United States. Congress. Senate. Committee on the.

The Industrial reorganization act. Hearings, Ninety-third Congress, first session [-Ninety-fourth Congress, first session], on S. 1167 (Volume pt. 7) online

. (page 84 of 140)
Online LibraryUnited States. Congress. Senate. Committee on theThe Industrial reorganization act. Hearings, Ninety-third Congress, first session [-Ninety-fourth Congress, first session], on S. 1167 (Volume pt. 7) → online text (page 84 of 140)
Font size
QR-code for this ebook


indication that the System/360, even in extended or restricted versions, is not
practical for every type and size of computer application.

February. 1965 : IBM announced a complete restructuring of software support
for the System/3(>0. To meet complaints that the Operating System/360 required
too much core storage and peripheral equipment to perform its impressive func-
tions, while the facilities of the Special Support System (the only previous
alternative) were far too restricted. IBM committed it.self to the gigantic task
of producing three different levels of .'joftware support : the Operating System/
360, Basic Operating System/360 (BOS), and Basic Programming Support
(BPS). Table V shows the facilities offered at each level and their scheduled
delivery dates.

March, 1965 : IBM announced two more additions to the System/360 line : the
time-sharing Models 64 and 66. Models 64 and 66 featured an associative memory



5584

to facilitate dynamic relocation of programs and a channel controller to permit
flexible interconnections among the system components. The two time-sharing
systems used the standard System/360 instruction repertoire plus additional in-
structions to direct the time-sharing features. Announced as non-standard models
to be offered only through special proposals, the time-sharing systems represented
IBM's response to the success of General Electric and other manufacturers
in winning contracts for multi-console, time-sharing applications, where the
System/360 as originally announced had been weak.

March, 1965: The 2870 Multiplexor Channel was announced, providing the
capability to connect a large number of low-speed input-output devices to the
larger System/360 models. Previously, the lack of Multiplexor Channels for the
larger models had seriously restricted upward compatibility and made it almost
mandatory to use a Model 30, 40, or 50 processor in conjunction with the larger
processors for control of punched-eard, printer, and/or data communications
operations.

March, 1965: IBM announced the 2260 Display Station, a low-cost, buffered,
cathode-ray-tube terminal for remote or local displays of alphameric data. An
optional keyboard permits convenient man/machine communication. Concur-
rently, the more expensive 1015 Inquiry Display Terminal, which featured a self-
storing dark-trace cathode ray tube, was dropped from the System/360 product
line.

March, 1965 : IBM demonstrated the 1401 Compatibility Feature for the Sys-
tem/360 Model 30 at its Endicott. New York facility. A wide variety of user-
submitted 1401 programs were run on the System/360 with relatively few
difliculties and, in most cases, at significantly higher si>eeds than on the original
1401. The practicality of the all-hardware, stored-logic approach to 1401 com-
patibility used in the Model 30 was convincingly demonstrated.

April, 1965 : IBM completely restructured the upper half of the System/360
line by adding three new models and dropping five others. Model 65 superseded
original Models 60 and 62, Model 75 superseded Model 70, and Model 67 super-
seded the just-announced, time-sharing Models 64 and 66. Models 65 and 75 offer
significantly higher processing speeds at lower prices than their predecessors,
indicating that the principal puriwse of the restructuring was to bring the
price/performance ratios of the larger System/360 models more closely into line
with the offerings of competitors. (Meanwhile, IBM indicated that the design
of the Model 92 was being "reevaluated," and that no performance details would
be released until redesign of the Model 92 — or its successor — had been completed. )

April. 1965 : IBM announced the 2314 Direct Access Storage Facility, the 2415
Magnetic Tape Unit, and the 2540 Card Read Punch. The 2314. a multidrive,
replaceable-cartridge disc storage unit, is the seventh distinct type of auxiliary
storage in the System/360 line. The 2415, a low-speed, economy-model tape unit,
provides magnetic tape capabilities for the System/360 Model 20 and makes it
IBM's lowest-priced tape system. The 2540 supersedes the widely-used 1402 Card
Read Punch and provides increased punching speed (300 cards per minute) and
a number of detail improvements.

April, 1965 : Initial customer deliveries of the System/360 were made. IBM
announced that more than 1,000 System/360's will be delivered by the end of
1965, and that deliveries will reach a rate of 35 systems per day in mid-1966.

July, 1965: IBM underlined the steadily increasing importance of data com-
munications applications by announcing eight new communications devices.
Most significant are the 2703 Transmission Control, which links up to 176
communications lines to a System/360, and the 2712 Remote Multiplexor, which
can multiplex data from as many as 14 remote, low-speed terminals over a single
high-speed line to a computer.

August, 1965 : IBM made doubled data rates available for all of the 2400 Series
Magnetic Tape Units through a recording technique called "phase encoding,"
which permits 1600 bytes per inch to be recorded on standard half-inch tape.

August, 1965 : IBM announced the System/360 Model 44, a processor especially
designed for scientific and process control applications. Model 44 features high-
speed binary arithmetic, a built-in single-disc storage drive, and up to 131,072
bytes of core storage ; it cannot be equipped with decimal arithmetic facilities
or Selector Channels.



5585

Appendix 9

International Business Machines Corp.,

Armonk, If.Y.

Notice to Our Customers — New IBM Marketing Plans
The following changes in our marketing plans go into effect October 1, 1965.

NEW way for rental CUSTOMERS TO PURCHASE

We are replacing our Purchase of Installed and Purchase Option Plans and com-
bining features from both into one program. Effective October 1. 1965, all IBM
data processing equipment types (except some 650, 700, and Education Plan units)
are automatically under the new plan. The highlights are :

A percentage of up to the first twelve Monthly Availability Charge payments
(from October 1, 1965, forward) for installed equipment can be credited against
the purchase of the IBM equipment without the need for a 1% deposit.

Under this plan, the option credits can be applied to your purchase of the
machine as long as it remains on rent and installed with you.

The price at which you can purchase IBM equipment will be the then current
standard purchase price, less the applicable option credits accrued on that
equipment.

You may transfer accrued option credits on System/360 base units and apply
them against the purchase of subsequent System/SfK) base units at your election
by depositing one percent of the purchase price and completing the Option to
Transfer Agreement before installation of the initial units.

DIRECT PURCHASE

If you wish to order your equipment on a purchase basis, you now have greater
assurance that your request will be met through IBM's expanded purchase
concept. As of October 1, 1965, we will offer for direct purchase not only new
and renovated IBM equipment but also used equipment. Because the distinc-
tion between new and used is not related to the true economic value of a par-
ticular machine to a customer, all equipment will be offered for sale at the same
__price and under the same warranties. When a unit is not newly manufactured,
it will be so identified in the Agreement for Purchase.

PRIOR PLAN AND AGREEMENTS

If you have signed a Purchase Option Agreement prior to October 1. 1965, you
will have until November 1, 1965, to determine if you want to continue under the
prior plan. If you decide to terminate the prior plan before November 1, 1965,
the unexpired portion of the one percent Option Deposit as of October 1, 1965,
will be credited to you.

The October 1, 1965 purchase price developed under the prior Purchase of In-
stalled Plan becomes a constant for your IBM equipment on rent as of October 1,
1965. Assuming no changes to that equipment, under this plan it will stay at
that same price for purchase by .vou as long as it reniain.s on rent and installed
with you. The purchase price of such an installed unit will be the lower of the
October 1, 1965, price or the New Option to Purchase price. Option credits do not
apply to this prior plan constant price.

IBM MAINTENANCE SERVICE

An adjustment to our maintenance service prices is also being made. Yon will
receive details separately if you are a maintenance service customer.



Although all marketing plans such as these are subject to change, you can he
assured that you will have reasonable notice of changes such as (luratimi of
option accrual period, ivithdraival of option credits, and termination of the pro-
gram to purchase at the October 1. 1965, constant price.



5586
Appendix 10

Partial list of IBM offers of Educational Discounts and Gifts In recent years .



University of California - the largest single university In the United States
with operations on several campuses, including
the following;



1. University of California at Riverside



6/3/65



60-100% discount
60% discount



2. University of California at Davis
10/9/63 60% discount

3. University of California at San Diego



6/15/65



100% discount
substantial discount



7040
360/XX



7040 & 7044



7090

7094-11 to replace previous
substantial 7040 to be
followed by 360/92 at 60%
discount plus extta



4. University of California at San Francisco, Medical School



6/4/65



Substantial discount
Substantial discount



5. University of California - Berkeley Campus
11/12/65 Substantial discount

6. University of California at Santa Barbara



1440
360/30



7094/7040



12/3/65



Substantial discount
60% discount
60% discount



360/40, /50
360/40, /65 to
360/50, /65 later



1410/1440 Remote termloala



7. University of California at Irvine
9/65 60-100% discount

(Note: "Nick -named" UCIBM, SCIENCE, Volume 148, P. 764, May 7, 1965)

8. University of California at Llvermore (Lawrence Radiation Laboratory) (AEC)



11/12/65



Substantial discount
Substantial discount
Substantial discount
Extra special discount



2 - 7094
2 - 1401
1 - STRETCH
360/90 Group



5587



9. University of California at Berkeley (Lawrence Radiation Laboratory) (AEC)

11/12/65



Substantial discount

Substantial discount

Substantial discount

Substantial discount



2 - 7094
7090
7044
360/90



10. University of California - Los Alamos Scientific Laboratory (AEC)
11/22/65 Successively lower prices



11. University of California at Los Angeles (UCLA)
UCLA Central Computing Facility



12/7/65



607o discount with buybacks
60% discount
Special deal



2 - 360/70 and

360/92
360/75 and 360/92



7094-11/1401

360/92

360/40



UCIA Health Science Computing Facility (NIH funded)



12/7/65



Special discounts
607. discount
Special discount
1007o discount



7090/7040, 1410, 1401

360/65

360/40 (ARPA funding)

360/40 (Alpine system)



Western Data Processing Center (WDPC) (IBM-owned)
(Operated by IBM in free UCIA facilities)



7/65



7094, 7040
4th - 360/40 (bait for 3 360/40s
noted above)



Southern Research Triangle

1. University of North Carolina
12/10/65

2. Duke Univerpity
6/4/65



Substantial discount, 360/67
(Note: IBM leased land from triangle)



607, discount
357. discount
457. discount



7040

360/50 and
360/75



3. North Carolina State



5588



state University of New York - second largest university system In United

States, has 58 operating units, including
the following:

1. Cornell University



2. NYSU at Buffalo
12/6/65

3. NYSU at Stonybrook
12/6/65



Extra special discount



Substantial discount



60% discount
Substantial discount



4. NYSU School of Engineering



12/6/65



Substantial discount
Free time



5. NYSU Courant Institute, New York City



7/65



60% discount

45% discount

100% discount



6. NYSU, Uptown Campus, New York City



7/65



60% discount
replacement
free use
offered



7090



360/67



7040 (11/8/63)
360/70



360/30
360/50



7094

360/30 (6/2/65)

360/70 (6/65)



1620

360/30

360/40, /50

on IBM Data Center



Massachusetts Institute of Technology (M.I.T.')

1. MIT Con^jutation Center C'to serve MIT and 51 other

cooperating colleges and universities in New England",
DATA PROCESSING MAGAZINE, September 1965)



9/65



Significant discount



2. MIT Civil Engineering Laboratory (ties in with
1 above)



10/4/65

3. MIT Nuclear Group
12/13/63

4. MIT Physics Group

12/13/63

7/6/65

12/6/65



Significant discount



60% discount



60% discount
Unknown
100% discount
100% discount



360/67 time-sharing



360/40



7044



7044

360/40

360/65

2 - 360/67



5589



Massachusetts Institute of Technology (Cont.)

5. MIT Lincoln Laboratory (operated by MIT for USAF)
ll5l()b unknown discount



(7094-11

(360/40

(360/62 or

(360/65

(dual 360/67 later



Group Comprising Midwest Universities Research Association (MORA) - reference
news releases by Argonne National Laboratories, 10/21/64, under a new tripartite
management comprising representatives of Midwestern Universities Research
Association (MURA) , Associated Midwest Universities (AMU), the University of
Chicago and the Laboratory itself)



1. Iowa State College
12/10/65

2,' Purdue University

6/65
10/29/63

1/65 to
3/65



significant discount



30% discount

207o discount

60% dis<Dunt

20% discount

40-45% discount

Priced to get under CDC



(360/40 to

(360/65

(360/44



7094/1401 and

7044 and

1620

360/62, /50 then

360/60 then

360/67



3. University of Chicago (Argonne National Laboratories) (AEC)
Priced to get under CDC



4. University of Illinois

11/10/62 100% discount



8/24/65
2/17/64



100% discount
60% discount



5. State University of Iowa

12/10/65 Substantial discount

6. Indiana University (Bloomlngton)

12/4/63 60% discount

12/13/64 (Research) 60% discount



360/70
360/90



1401 and
2-1301 discs
360/30
7044



360/30 and
360/65



2 ea. 7090
2 ea. 7040



5590



Midwest Universities Research Association (Cont.)

7. University of Minnesota

45% discount

8. University of Wisconsin

12/10/65 Substantial discount

9. The Ohio State University

8/24/64 20% discount

10. Washington State University of St. Louis

(Expressed compatibility requirement to other
major universities)



12/10/65



large discount



11. Northwestern University

12/18/63 60% discount

12. Michigan State University

13. University of Michigan

14. University of Kansas

15. University of Notre Dame



360/75
360/90



2 of 360/67



Model



7072/1401

360/40

360/65



7094/7040



July 1965



8/10/65
12/7/65
6/7/65



Carnegie Institute of Technology



100% discount




(STRETCH,


, then






(360/66,


then


Priced to get


Jan. '65


(360/91,


then


under CDC


to


(360/66M,


, then




Apr. '65


(360/67




rerslty








100% discount




1620




35% discount




360/50




Priced to get


under CDC


360/67,


/75


(50%-60%)




360/92





5591



6/U/65


Illinois Institute of Technology


(IITRI)


507o plus
IBM SBC
buyback


7094/1401


12/65


University of Texas

(T. J. Watson, Jr. - personal)




45-55%


360/75
360/91


12/6/65


Brown University




607.
207.


7070/1401
360/50


11/20/65


Georgia Institute of Technology




substantial


360/67


2/19/64


University of Arkansas




60%


1401/7090


10/25/63


University of Alaska




60%


1620


3/2/64


University of Louisville




60%


1620 w/1311


1/21/64


Manhattan College (Bronx)




60%




3/13/64


Manhattan College (Riverside)




60%


1620


11/7/63


Milwaukee School of Engineering




60%


1620


8/18/64


Newark College of Engineering




60%


1620


2/16/64


Wisconsin State College




60%


1620


2/27/64
12/10/65


University of Omaha

" " (plus tie-in to
Data Center)


IBM


60%
significant


1620
360/30


2/12/65


University of Florida




20-45%


360/XX


5/65


University of Alaska


(component


s)20%


360/40


3/65
2/18/64


University of Oregon


(periphera


1)20%
60%


360/50
7040


6/3/65


University of Arizona




40% ■


360/60


5/18/65


Florida State University




45%


360/65


12/7/65


University of Nebraska




35%
20%


360/50, 360/65
7040


10/22/65


Washington State University




40%


360/67


2/11/64


University of Alabama




60%


7040


3/17/64


San Jose State "VAN"




20%


7040


4/7/64


San Jose State College




20%


7040


5/25/64


Yale University




60%


7040 & 7094-1
ARPA



5592



3/64 University of Washington 60%

3/2ii/(iU Florida Atlantic University 60%

Foreign

Switzerland

11/27/63 OBTG, University of Commerce, St. Gallen 60%

Scotland



7094/40

all equipment



1410



12/63 St. Andrews University

Australia

4/65 University of New South Wales

Israel

6/3/65 Weizmann Institute
6/3/65 Tel Aviv University

Norway

8/65 University of Bergen

Australia

6/4/65 University of New South Wales
6/4/65 Australian National University

England

8/3/65 University College, London

Germany

6/3/65 Deutsches Rechenzentrutn

Holland

11/30/63 Institute for Applied Mathematics,
University of Nejmegan

Switzerland

11/1/63 ETUL, Lausanne

Australia

6/4/65 Melbourne University



50% cost of
installation



60%



60%
35%



30%



60-70%
40%



45%



45%



60%



60%



83%



1620



1620



1302
360/40



360/44



360/50
360/50



360/62



360/75 or up



7040



7040



7044



5593



Germany

3/19/64
India

Denmark



Deutsche Riektranen, Hamburg



Indian Institute of Technology



3/64 Danish Technical University



England

6/3/65

Germany

11/6/63

Japan

6/4/65

France

11/28/63

Israel

8/21/64

Others

3/24/64

3/6/64

2/17/64

4/29/64



Imperial College, London



KFA, Juelich



Osaka University
Tokyo University



University of Paris



University ofJerusalem



60%



60%



5 years
rent free



100%



80%



60%



60%



FORRESTAL (renting) 60%

Latter Day Saints Hospital, Salt Lake City 60%
Mayo Clinic, Rochester 60%



Space General Corporation, Davis 60%

Brookings Institute, Washington D.C.



70A4/1401



7044/1401



7090



7090



7090



100%


7090


60%


7094-11, 7040




and 1460



7094



7094



1620

7040

7040 & 7044

replacement

7040 & 7044
7040



5594

Appendix 11

National Aeronautics
AND Space Administration,
Washington, D.C., December 7, 1965.
Mr. William C. Norris,
President, Control Data Corporation,
Minneapolis, Minn.

Dear Mr. Norris : You will recall that when we conferred in early October on
the computer procurements for the real time computer complex at Houston, I in-
dicated my desire for the National Aeronautics and Space Administration to
undertake appropriate steps to improve the exchange of information between
NASA and the computer industry, and to increase competition throughout the
industry on future procurements of large-scale, general purpose computing sys-
tems. As a result of our discussions, an ad hoc committee was formed to review
this entire matter and to recommend a plan of action for accomplishing this ob-
jective. The committee has completed its work, and we are prepared to move
forward.

As an initial step, we would like to convene key corporate officials of the prin-
cipal companies involved in the manufacture of new generation computer sys-
tems, in order that we might outline our plans to you and provide an opportu-
nity for an exchange of views. We have scheduled a meeting for this purpose on
Tuesday, December 21, 1965. in the Program Review Center (Room 70059) of the
NASA Headquarters Building. 400 Maryland Avenue, S.W.. Washington, D.C.

We have planned this industry briefing in two parts. The morning session
from 10:00 a.m. to 12:00 noon will concern itself with a review of our policy,
intentions, and future plans to increase competition. The afternoon session,
from 1 :30 p.m. to 4 :30 p.m., will deal with advance information concerning
specific computer procurements which NASA is planning to undertake in the im-
mediate future.

We hope it will be pos.«ible for you to attend the morning session, and to par-
ticipate in whatever portion of the afternoon session you feel would be of interest.
You might Avant to have one or two additional company representatives join
you, since the briefing should be of interest both to your sales and technical
personnel. In view of the number of companies participating, and the limitations
on space, it is requested that not more than three representatives attend from
each company.

I would like to have you and any senior officials who accompany you join me
for lunch, following the morning session. This will provide an opportunity for me
to meet Avith the senior executive officers, for a further exchange of views.

All of the arrangements for the December 21 meeting are being handled by
NASA's Industry Assistance Officer, Mr. John K. Koepf. It would be appreciated
if you would let Mr. Koepf know who will be representing your company. He
may be contacted by telephone on Area Code 202. Dudley 2-8236.
Sincerely yours,

James E. Webb, Administrator.

Senator Hart, Our next witness is Dr. Ralph Miller who is an econ-
omist. We welcome you.

STATEMENT OF RALPH E. MILLER. ECONOMIST, WASHINGTON, D.C.

Mr. Miller. Thank you, sir.

I'd like to say that it is an honor and a privileg:e to be before this
committee to discuss the structure of the computer industry.

To set the record straight, I'd like to point out that I do not have
a doctor's degree, as my prepared statement explains somewhat more
fully.

[Mr. Miller's prepared statement appears as exhibit 1 at the end of
his oral testimony.]

Mr. Miller. I am an economist residing in Washington, and my pre-
pared statement shows that my expertise in the computer industry
comes, in part, from having begun but not finished a doctoral disserta-



5595

tion on the subject; and from my past association with various cases
of private antitrust litigation that have occurred in the industry.

I was also, for almost a year, on the staff of the Department of Jus-
tice, assigned to the team that was engaged in preparation for the trial
of the IBM case. I want to emphasize that I will not today, for that
reason, say anything about the IBM case that is currently in the
courts, and I do not intend to use any confidential information that
came to me in my work, either with the Justice Department or in some
of my other work in the computer industry.

To keep the record straight on the sources of my information, what
I actually intend to rely upon in large part is the incomplete disserta-
tion manuscri{)t that I mentioned, and that I believe has been available
to the staff of the committee for some time; I believe, in fact, since
before I was employed by the Justice Department. That manuscript
covers the period through 1969, and I trust that the committee will
understand that I am limiting the bulk of my detailed consideration
to events that occurred during that period, to insure that there is no
question about the sources of my information.

Finally, I'd like to emphasize that the views I present here today are
my own personal views, and that they are based on my personal study
of and experience with the computer industry. I am not representing
my present employer nor any of my past employers or clients or any
Federal agency and, of course, my views are not necessarily those of
any of these parties.

In the statement I make today, I would like first to comment very
briefly on what I see to be the computer industry, and to give you
some information that I believe shows the industry to be dominated
by IBM. Then I shall try to explain how and why IBM has achieved
and is maintaining that dominant position. Next I shall turn to the
question of whether a more competitive structure for the industry is
likely to be in the public interest. My conclusion, of course, is that it is.
And then I present and discuss several possible ways that the needed
restructuring of the industry might be achieved. The last thing I will
say is a comment about the relevance of this analysis, despite its being
somewhat out of date in an industry that is changing as rapidly as
the computer industry is changing.

My concept of the computer industry — for the purpose that we have



Online LibraryUnited States. Congress. Senate. Committee on theThe Industrial reorganization act. Hearings, Ninety-third Congress, first session [-Ninety-fourth Congress, first session], on S. 1167 (Volume pt. 7) → online text (page 84 of 140)