IBM-Apple deal not be as revolutionary as it sounds


Much has been said about the recent historic pact between IBM and Apple. Many analysts feel that it could have an enormous impact on the personal computer industry. I'm not so sure. To me, the proof will be in the products. While I'm as impressed as anyone by the credentials of the players, I'm just a little bit jaded after watching scores of other "strategic alliances" come and go over the years.

On July 3, the two companies announced a four-part agreement that would result in the formation of a jointly owned software company that would develop an "open system software platform" for equipment from Apple, IBM and other vendors. They would cooperate in helping customers connect Macintoshes to IBM networks and would develop new machines based on IBM's RISC (Reduced Instruction Set Computing) chips, which will be developed in conjunction with Motorola. The two companies would also collaborate on standards for the new generation of multimedia software.

This may sound like the biggest news since glasnost. But is it really revolutionary? Not necessarily.

The lead story in the July 1 issue of the trade newspaper PC Week, published prior to the IBM/Apple announcement, proclaimed IBM's new-found desire to "strike deals." IBM's new alliances, said PC Week, are designed to win allies to an upcoming version of its OS/2 operating system. OS/2, which will compete with Microsoft's DOS and Windows, is a strategic product for IBM. IBM has poured millions of dollars and an incalculable amount of prestige into this operating system. Apple may be IBM's new-found friend, but OS/2 is its cherished child.

Apple is hardly the first company to dance with IBM. Much was said and written about IBM's 1988 agreement with estranged Apple founder and Next Chairman Steven P. Jobs, whereby IBM would adopt Next's "NextStep" graphical interface. It evoked a lot of comment but, so far, no impact.

About a year ago, IBM announced an agreement with Go Corp. to license that company's operating system for pen-based computers. In February of this year, IBM signed an agreement to resell Novel's NetWare network software, despite IBM's heavy investment in networking technology. So far this summer, IBM has announced new strategic alliances with Borland, Wang and Lotus.

Apple is no stranger to alliances. It has made deals with Microsoft, Wang, Hewlett Packard and many other companies. A few years ago, I was present at the MacWorld Expo where Apple Chairman John A. Sculley and Digital Equipment Corp. President Kenneth H. Olsen announced a historic pact between their two companies. To be sure, there were some products and new marketing arrangements, but I haven't noticed any major upheavals in the computer industry.

The IBM and Apple logo give a product notoriety but they don't assure its success. Both companies have produced some impressive and successful products, but they both have their losers. Remember the IBM PCjr, (CQ) the Apple III and the Apple Lisa? What about the IBM software products that have gone nowhere. The IBM PS/2 has been reasonably successful, but its sales pale in comparison with the lower-cost PC clones that have flooded the market and offer the customer greater performance per dollar spent.

And don't forget IBM and Microsoft's now-estranged alliance over OS/2. If the hype of 1987 had become reality, DOS would now be dead and Macintosh would be yesterday's news.

Apple and IBM are powerful, but they are not the only major forces in the industry. For openers, there are the other major PC vendors such as Compaq and Tandy and the workstation companies such as Hewlett Packard and Sun. More important, there is Intel and Microsoft, which, together, dominate the microprocessor and operating system industries. Nearly 90 percent (about 70 million) of the world's personal computers use Intel's microprocessors and Microsoft's MS-DOS operating system. IBM and Apple have about 40 percent of the market, but even there, all IBM PCs are based around Intel microprocessors and the overwhelming majority of IBM machines run MS-DOS. A very high percentage of Apple Macintoshes are being used to run Microsoft Word, Microsoft Excel and other software programs from the Redmond, Wash.-based software giant.

The enormous installed base of MS-DOS and the growing base of Windows users gives Microsoft an important advantage. While IBM readies OS/2 2.0 and announces long-term alliances, Microsoft is now putting its considerable resources into DOS and Windows. Later this summer, the company will release a multimedia version of Windows that will be included with machines from Tandy, Fujitsu, AT&T;, NEC Technologies, Olivetti, Zenith Data Systems and other companies that plan to use Windows as the software platform to integrate animation, video, voice and music as a basic part of their computing platforms.

At the same time, Microsoft is working on a long-term strategy that includes its own version of OS/2 (expected to be called OS/2 3.0) along with a more robust 32-bit version of Windows for PCs with 386 and higher CPUs.

The Apple-IBM alliance has produced a press release. Research and development are months away from even starting and years away from producing results. The alliance is worth watching, but it's impact is far from certain.

+ Los Angeles Times Syndicate

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