Control Data Australia Memories compiled by Brian Membrey

Service Bureau Corporation

Although the concept of provided processing services to external customers may appear to us a phenomena of the late 1950's and early 60's, IBM had operated bureaus in major U.S. cities since 1932, allowing users to rent time on tabulating equipment, and later computing equipment, to solve problems which couldn't justify a full-time equipment lease.  

The Service Bureau Corporation was compulsorily established by the 1952-56 U.S. Government's Anti-Trust suit against IBM which in part effectively detached the data service operations into a separate company.

“Section VIII (a) IBM is hereby ordered and directed to transfer, within one year after the date of the entry of this Final Judgment, all its contracts for service bureau business to a corporation ( hereinafter called the Service Bureau Corporation), which may be wholly owned by IBM, and IBM shall thereafter be enjoined and restrained from engaging in the service bureau business except on a nondiscriminatory basis for the Service Bureau Corporation and for service bureaus operated by other persons”.

Additional restrictions prevented the Service Bureau Corporation from using any corporate name containing the words "International Business Machines" or "IBM", from utilising services from any person also employed by IBM [1] or for any employee of SBC to solicit on behalf of IBM any order for the sale or lease of any IBM equipment"

IBM was also directed to promptly notify other service bureaus using IBM equipment of all new releases of tabulating or electronic data processing machines made available to the Service Bureau Corporation, and and to make available to third-party bureaus such equipment and all appropriate documentation at the same prices, terms and conditions for the sale or lease as established for SBC.

SBC in turn was restricted from, after a period of three years grace, subleasing more than 20% of their service locations from IBM.

In the early 1960’s, IBM began replacing SBC’s punched card and tabulating equipment with 1401 systems, the company’s first transistorised computer, and from the mid-60’s commenced transition to the 360 range

In 1968 IBM transferred its Information Marketing Division to SBC. This included the CALL/360 time-sharing service, the proprietary languages QUIKTRAN (Fortran) and BASIC, and DATATEXT, a text processing system.

Estimates put SBC’s revenue at the time of its “bargain basement’ acquisition by CDC at $63 million, a drop in the ocean compared to IBM’s declared overall revenue of roughly $9.5 billion (my calculator suggests .067 percent).

On this basis, it is seems unlikely that Thomas J. Watson or his management lost too much sleep over letting SBC out of their grasp, but the raw figures do not reflect the true value to IBM of SBC and its earlier punched card-tabulator predecessor - a substantial part of IBM's service bureau strategy was to target small data processing customers and "grow" them into their own tabulating equipment and later digital computers; the impact of losing this marketing stream cannot be calculated.

(In retrospect, even after Control Data took over SBC, the effect may not have been that great in the first couple of years - even although IBM had lost direct access to the bureau customers, SBC still used IBM equipment and software.

With the perfect clarity offered by hindsight, the acquisition of SBC may have been a lost opportunity for CDC which never managed to address the low-end commercial bureau customers looking to migrate to their own mainframes.

Robert M Price in his book, “Building the Control Data Legacy” provided some fascinating background to the SBC acquisition, suggesting that compared with CDC's 1967 acquisition of C.E.I.R. (a Washington-based service bureau offering IBM batch processing and GE time sharing and generally considered CDC's first venture into data services), that of SBC was "a shotgun marriage" ...

"SBC did not come to Control Data of its own free will. It came because its parent and its sole stockholder, the IBM company, sold it off to settle a lawsuit. SBC had no part in either the cause of the lawsuit, or interest in the lawsuit, or interest in Control Data. They were just told: “There, you’re no longer part of us, you’re part of Control Data.” In terms of people, it’s difficult to imagine a more wrenching situation. So, the SBC was maintained as a standalone company; not only was it a standalone company, it was not part of the services group”.

Price suggested SBC was slightly larger than CDC's data centre operations, but considerably smaller than the Services Group he then controlled which included hardware maintenance, CDI and other educational and professional services.

The SBC operation appears to cause something of a rift between Price and Bill Norris, who insisted that SBC report directly to him rather than via CDC Services; a situation which Price in his book suggested "caused me considerable personal turmoil — I took it as an expression from Bill Norris that he didn’t have faith in me as an executive".

Price, along with Norbert Berg, Henry White, Steve Beach (formerly a lawyer with SBC) and another unknown executive however comprised the initial Board of Directors of SBC under Norris’ chairmanship..

It is known that SBC was later merged into the CDC service group, but the date has yet to be traced,   

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1967 Service Bureau Corporation advertisement

Service Bureau Corporation Headquarters, Greenwich Connecticut (1974)

Charles Babbage Institute <cbi01442>

Telex v IBM : the winner is ... Curiouser and Curiouser 1973 : The I.B.M. settlement The New York Times says ... "The Anti-Trust Division's Vietnam"