IBM's Software Strategy Shift: From Free to Fee
This article recounts IBM's strategic shift from offering free software to charging for it in the early 1970s. Initially, to build utility value for its computers, IBM offered software for free, similar to today's bundled internet and phone packages. However, antitrust pressures and internal factors, such as executive bonuses versus future recurring revenue, led IBM to unbundle software and hardware pricing and start charging for system engineer services. This transition also resulted in adjustments to the training model for junior engineers. To support 7x24 online services, IBM developed techniques to optimize billing. Following the failure of the Future System project, IBM refocused on 370 hardware and software, ultimately deciding to charge for kernel software, marking a complete change in its software strategy.
Read more