over, after the collapse of the great Bubble, the Linux fanboys reckoned Microsoft would be dead in five years...."

        I don't recall anyone saying any such thing. As I remember it, the consensus of the time among free software advocates and MS-critics was that the settlement was a slap on the wrist that wouldn't make much of a difference. I figured that MS' defeat of the breakup order was a Phyrric victory and I think time has vindicated that position; but it was definitely a minority view at the time.
        John L. Ries
        • Your problem...

          if you "don't recall anyone saying any such thing." I do. Otherwise, that's a trivial part of my fact-based reply about Ballmer's performance. Even if Linux fanboys didn't say stupid things, as you claim, the rest of it stands.
          Jack Schofield
  • What is bigger?

    IBM revenue $100B, EBITDA $24.28B
    MS revenue $77.8B, EBITDA $32.99B
    WMT revenue $476B, EBITDA $35.74B
    robradina@...
    • You could do it

      You could do it by employees which would make IBM much bigger but I have to agree financially it depends on how you look it. Market cap Microsoft is much larger although that's not a very useful number.
      Buster Friendly
    • The usual measure...

      is annual turnover. You're welcome to use other measures but I don't think any of them are better....
      Jack Schofield
  • He's why...

    ...the IBM-PC architecture became the dominant one. It's far bigger than it could possibly have been if IBM had not allowed cloning. Apple because a niche vendor precisely because it succeeded in doing what Akers failed to do.
    John L. Ries
    • His real failure...

      ...was that he allowed MS to dominate the architecture instead of insisting on a software market as competitive as the hardware market became.
      John L. Ries
      • That said...

        Mr. Akers is no longer in a position to argue with us. Likely, if he could, he would have discussed the choices facing him at the time and noted that it's a lot easier to judge decisions with 30 years of hindsight than on the basis of then-available data.
        John L. Ries
    • Newsflash

      IBM did not allow cloning. It was Compaq that successfully cloned the BIOS, which was the key to cloning - the rest was apparent to anyone with eyes.
      chrome_slinky@...
      • But...

        ...IBM-compatible machines were available almost from the beginning, largely because IBM agreed to allow MS to sell its DOS separately to both hardware manufacturers and directly to consumers.

        Without that, there would have been no clones.
        John L. Ries
        • And...

          ...the IBM architecture could not have become as dominant as it subsequently became (without some illegal help, anyway; which IBM wasn't going to give, as it had only recently emerged from antitrust court due to its mainframe marketing practices).
          John L. Ries
  • That would apply to a lot

    Losing the PC market could apply to a lot of companies. I personally used Tandy, Sun, Atari, Commodore, and TI in the 80s. There was also quite a variety of Unix workstations going against Sun but they all suffered from wanting to lock their software to their hardware. Apple still lives in the 80s on that aspect.
    Buster Friendly
    • True, but...

      IBM used its power to set the PC industry standard. The Tandy, Atari, Commodore, TI and many other designs did not set the PC industry standard.
      Jack Schofield
  • Cherry picked overview of press releases - No connection to reality.

    Ever hear of John Opel? Consent decree? Don Estridge? All had a considerably more to do with IBM's performance in the PC market than Akers.
    aleobul
    • What IBM could have done

      IBM was no longer in a position to use its old tricks to monopolize the PC market, but it could have used its money and legal muscle to prevent MS from doing so, and didn't. Because it failed to do that, it was severely hampered in its own efforts to promote OS/2.
      John L. Ries
    • What an amazingly clueless comment

      I bet you can't link to any of these press releases. I didn't use any, apart from the IBM announcement, and I don't believe they exist.

      Otherwise, I'm very well aware of Opel, Estridge and many others. However, this was an Akers obit, not a history of the PC business.
      Jack Schofield
  • beg to differ

    ="The computer world might be a different place if IBM had dominated microcomputing the way it dominated the mini and mainframe markets. It would probably be much worse. Akers is worth cherishing not for his successes at IBM, but for his most notable failure."

    I beg to differ: msft et.al. charged into the "pc" business with reckless abandon,-- creating the mess we have today which results from their implementations having a total lack of concern for security.

    mr gates wrote his famous memo on security in january of 2002; still hacking gets worse every year. fundamentally because the mentality in the pc area is that convienence and compatibility are trumps. mark my words mr. schofield this will prove the un-doing of msft
    Mike~Acker