In 1962, IBM's revenue was $2.6 billion. In 1964, it jumped to $3.2 billion, growing to $5.3 billion by 1967 and more than $7 billion by the end of the decade. System/360 sales far exceeded the company's projections, and IBM was unable to meet demand, in part because its manufacturing operations couldn't produce enough high-quality components. The compatible operating system also proved to be difficult, and a number of the glitches weren't resolved until the fourth release of OS/360 in November 1965.
Customers, however, began to see the advantages that could be obtained with the 360, and rivals felt the impact. IBM's competitors at the time--Burroughs, Univac, NCR, Control Data, and Honeywell--were known in the industry as "the Bunch." They never recovered from the introduction of the 360, says Mike Kahn, an analyst with the Clipper Group, a technology acquisition consulting firm. "The 360 has had a bottom-line impact on the evolution of computing and the creation of information technology as we've looked at it the past 30 years," Kahn says.
Irwin Sitkin, who developed the first information systems for Aetna Insurance in the late 1950s and early 1960s, says the 360 was instrumental in transforming the insurance industry. "If there were no [360 series], there would be no business," Sitkin says. "It was not trivial and not without risk, and the miracle of it all was it worked. It changed the nature of the way we operated from being merely accounting and statistics to true online policy creation and service."
Aetna and American Airlines were among the first to deploy the 360. American Airlines used the computer to expand its Sabre reservation system. Aetna created Safari, the System for Automatic Family Automobile Renewal and Inquiry. Aetna recruited personnel from throughout the company to build a technology workforce of about 200, who then proceeded to write more than 2 million lines of code to run on the 360.
In 1965, Aetna used one high-end 360 machine to handle automotive polices written in Vermont, "where cows still outnumbered cars," Sitkin says. The transaction-processing capability of the 360 let Aetna start automating the process of creating an insurance policy. Until then, field representatives had mailed handwritten policies to the home office, where nearly a quarter of them had detectable errors. Using the 360 running with a then-impressive 15-second response time, field representatives used remote terminals to file relevant policy information directly to the home office, where coding and calculation of premiums were completed and responses dispatched to branch-office printers.
The results were so positive Aetna quickly purchased six more machines at a cost of around $3 million each and expanded the automation process to include all its automotive, homeowners' insurance, and workers' compensation policies. Aetna still uses mainframes today.
"I don't think it's an overstatement to say the mainframe has been the engine that has driven the business-computing evolution," says Charles King, an analyst at the Sageza Group, a technology research and consulting firm. "They set the table for what has resonated for a long time."
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