Thomas Watson and His Machine

Thomas J. Watson Sr. in mid-1920's

Watson was the son of Thomas and Jane Watson. They had four daughters and a son, Thomas. Thomas J. Watson was the youngest and was born on February 17, 1874 at Campbell, New York. His formal education consisted of only a course in the Elmira School of Commerce. He began his first career in 1892 at the age of 18 as a bookkeeper in Clarence Risley's Market in Painted Post, New York. A year later, Watson joined Willard Bronson’s hardware store where he sold sewing machines and musical instruments. To earn more money Watson moved to Buffalo, New York, trying to sell sewing machines for the manufacturer called Wheeler & Wilcox. He was fired by the company after he report that his horse and wagon and the sewing machine on it had been stolen. After that Watson tried selling shares in a building and loan company for a man named C.B. Barron. He quit that job after realizing that Barron was more of a huckster than a salesman. Then he opened a butcher shop in buffalo, which ran out of cash and Watson had to sell it.

Hammered by failure, his confidence tattered, Watson trudged to the local National Cash Register Company (NCR) office to transfer the installment payments to the butcher shop’s buyer. In NCR office he talked to John Range. He asked for the job and later he began working as a sales apprentice to Range. Range pushed Watson hard and taught him salesmanship. After working for nine months for NCR, he moved up to full sales agent in Buffalo in 1895. He eventually worked his way up to general sales manager. Watson found handful of lifelong friends inside NCR and among them was Charles Kettering, who later moved to General Motors and became one of the greatest product developers in American history. Kettering proved to be an important bridge for Watson, who showed him how invention could drive business and because of him, Watson learned how to work with engineers. As Watson’s job was a salesman, he often put him in contact with engineers who were developing new features or product. Bent on inspiring the dispirited NCR sales force, Watson introduced the motto, "THINK," which later became a widely known symbol of International Business Machine (IBM).

Watson was an excellent salesperson, and John H. Patterson founder of NCR, saw it. Therefore he and his second in command, Hugh Chalmers asked Watson to come see them in Dayton. The visit was to be kept very secret. Patterson told Watson about his plan to set up the NCR-subsidized used-cash register in which he had to have peoples selling deliberately faulty cash registers, either second-hand NCR or from competitors; soon after the second-hand NCR or competitors cash register failed, an NCR salesperson would arrive to sell them a brand new NCR cash register. He was granted a budget of $1 million for this project. In 1903, Watson disappeared from NCR records, not to reappear until 1907. He created Watson second-hand cash register, later named American second-hand cash register. It grew into a successful, profit generating company but profits were an unintended consequence. The real purpose was to destroy the competitors.

For nearly five years, the operation was extraordinary success. City after city used-cash register business was devastated. On February 22, 1912, the lead headline across the top of the Dayton Daily News read: “NCR men indicted by the Federal Grand Jury.”  If convicted he and thirty other officials and employees including Patterson, Chalmers and Range, could go to jail for three years. Two sides prepare their cases and on November 19, 1912 trial began in U.S. district court in Cincinnati. It lasted three months. On February 13, 1913, words sifted through the Sinton that the jury had reached a verdict. All of the defendants except Edgar Park, were found guilty. NCR attorney John Miller immediately asked for a motion for a new trial. The judge released the defendants on $5,000 bail, pending sentencing. At the sentencing, Hollister scolded the defendants and sentencing them to one year in jail pending appeal.  Weeks after the verdict, all convicted including Watson went back to their job.

On the morning of March 25, 1913, heavy spring rains were soaking Ohio. It was the beginning of worst flood in U.S. history and by afternoon of March 25, water covered most of the Dayton. NCR remained relatively dry because it was on high ground and was used as a shelter for nearly 1,000 homeless flood victims. On other hand, Watson send a train from New York, on which were food, tents, overcoats, blankets, medical supplies and one car full of bottled drinking water.  Both Patterson and Watson tried to grab media attention for their effort in saving people lives, which may save them from jail.

In the 1920, Watson and Jeannette oversaw a growing young family. Sitting, left to right: Jane, Jeanette, Helen, and Dick. Standing: Watson and Tom Watson Jr. (The maverick and his machine)

On April 17, 1913, Jeannette Kittredge, daughter of an Ohio industrialist, and Watson married in Kittredge townhouse. Thomas was the father of four: Thomas Jr., Jane, Helen and Arthur. Watson was fired from NCR in late November 1913, but remained director of NCR until February 10, 1914. Ed Deeds, who was the second president of NCR called Watson back in NCR but Patterson made his stay in NCR difficult. Therefore he voluntarily resigned from NCR. He then also left Dayton and headed to New York. In 1914, he joined CTR (Computing-Tabulating-Recording Co). Watson started making moves to organize and stabilize CTR and he became a general manager of CTR in 1914. After his antitrust charges clearance, the CTR board met and named Watson president on March 23, 1915. The economy soared, growing 6 percent one year, 13 percent the next, and showing no sign of slowing. In 1924, Watson renamed CTR to IBM (International Business Machine). He was transforming IBM into the world's most powerful technology company, and pioneered many of the industry's strategies, including the key positioning of patents, whose value he discerned while at NCR. Controlling the key patents on tabulating systems helped make life difficult for the competition because competitor would have to invent entirely new technology or license IBM’s patents, which IBM could refuse to do. Other strategy IBM used was to lock their customer in their technology. Because of this strategy, in 1927, the company made a $4 million profit on $14 million sales. In the fall of 1928, IBM made $5 million profit on $15 million sales. Watson became a millionaire, able to afford the big Short Hill house, the New Jersey farm, a chauffer, a caretaker, a cook, and few horses and ponies. The once-poor farm boy enjoyed the things money could buy. As Watson began to feel more powerful at work, he would come home and order Jeanette around, as if she were a secretary or middle manager. She would push back.

From behind the couple’s door, the children would hear angry voices arguing. Watson’s treatment with the boys was also horrifying. Fifteen years into their marriage, Jeanette told Watson that she wanted a divorce. Watson reacted with horror and devastation. He was so upset; Jeanette dropped the subject and never brought it up again.

To spread any news and product information, Watson started publishing two news papers. One of his main mouthpiece was “Business Machines”, a weekly broad-sheet newspaper that borrowed its look from the New York Times.  In 1935, Watson created a monthly magazine called “Think”, which also made IBM symbol. Around IBM, a rectangular sign simply saying, in all capital letters, THINK, could be found anywhere. The culture built discipline inside the IBM. In worst American history, Watson got rich. Watson pay was $365,358. Instantly, he was labeled as Thousand-dollar-a-day man. After having success, Watson stepped fully onto the global stage by taking on the presidency of an organization called the International Chamber of Commerce (ICC). During the World War II, Watson believed that he could use the ICC and IBM to avert the war. If someone had to sell peace to Hitler, Watson figured he was more qualified than anyone. On June 28, Watson and Hitler were joined by four other in a meeting. What was said during the meeting was not recorded. After the meeting, Watson appeared in front of reporters and told them that Hitler had given him his “personal promise” that “there will be no war. No country wants war, no country can afford it. Certainly, that is true of Germany”. After few days, Watson visits an opulent party. In that party, Schacht, minister of the national economy, began his speech, addressing the outgoing and incoming ICC presidents. “In your work for the International Chamber of Commerce, you have worked for Germany”. Schacht slipped the ribbon over Watson’s head and left arm, the medal of on the ribbon settled on Watson’s chest.

The famous "THINK" slogan that Thomas J. Watson, Sr. made famous

However, as the world learned more about Hitler’s barbarism, Watson began to refill his drain bottle of courage. On June 6, 1940, Watson packed his medal with a letter and sent it back to Hitler. A five sentence letter ended: “In view of the present policies of your Government, which are contrary to the cause for which I have been working and for which I received the decoration, I am returning it”. In response, Hitler declared that Watson would never again set his foot on Germany controlled soil. The Nazi leadership renounced IBM, and German official exploded in anger at Watson.

When World War II ended in ended in 1945, Watson was 71 years old. IBM workers, salesman, and managers referred to him as “the old man” when talking about him. When Watson looked in the mirror, he could see an aged man of flattering health carrying an overwhelming workload. But IBM was still leading. Watson achieved his main objective with the success of his IBM 603 and IBM 604 electronic machines to build the world’s most powerful super calculator. IBM spent $950,000 to develop the machine named Selective Sequence Electronic Calculator (SSEC). It was 250 times faster than Aiken’s Mark I. The engineers finished testing the SSEC in late 1947. By 1949, IBM’s debt reached $85 million, the largest corporate debt in the United States. In 1951, the top level of IBM looked like:

Watson Sr. – Chairman and Chief executive

George Phillips – President

Tom Watson Jr. – executive vice president

Al Williams – Vice President and treasurer

In 1953, IBM 701 was made, which would go head-to-head against the UNIVAC, and in the same year, IBM brought in $497 million in revenue. Fred Nichol, Watson closest companion, died on October 1955. Watson was also looking like he’ll join his friend in the hereafter. On his face, discolored patches splotched the skin, and his cheeks caved in because of his weight loss. Watson hired a film crew to come to his house in early 1956, and shoot footage for an end-of-year message to shown to all IBM employees.

A month before his death, Watson handed over the reins of the company to his older son, Thomas J. Watson, Jr. His other son, Arthur K. Watson, served as president of IBM World Trade Corp. On Sunday June 17, Watson’s heart began failing. The family members told Watson about the “get well” telegram they were receiving from around the world. Watson seemed to hear, but he couldn’t respond. The following day, Tuesday, June 19, 1956, Watson’s breathing grew labored. As the family watched, his heart stopped, his lungs settled one last time, and he gently died. After his death George Phillips stayed on as IBM’s vice chairman until end of 1956, and then retired and died in 1964. Al Williams retied at age of 55, in 1966 and died on December 30, 1982. Jeannette Watson died on February 10, 1966, at 82 years old. Jeanette lives on as a mythical first lady of IBM.

Months before his death, he is surrounded by all 15 grandchildren, his wife, and his four children and their spouse. (The maverick and his machine)

Famous misquote:

Watson is well known for his alleged 1943 statement: "I think there is a world market for maybe five computers”.

References:

• Maney, Kevin (2003). The Maverick and His Machine: Thomas Watson, Sr. and the Making of IBM.

• http://www.watson.ibm.com/t_j_watson_history.html

• http://en.wikipedia.org/wiki/Thomas_J._Watson

IBM Song Book:

For further information, please visit: http://www-03.ibm.com/ibm/history/documents/pdf/faq.pdf

Muhammad Sajjad Aman

Stony Brook University

CSE 301 - History of Computing

Spring 2006