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IBM-Apple Alliance May Transform Roles of Key Industry Players

July 04, 1991|DEAN TAKAHASHI | TIMES STAFF WRITER

The alliance of International Business Machines and Apple Computer could cleave the computer industry, assuring some companies of key roles in determining the future of computing and forcing others to scramble for survival, industry analysts said Wednesday.

Skeptics said IBM and Apple's attempt to develop a new generation of universally compatible personal computers will take several years. The alliance could easily dissolve during that period because, as one analyst said, IBM and Apple "operate as if they are on different planets."

One beneficiary of the IBM-Apple venture would probably be Motorola, a Schaumberg, Ill., chip manufacturer that will collaborate with IBM in designing microprocessors for the alliance. Microprocessors are tiny chips that serve as a computer's brain.

Santa Clara-based Intel, the world's biggest chip maker, and software giant Microsoft of Redmond, Wash., could be hurt if the alliance accomplishes its goals. Intel makes microprocessors for IBM-compatible computers, and Microsoft makes the popular MS-DOS operating system that is the central software for IBM machines.

Apple and IBM said they will cooperate to develop easy-to-use, easy-to-program software that would compete with Microsoft's MS-DOS system.

"We don't feel left out," said Microsoft President Michael Hallman, who questioned whether the IBM-Apple effort was really addressing a need in the market.

The alliance would rely on reduced set instruction computing (RISC), an advanced chip technology that makes it easier and cheaper to manufacture microprocessors. Because Motorola would co-develop chips for the alliance, Intel's influence as the industry's dominant chip supplier could be challenged, analysts said.

But Intel spokeswoman Michelle Bourdon said the company welcomed the alliance because it will develop an operating system that will be compatible with Intel's existing line of X86 microprocessors. She noted that there is no guarantee that the Motorola-IBM processor would gain wide acceptance in the industry.

"We've competed with Motorola successfully for years," Bourdon said.

Sun Microsystems in Mountain View and Hewlett-Packard in Palo Alto, which manufacture workstations based on RISC systems, could be put on the defensive.

Anil Gadre, a Sun Microsystems vice president, said her company has an edge because the alliance won't bring a computer to market for several years whereas Sun already sells RISC-based computers.

Likewise, H-P spokeswoman Marlene Somsak said the IBM-Apple alliance has a lot of catching up to do. She said the Open Software Foundation, an H-P-sponsored consortium, hopes to develop standardized, object-oriented software by year-end, giving H-P a further jump on the competition.

Richard Shaffer, a consultant with Technologic Partners in New York, said a successful IBM-Apple effort could threaten dozens of other manufacturers of IBM-compatible computers.

Thomas Yuen, chief operating officer of AST Research in Irvine, said he was unimpressed by the announcement, noting the alliance wouldn't pose a competitive threat for several years.

"It's like a couple of auto makers saying they will deliver an electric car," Yuen said.

Yuen also noted that IBM and AST have a technology cross-licensing agreement that would likely be extended for any new computing standard that the IBM-Apple alliance would develop. Some other PC manufacturers may not have that protection.

The ultimate loser could be the consumer, who will be faced with yet another computer standard to choose from, Shaffer said.

"Microsoft doesn't feel threatened, but the confusion created by this alliance could cause people to slow down their purchases," said Hallman at Microsoft.

In the long-term, consumers could see fewer price cuts in part because IBM and Apple would not likely license a huge number of the clone makers to produce the computers. With fewer manufacturers making products, price erosion will not likely proceed as quickly as in the past, Shaffer said.

IBM and Apple, in response, say the open standards that they plan to develop could be broadly licensed to the industry and could introduce a new generation of innovation to the computing world.

* MAIN STORY: A1

IBM Deals

Here is a look at recent agreements that International Business Machines Corp. has forged with other computer makers in the past few weeks:

* June 18: IBM announces that it will invest up to $100 million in ailing Wang Laboratories of Lowell, Mass. As part of the deal, Wang will resell IBM computers and cut back on its own computer manufacturing to concentrate on developing office software and computer imaging products that will run on IBM computers.

* June 24: IBM and Lotus Development of Cambridge, Mass., team up to expand IBM's line of office software while giving more exposure to Lotus products. Under the agreement, IBM will sell Lotus' Notes program, which allows groups of people to share information through computer networks, as well as Lotus' electronic mail product, cc:Mail.

* June 24: IBM and Borland International of Scotts Valley, Calif., enter an alliance to develop and sell certain software to work with a new version of IBM's OS/2 operating system.

* July 3: IBM and Apple Computer announce a broad agreement to share technology. The deal includes a joint venture in computer software that will simplify computer programming and integration of Apple's highly successful Macintosh computer design into IBM systems.

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