How did Intel and Microsoft benefit from IBM losing its market leadership?

Answer 1

IBM was failing to compete with the new breed of innovative software companies and hardware producers who could make computers much more cheaply. "Prices for mainframe computers dropped, eventually they dropped by 90%," says Mr Heller. ... It lost money, it lost market share and became a company in denial.

In the 1980s, IBM's profit margins suffered a steep decline. Because the company's costs remained level, profits dropped. Critics of the company have widely attributed IBM's decline to two factors. During this period, IBM became a follower of technological development, more so than in the past.

In 1980, Microsoft formed a partnership with IBM to bundle Microsoft's operating system with IBM computers; with that deal, IBM paid Microsoft a royalty for every sale. ... When Microsoft launched several versions of Microsoft Windows in the 1990s, they had captured over 90% market share of the world's personal computers.

I.B.M. ENDS INTEL FINANCIAL SUPPORT

Remember that IBM keeeps moving. They once were only a mainframe company. Then also a powerPc chip making company. Then also a service company. Other stuff. They still make mainframes but they no longer make chips that used to be one of their biggest moneymakers.

The chips they design now get made by GlobalFoundries. They outsource their own chips, an idea that would have been toxic 10 years ago after they invested 1.5 billion dollars in the making of a new semiconductor fab.

Sold it for 1.5 billion to Global.

So IBM stayed in the pc business as long as it wanted to. Sold their thinkpad PC line to lenovo for 1.75 billion in 2005. Selling their entry server line to them this year for 2.3 billion.

Today IBM and Intel are similar in total value. Microsoft has a bit more value about 70 billion more and bases all of their profits on what IBM started.

Not easy to evaluate if you are in the business of keeping you in business. When a lenovo pc is sold, microsoft makes money, intel makes money, and ibm makes money from the fact that they are invested in iot and the servers that help run it all. Seems like its what they want to invest in and its not just making all of the pc’s in the world.