Big Blue and History

What Is Big Blue?

Big Blue is a nickname used since the 1980s for the International Business Machines Corporation (IBM). The moniker may have arisen from the blue tint of its early computer displays, or from the deep blue color of its corporate logo.

IBM Logo. www.ibm.com

Understanding Big Blue

Big Blue arose in the early 1980s in the popular and financial press as a nickname for IBM. The name has unclear specific origins, but is generally assumed to refer to the blue tint of the cases of its computers.

The nickname was embraced by IBM, which has been content with leaving its origins in obscurity and has named many of its projects in homage of the nickname. For example, Deep Blue, IBM’s chess-playing computer, challenged and ultimately defeated grandmaster Garry Kasparov in a controversial 1997 tournament.

The first known print reference to the Big Blue nickname appeared in the June 8, 1981, edition of Businessweek magazine, and is attributed to an anonymous IBM enthusiast.

“No company in the computer business inspires the loyalty that IBM does, and the company has accomplished this with its almost legendary customer service and support … As a result, it is not uncommon for customers to refuse to buy equipment not made by IBM, even though it is often cheaper. ‘I don't want to be saying I should have stuck with the “Big Blue,”’ says one IBM loyalist. ‘The nickname comes from the pervasiveness of IBM's blue computers.’”

Other speculators have also associated the Big Blue nickname with the company’s logo and its one-time dress code, as well as IBM’s historical association with blue-chip stocks.

History of Big Blue

IBM began in 1911 as the Computing-Tabulating-Recording Company (CTR) in Endicott, NY. CTR was a holding company created by Charles R. Flint that amalgamated three companies that together produced scales, punch-card data processors, employee time clocks, and meat slicers. In 1924, CTR was renamed International Business Machines.

In the following century, IBM would go on to become one of the world’s top technological leaders, developing, inventing, and building hundreds of hardware and software information technologies. IBM is responsible for many inventions that quickly became commonplace, including the UPC barcode, the magnetic stripe card, the personal computer, the floppy disk, the hard disk drive, and the ATM.

IBM technologies were crucial to the implementation of U.S. government initiatives such as the launch of the Social Security Act in 1935 and many NASA missions, from the 1963 Mercury flight to the 1969 moon landing and beyond.

IBM holds the most U.S. patents of any business and, to date, IBM employees have been awarded many notable titles, including five Nobel Prizes and six Turing Awards.

One of the first multinational conglomerates to emerge in U.S. history, IBM maintains a multinational presence, operating in 175 countries worldwide and employing some 350,000 employees globally.

Examples of Big Blue's Financial Performance

IBM has underperformed the broader S&P 500 index and Nasdaq-100 index. Significant divergence began in 1985 when the Nasdaq-100 and S&P 500 moved higher while IBM was mostly flat or lower until 1997. Since then it has continued to lose ground, especially when compared to the Nasdaq-100 index.

Image by Sabrina Jiang © Investopedia 2021

The underperformance in the stock price between 1985 and 2019 is underscored by the firm's financial performance. Between 2005 and 2012, net income generally rose, but at less than 12% per year on average. Between 2012 and 2017, net income fell by 65% over the time period, before recovering in 2018 and 2019. In 2019, though, net income was still about 43% lower than it was in 2012.