The Real IBM

I’m sorry to say that Tyler Cowen lost me in the first paragraph of his post at Globe and Mail in defense of large tech companies:

It may seem odd, but it’s not unreasonable to say that the U.S. economy in the 1960s belonged to a company that, when it was amalgamated in 1911, was best known for its meat slicers, coffee grinders and systems to track employee punch cards.

The problem is that it tells a story that is either false or at best incomplete. All of the major typewriter manufacturing companies with the exception of IBM turned their manufacturing facilities to the production of machine guns and other military equipment during World War II. When WWII broke out Royal dominated the market. Upstart IBM used the war to develop the Selectric and when the war ended and Royal, Remington, and others returned to typewriters they had to play catch-up. They never really recovered.

The real story of IBM is that the company cleverly exploited the patent system to corral another development of the war—the digital electronic programmable computer by controlling the inputs (cards, electric keyboards) and outputs (cards, line printers). They never produced the best computers but they did enforce their patents ruthlessly and used them to dominate other markets, a clear misuse of monopoly power.