In addition to mainframes and midrange computers, IBM was also a major contributor in software and services, though prior to 1970 most software and services were bundled into the price of hardware, and even after its 1969 unbundling announcement (for software and services), the implementation of separately pricing software and services from hardware in the 1970s was only partial. From shortly after IBM’s first digital computers, it produced software tools (such as compilers and programming languages), software products (including multiple important offerings in the database field), and services. Under the project leadership of John Backus, an IBM team in the late 1950s developed the highly influential scientific programming language Formula Translator, or FORTRAN. In terms of database and communications software products, IBM created Generalized Information System and the Customer Information System in the late 1960s – tools highly valuable to managing data and for transaction processing. In the services area (and fully bundled into the several mainframes and more than 1,500 modified IBM Selectric typewriters with CRT screen terminals it sold), IBM pioneered the first real-time, networked airline seat reservation system. Developed for American Airlines, SABRE was a $30 million project that began in the late 1950s and was fully operational by the middle 1960s. IBM also provided services for the government out of its Federal Systems Division, which included mission control IT infrastructure and support for NASA in Houston, and was critical to putting a man on the moon.
The SABRE project, as with many Federal Systems projects including work for NASA, took advantage of a new class of engineers that IBM launched in 1960s, Systems Engineers, who specialized in programming and integrating large-scale systems for advanced (often real-time, networked) applications. Systems Engineers, which included five levels and elevated the prestige of high-level work on-site for customers to correspond with internally focused IBM computer design engineers, was an IBM employment category that built on the legacy of the mid-1930s Systems Services Women’s Corp of college educated and advanced trained women employees providing advanced services to customers on applications, first in punched card tabulation, and by the mid-1950s (by then numbering more than 500 women) in programming and computing.
IBM’s executives, in making the unbundling decision at the end of the 1960s, were influenced by their anticipation of a Department of Justice antitrust lawsuit that was filed shortly after the announcement of unbundling by IBM in 1969. An IT services industry that had begun in the early to middle 1950s with computer consulting, and shortly thereafter programming services and outsourced data processing, and a software products industry that got going in the first half of the 1960s, arguably were greatly hindered by a dominant mainframe supplier giving away software and services. But even if IBM’s unbundling had been complete in the 1970s (which it was not), there were many other practices that might cause unfair advantages across business areas. As part of a Control Data Corporation 1967 lawsuit for anti-competitive practices, IBM settled in 1973 by selling (on very favorable terms) to Control Data IBM’s Service Bureau Corporation (its wholly owned subsidiary for outsourced data processing and computer time-sharing, a spinoff of Service Bureau Division that shifted to being computer based in the second half of the 1950s ). The DOJ lawsuit lasted a dozen years, and the DOJ presented a great amount of damaging evidence against, but ultimately the case was dismissed in 1981 in the face of the far less aggressive antitrust policy of newly elected President Ronald Reagan. Not only was the new administration less keen on prosecuting an legendary American computer company for antitrust violations, IBM did not have the real or perceived dominance in computing in 1981 that it did in the late 1960s. The growth of the minicomputer market and its leader, Digital Equipment Corporation, lent some balance to the field. And the advent of personal computers meant IBM likely would have a much smaller portion of computer market share in the 1980s and 1990s than in the 1960s and 1970s.