The IBM 650

Announced in 1953, the IBM 650 Magnetic Drum Data Processing Machine was the world’s first mass-produced computer — and the first computer to generate a significant profit. Originally geared toward IBM’s scientific and engineering clientele, it is nevertheless also widely considered to be the first commercial business computer, and it helped established computer science as an academic discipline.

The 650’s invention was expedited, if not inspired, by innovative product planning and shifts in the marketplace.

In 1952, Thomas J. Watson Jr. made an important organizational change that altered IBM’s engineering culture for the next half century. After experiencing enormous growth over the previous 25 years, the company had come upon a crossroads. The rapid growth of computing had attracted significant competition, and the company’s structure was not operating at optimal efficiency. The sales force, for example, was being incentivized to sell traditional punched card equipment, while the engineering side was pushing toward digital offerings.

Watson Jr. asked veteran sales executive James W. Birkenstock to streamline IBM’s approach to innovation, creating a product planning department that was separate from another dedicated to market analysis. James Cortada, an author and historian, called it “a more disciplined process for controlling diverse intentions.”

Management then enlisted the expertise of engineer Frank E. Hamilton, whom Watson had hired in the late 1940s to create a smaller version of the 8-ton Mark I electromechanical punched card calculator. (He was responsible for the design, organization and build of the Harvard Mark I ASCC in 1944 and was then brought onto the IBM Selective Sequence Electronic Calculator, or SSEC, project in 1948.) Hamilton’s early forays were deemed too pricey, but competitive pressures prompted the company to channel more resources his way — expanding his staff from four to 50 — which led to the development of a full-blown electronic computer. On July 14, 1953, it announced development of the IBM 650 in its upstate Endicott, New York, laboratory.

To the surprise of IBM executives, who had expected sales of only 50 or so computers, the device quickly became the most popular computer of the decade, dubbed the “workhorse” of commercial computing. Its versatility allowed users to shift quickly among tasks — from payroll and cost control to research and sales analysis. Another signature application, known as continuous processing, helped with billing and inventory control.

Before the 650, computing operations were executed in “batch mode.” Daily operations such as sales were logged onto punch cards, and at the end of the day (usually overnight), the decks would be run through the computer to perform calculations. The time gap between an action and its calculation could cause problems. Without a current accounting, a company could easily oversell its inventory and not realize it until the overnight computing run. Continuous processing also allowed many decisions, including such as whether to extend credit, to happen in real time. This resulted in improved inventory control, smoother internal operations, and better customer service. John Hancock Mutual Life Insurance Company took delivery of the first IBM 650 in December 1954, and within an hour the device was helping the insurer calculate commissions for 7,000 agents nationwide.

IBM eventually installed nearly 2,000 of the devices around the world, and the machine continued to have ripple effects after the company stopped production in 1962. The IBM 650 is credited with introducing computers to hundreds of corporations, including smaller and mid-size enterprises that could afford the new device, many of which went on to become regular patrons of future IBM products. The company also used the 650 to seed the ground for computer studies at dozens of universities.

Donald Knuth, a computer scientist and author of The Art of Computer Programming, described the clever gambit: “Computing courses got started in universities largely because IBM donated about 100 ‘free’ computers during the 1950s, with the stipulation that computer courses must be taught. This strategy made it possible for computing to get a foot in the academic door.”

In short, the IBM 650, and the culture that spawned it, fundamentally altered commerce, science and higher education. Like many of history’s great inventions, it met an immediate need while also laying the groundwork for broader transformation.