With IBM clearly on top in the early '60s, Watson took one of the biggest gambles in corporate history. He proposed spending more than $5 billion--about three times IBM's revenues at the time — to develop a new line of computers that would make the company's existing machines obsolete. The goal was to replace specialized units with a family of compatible computers that could fill every data-processing need. Customers could start with small computers and move up as their demands increased, taking their old software along with them. This flexibility inspired the name System/360, after the 360 degrees in a circle.

The strategy nearly failed when software problems created delivery delays. Panic raced through IBM's top echelons as rivals closed in. A desperate Watson ousted his younger brother Dick as head of engineering and manufacturing for the System/360 project, derailing the younger man's career and filling Watson with shame.

Ultimately, System/360, which revolutionized the industry, proved to be wildly successful as well. IBM's base of installed computers jumped from 11,000 in early 1964 to 35,000 in 1970, and its revenues more than doubled, to $7.5 billion. At the same time, IBM's market value soared from about $14 billion to more than $36 billion.

A heart attack forced Watson to retire at age 57 in 1971, leaving him plenty of time for such adventures as retracing a flight across Siberia that he had made during the war. A lifelong Democrat (his father had been a Franklin Roosevelt confidant), Watson served for two years as Jimmy Carter's ambassador to Moscow.

But perhaps his proudest achievement was to emerge from the shadow of a legendary, relentlessly demanding father. In his first five years as chairman, the younger Watson observed the anniversary of his father's death in 1956 with a ritual. He quietly took stock of what IBM had accomplished since his father died, and then said to his wife, "That's another year I've made it in his absence."

Senior writer John Greenwald wrote his first cover story for TIME in 1982; the subject: IBM

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