IBM Board Cancels Disk File Project

1953
IBM's Board Cancels Disk File Project

An example of corporate management's focus on current products and customers to the potential detriment of future opportunities

Why it's important

At an early 1953 IBM Board meeting reviewing the IBM San Jose programs it was decided to not fund the RAMAC program. Rey Johnson, then the IBM San Jose Laboratory Director, chose to not implement the decision and continued the project, leading to the RAMAC disk file and the beginning of the disk drive industry.

IBM's management in its focus on current products and customers may have committed a classic "Innovator's Dilemma" decision in attempting to cancel the project that led to the development of disk drives.


Discussion:
In early 1953 [1] Wallace McDowell, the IBM Director Of Engineering and the person to whom the SJ Lab reported, requested a San Jose laboratory status report to the IBM Board of Directors. This report was to have a brief description of each project that was being pursued in the laboratory. There were some eight projects to be reviewed with the board - not in a detailed technical manner but in layman's terms with slides and simple charts.

Ray Johnson with the assistance of Jim Hood and Jack Poole prepared a 1953 budget. John Haanstra accumulated the brief descriptions, charts and slides and requested that Bill Crooks gather all the material. Johnson, Haanstra and Crooks flew to New York City for the presentation.

Each board member seemed to be interested in one or two of the projects, TJ Watson Sr, IBMs Chairman, introduced the team as the group that was going to “wipe out the punch card.” At that time IBM was manufacturing about 16 billion Hollerith cards a year[3] with very high profitability. Johnson and Haanstra both tried to convince the Board that the disk file would increase the need for Hollerith cards. Nonetheless, at the end of the meeting Watson Sr., informed Johnson that the RAMAC was not wanted and its budget was not approved. Ray Johnson was very disappointed and during the trip back to San Jose, he met quietly with Haanstra and Crooks and swore them to be silent as he was not going to cancel the disk file project. He was going to rename it [4].

Much later this may have been reported as,
"When management back East got wind of the project, it sent stern warnings that RAMAC be dropped because of budget difficulties. But the brass never quite caught up with the cowboys in San Jose." [5]

Later in 1953 TJ Watson, Jr., IBMs President, visited the San Jose Lab and gave his approval to go ahead with what became RAMAC. According to Crooks, Watson Jr. was not at the earlier Board meeting.

The disk drive then went on to become for a time the single most profitable product line within IBM. IBM sold this business to Hitachi in 2003. By 2006 the industry had grown to $30 billion annual revenue [6].

Notes:

[1] IBM's Archives have no Board minutes earlier than the 1960s. Crooks is certain that the Watson Jr meeting later in 1953 occurred after Lou Stevens took over the project in Nov 53. Rey Johnson in a 1957 speech mentions “opened ‘Pandora’s Box’ … as exemplified in the 305 and 650 RAMAC” which may have been in context of a Watson Jr visit possibly in “early 1953” but the timing is not clear from the language of the speech.
[2] IBM headquarters, then located at 590 Madison Ave, New York City NY.
[3] The 16 billion Hollerith card figure also appears in Johnson’s 1989 speech.
[4] It is likely the project was called Disc File or Random Access File in early 1953. Crooks thinks it was renamed to RAMAC at San Jose but there is other evidence that the name RAMAC was suggested by Jerry Haddad in Feb 1955 [Bashe et al., IBMs Early Computers” p. 297
[5]
Rostky, G, "Disk drives take eventful spin," EE Times, July 13, 1998, Rosky does not provide his sources and it is not clear that there is a direct linkage between the Board meeting and Rosky's reporting.
[6] "History, Market Share and Forecast, HDDs, Worldwide, 2002-2011," Gartner Group, (c) 2007



Provenance note: : This article was written by Tom Gardner based upon the 2008 Oral History of William (Bill) Crooks (Computer History Museum. accession number 102702016) with a probable confirmation from a 1998 EE Times article on Hard Disk Drive history authored by G Rostky. In 1952 Bill was the ninth employee (second engineer according to Bill) of IBM San Jose Laboratory where he participated in the initial RAMAC media development. He retired from IBM. At the time of his oral history he was the only known living person to have attended the IBM Board meeting in early 1953 that reviewed the IBM San Jose Laboratory programs. The IBM Archives have no Board records going back to 1953.

On June 20, 2012, the Computer History Museum’s Storage SIG voted 6 to 1 to not publish Revision 8 this article on the basis that they just didn’t believe that the IBM Board and/or T.J. Watson, Sr. would have acted in the manner described above. None of the attendees at the meeting worked for IBM in the 1950s or had ever attended a 1950s IBM Board meeting. Most of the voters to reject the article had neither read the transcript of Crooks’ Oral History nor the Rostky article.

Minor changes were made to the article after the SIG's rejection.

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