Year: 1997

IBM Chairman Louis V. Gerstner, Jr. announces to IBM employees the debut of a
major strategic campaign built around the IBM-coined term "e-business." In his
first major customer address on e-business - a speech considered by many as the
first "wake-up call" to Wall Street on the implications of the networked world -
Gerstner describes to the Securities Industries Association the Internet's ability
to challenge centuries-old business models and transform the nature of all
important transactions between individuals and institutions.

In a six-game match, a chess-playing IBM computer known as Deep Blue defeats chess
grandmaster Garry Kasparov - the first time a reigning world champion loses a
match to a computer opponent in tournament play. Deep Blue is an IBM RS/6000 SP
supercomputer capable of calculating 200 million chess positions per second.

IBM announces plans to become sole proprietor of Advantis - the U.S. data network
services arm of the IBM Global Network - by buying Sears' 30 percent equity
interest.

The company acquires Eastman Kodak's share of Technology Service Solutions, which
was formed in 1994 by IBM and Eastman Kodak. TSS becomes a wholly-owned subsidiary
of IBM.

IBM and NetObjects, Inc., announce that IBM has purchased a majority interest in
NetObjects, a leading provider of website development tools for designers and
intranet developers.

IBM completes one of the most important product transitions in the company's
history with the debut of a new generation of System/390 servers, all powered by
advanced microprocessors. The microprocessor "engines" help make the S/390
Parallel Enterprise Server - Generation 4 (G4) more powerful and less costly to
produce and maintain than previous models, which used bipolar processor
technology.

IBM introduces Netfinity, a new line of enterprise PC servers beginning with the
Netfinity 7000 supporting the Microsoft Windows NT computing environment.
Netfinity servers range from entry level models to high-capacity symmetric
multiprocessing machines.

IBM introduces the IntelliStation, a line of Microsoft Windows NT-based
workstations for commercial users. The new family complements IBM's RS/6000 line
of UNIX workstations and servers. The first in that line of professional
workstations is the IBM IntelliStation Z Pro.

The Travelstar 5GS is rolled out as the world's first 5-gigabyte laptop disk
drive, and the company announces the 8.1-gigabyte Travelstar 8GS, the first drive
to exceed 3 billion bits per square inch on each of its disk platters, a world
record. Not much larger than a music cassette tape, it will hold enough
information that when printed, would constitute a stack taller than the Empire
State Building.

IBM announces the world's highest capacity desktop OPC disk drive. The
16.8-gigabyte drive incorporates breakthrough technology called giant
magnetoresistive (GMR) heads. No bigger than the head of a pin, the GMR head is
the world's most sensitive sensor for reading and writing computer data on
magnetic disks.

With the introduction of eSuite, Lotus becomes the first company to offer a
complete set of business productivity software written in Java for the network
computing environment. The total installed Lotus Notes seats base reaches 20
million, up from 2.2 million when Lotus joined IBM in 1995.

IBM unveils ViaVoice continuous speech recognition technology for Mandarin
Chinese. In developing the product, researchers identified and classified thousand
of vocal tones and homonyms, created an algorithm that deconstructs syllables into
parts, and developed a new language model to transform spoken words into the right
combination drawn from 6,700 Chinese characters. IBM also announces ViaVoice Gold,
software that gives people a hands-free way to dictate text and navigate the
desktop with the power of natural, continuous speech. IBM introduces software that
reads aloud information displayed on the computer screen. The software allows the
visually impaired to access and use the Internet.

The State Hermitage Museum of St. Petersburg, Russia, and IBM announce an art and
technology partnership. Also announced during the year are technology projects
with the Library of Congress and with Yale University's Beinecke Rare Book and
Manuscript Library to use IBM digital library technologies to preserve art and
scholarship while protecting ownership rights.

IBM says that the National Football League, NBC Sports and IBM will jointly
produce the official Super Bowl XXXII Web site.

For the fifth consecutive year, IBM receives more U.S. patents - 1,724 in all -
than any other company.

Three IBM scientists - Robert Dennard, Mark Dean and Dennis Moeller - are inducted
into the U.S. National Inventors Hall of Fame. To date, only 137 people have been
so honored. IBM Fellow Emeritus Richard L. Garwin receives the Enrico Fermi Award
for contributions to national security and arms control, and for his achievements
in nuclear and particle physics. IBM scientists announce CMOS 7S, a breakthrough
semiconductor manufacturing process that uses copper instead of aluminum to link
transistors in chips, the culmination of 30 years of experimentation and inquiry.
With copper technology, which conducts electricity 40 percent more efficiently
than aluminum, semiconductor devices like microprocessors and memory chips can be
more powerful and more energy efficient.

NASA's Pathfinder, equipped with IBM RS/6000 technology for its onboard flight
computer, lands on Mars. The flight computer is responsible for more than 100 pyro
events, including deploying the parachutes, inflating the airbags and firing the
retro rockets that allow Pathfinder to land safely.

IBM and EDS announce a software agreement - believed to be one of the largest in
the history of the software industry - that gives EDS access to a wider range of
products to support its clients' global needs while streamlining costs associated
with software purchases.

IBM dedicates its new state of the art corporate headquarters in Armonk, New York
in September. Although smaller than previous headquarters, the new 280,000 square
feet facility has an open office design and many more meeting areas for team and
customer interaction. The building is equipped with a high-speed wire and wireless
communication network, and a technology gallery that features IBM products and
innovations throughout the company's history.

IBM announces plans to invest $700 million to build one of the world's most
advanced microdevelopment facilities at IBM's site in East Fishkill, New York The
facility will be among the first to produce chips on 12-inch silicon wafers and
will use IBM's unique copper manufacturing process and advanced X-ray lithography
technology.

IBM announces a five-year, $25 million investment to establish the Solutions
Research Center - its eighth research center in the world - in Delhi, India. As
part of its mission, the Center will foster joint research projects with India's
top universities and educational institutions, and will focus initially on weather
forecasting.

IBM provides $10 million in new Reinventing Education grants to 12 U.S. school
districts and state education departments, bringing the total to $35 million since
the program was established in 1994. IBM Reinventing Education grants in South
Africa - part of a $35 million IBM initiative - help equip schools and train
teachers on how technology can help them develop innovative curricula.

The U.S. Environmental Protection Agency recognizes IBM for outstanding
contributions in protecting the Earth's ozone layer. Since 1993, IBM has
completely eliminated the annual use of more than 12 million pounds of CFCs and
three million pounds of methyl chloroform from its products and processes. More
than two-thirds of the nonhazardous waste generated by IBM during the year is
recycled.