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10 Companies That Completely Reinvented Themselves

        Money | Business Profiles

10
IBM
A woman walks past the IBM logo at the 2011 CeBIT technology trade fair in Hanover, Germany. IBM's reinvention is often studied in business schools. Sean Gallup/Getty Images
A woman walks past the IBM logo at the 2011 CeBIT technology trade fair in Hanover, Germany. IBM's reinvention is often studied in business schools. Sean Gallup/Getty Images

In 1984, IBM was the undisputed king of the computing world, with its iconic PC. IBM was successful because it didn't try to do everything itself. Unlike Apple, which built every piece of hardware and wrote every line of software for its computers, IBM bought hardware components from smaller manufacturers and shipped its PCs preloaded with Microsoft Windows.

Ironically, the very strategy that made IBM the darling of Wall Street almost led to its demise. So-called "PC clones" soon flooded the market, each built with cheaper components and running the same versions of Windows. The large and lumbering IBM was slow to innovate, allowing nimble competitors to undercut its prices. In 1993, IBM posted the then-biggest loss in the history of corporate America — $8 billion [source: van Kralingen].

The company, which had weathered technological revolutions from punch cards to supercomputers, had to make an incredibly difficult choice: innovate or die. The brave decision was made to abandon the core of its business model — building and selling low-margin PCs, computer chips, printers and other hardware. IBM's new focus would be providing IT expertise and computing services to businesses.

By 2010, IBM had acquired more than 200 companies in the IT services sector [source: van Kralingen]. It also invested heavily in its server business, becoming the No. 1 seller of enterprise server solutions in the world by 2013 [source: IDC]. The reinvention of IBM is studied in business schools as a model of corporate evolution in the Internet age.


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