February 23, 2026·3 min read·FREE ESSAY
The Secret was to Migrate Upstream
That's how they survived
In 1980, IBM earned $26.2 billion in revenue and by 1985, it had increased this to $50 billion, a 90% growth.
Their secret was building personal computers (PCs) using off-the-shelf components such as processors from intel and the operating system from Microsoft and charging a premium for their devices.
The IBM 5150 PC was sold for $1,565 in 1981, equivalent to US $5,500-$5,700 in 2026.
The team had broken its traditions and decided to invite third parties to make parts of the PC.
"The team made a number of controversial decisions... Before the IBM PC, the company had designed and made nearly everything it sold. [Now] about half of the system... would be lifted from the IBM System/23 Datamaster. They invited outsiders to make components... and approached a little-known company to write its software—Microsoft."
IBM Archives
However, this would later be their undoing.
Adopting an open architecture where nothing was built fully in-house also meant that other brands could clone their PCs.
Dell and Compaq began making cheaper PCs and the high profit margins from selling hardware units evaporated.
IBM had helped make an open source platform to build the PC and now competitors ran with it. Losses between 1991-1993 reached nearly US $16 billion.
How could they survive?
Enter Lou Gerstner in 1993 as CEO.
His strategy was that IBM now had to move upstream.
Downstream was already too crowded. Every company could now make a cheap PC and there was simply no value in selling these.
What Lou saw was that although companies could buy many PCs, there was higher complexity in interconnecting them.
That’s the direction IBM took, moving to IT services and consulting.
"IBM’s unique advantage was its ability to integrate all the pieces of the puzzle for the customer... I believed that the computer industry was going to be driven by services, not by the hardware and software itself."
Who Says Elephants Can’t Dance?
For IBM, their survival came from the move from producing hardware units to designing and managing entire IT departments of banks and airlines.
"I had to tell the hardware guys that their job was no longer to sell the most boxes, but to support the services guys who were solving the customer's problems... even if that meant using a competitor’s hardware." Lou said.
Eventually, IBM would sell its hardware business to Lenovo and focus on IT services, AI, and consulting.
Today, we are reliving 1993, facing the same commodity crisis.
Just as IBM faced competitors who cloned the PC, professionals today are also facing clones and AI agents who produce the same automated output.
When everyone can generate thousands of lines of code or 50-page books with a single prompt, the true value remains in scarcity, taste, and understanding the “why” behind each system.
However, to move upstream, we must also navigate away from the mundane.
Lou didn’t transform IBM to build better boxes. Instead, he pivoted the business to offload the manufacturing work and embrace high-level services.
One of the changes I made in my workflow was to re-allocate productive time away from manually managing and sorting my inbox to allowing secure AI do this for me.
I embraced SaneBox, AI that securely and privately manages your inbox quietly in the background, allowing you to focus on what’s most important.
Initially, I lost time searching for emails that still required a reply. I also lost contracts that I failed to follow-through simply because I forgot about them.
If you use Gmail or Yahoo mail, it can be difficult to know which particular email is still waiting for a reply from the recipient, especially when you have thousands of client requests.
SaneBox creates a #SaneNoReply folder where all emails requiring a reply exist.
“My NoReply folder would show me every time I would email him and he wouldn’t email me back. Every couple of weeks I would go into that NoReply folder and I would follow up with him.” Ryan, CEO of Serhant said.
If you have thousands of leads that you are following up on, use SaneNoReply to get an overview of all emails that still require a reply from clients.
You will save hours and avoid missing out on important deals.
