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Apple's Chairman Has Great Expectations for Alliance With IBM


CUPERTINO, Calif. — Declaring that "things are really humming" between his company and International Business Machines, Apple Computer Chairman John Sculley said Thursday that details of their landmark alliance would be completed this fall.

Sculley added that "people who speculated that the two cultures couldn't work together are going to be surprised."

In his first press briefing since his firm's link-up with IBM was announced last month, Sculley defended the agreement as a central element of the radical strategy shift under way at Cupertino, Calif.-based Apple during the past 18 months.

Apple, he said, simply had no choice but to abandon its go-it-alone approach and hook up with a strong partner if it was to play an important role in the computer industry of the 1990s.

Sculley said he expected the alliance to "change the course of the industry" and emphasized that the technologies developed by the two companies--notably a new software operating system for controlling basic computer functions and a new version of an IBM computer-on-a-chip--would be made available for license by other computer firms.

He also said that while other companies would not be permitted to produce clones of the flagship Apple Macintosh, a version of the Macintosh that uses a software system called Unix would be made available to other manufacturers.

In defending Apple's decision to lay off 1,500 employees, Sculley conceded that the company had underestimated the impact of the recession. Chief Financial Officer Joseph Graziano said sales would remain flat for the rest of this year. Although unit sales of Apple machines are up about 60% from last year as a result of the introduction in October of low-priced Macintoshes, profit margins have shrunk from the mid 50% range to the low 40% level.

Graziano said the company was continuing to cut costs by consolidating offices and moving "several hundred" jobs out of Silicon Valley to a new data center in Napa, Calif., and to a new service center at an undetermined location outside California.

Sculley, who has assumed responsibility for advanced technology at Apple despite his lack of technical training, emphasized the importance of the new software operating system. It has been under development at Apple for three years and will be completed by a new Apple-IBM joint venture company.

The software is based on "object-oriented" technology, which makes it far easier to create customized computer programs and is regarded by many in the industry as the key to the next great leap in personal computer capabilities. But the system will not be ready for two to three years, and many other firms are also at work on object-oriented systems.

Next Computer, headed by Apple founder Steven P. Jobs, already has an object-oriented system on the market, but IBM has shelved a licensing deal with Next in favor of working with Apple. The IBM deal, ironically, is Sculley's opportunity to move beyond the Macintosh--a Jobs legacy--and leave his own imprint on Apple.

Sculley said he is personally leading the talks with IBM. He said he had talked with executives of other companies who have had problems working with IBM--including Microsoft Chairman William H. Gates--about the potential pitfalls of partnering with the Armonk, N.Y.-based giant, but expressed confidence that Apple and IBM would get along well.

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