Jack Karp, Frank Michnoff, Matt Cain
Picking the winners and losers as IBM and Apple merge object-oriented OS efforts
We believe the most challenging aspect of the IBM-Apple deal will be development of an object-oriented operating environment (which we expect in 1994). The companies had been working independently on such an operating system (IBM with Patriot Partners and Apple with Pink) and the two firms will merge their efforts. This initiative is similar to Microsoft’s New Technology kernel effort, in that both propose support for multiple existing operating system applications, and run across both RISC and complex instruction hardware. These two OSs, however, differ significantly in terms of hardware and systems software supported. These object-oriented operating systems are designed to alleviate the burden faced by users developing applications across multiple heterogeneous desktop operating systems. We believe Windows 3.0 users will have the most alternatives when migrating – we expect both the NT and the Apple-IBM operating systems to support Windows 3.0 applications. Support for OS/2 2.0 and Macintosh applications under NT will be severely limited or non-existent. Further, although we do not expect the Apple-IBM OS to support 32-bit Windows (Win32) applications, support for OS/2, Macintosh and AIX (as well as Windows 3.0) applications would make this platform highly competitive. Windows 3.0 users will face a critical decision point in two to three years, when they must choose between Win32 or OS/2 2.x – this choice will lead them toward one of these object-oriented operating systems by the end of the decade. We believe the impact of this alliance will first be felt when IBM delivers (1992) a new version of AIX that supports the Motif and Mac interfaces, and runs Macintosh applications. This effort has several implications. First, AIX (on PCs and RS/6000s) becomes commercially attractive through its ability to run thousands of Mac applications. Second, we believe Apple will drop support for A/UX in favour of AIX. Third, IBM’s commitment to the Open Software Foundation (never rock solid) continues to be questionable given this emphasis on AIX. Finally we believe IBM’s RS/6000 (and forthcoming RS/5000) will gain market share (from 5% today to 15% by 1994), primarily due to the increased application availability and licensing of technology to others. We believe that strong ties to IBM will benefit Apple positively, and continue to believe that, by 1995, the Mac will achieve a 15% to 17% personal computer shipment market share.
IBM’s RISC risk
This relationship will give Apple greater share of mind in corporate accounts that have been hesitant to grow their Mac installed base due to a lack of support from IBM. We believe IBM will move to support Mac as a client of LAN Server as well as OfficeVision in 12 to 18 months. We remain positive on the outlook for OS/2 2.0 (fourth quarter 91), and believe that IBM’s willingness to work with third parties (perhaps out of desperation), as well as the perception that the company is taking aggressive actions in the desktop arena, will strengthen OS/2. We expect greater support from independent software vendors and greater interest from user organisations to result. Moreover, IBM gains the Mac interface for future CUA iterations (eg CUA 4), circumventing a potential loss in the Apple/Microsoft lawsuit. Hardware vendors (Apple included) will be affected significantly should this agreement be inked. Apple risks becoming just another box vendor; we believe clone vendors will quickly move to incorporate the Power PC chip and run the new Apple-IBM OS. Apple will attempt to derive a greater percentage of revenue from systems and applications software. IBM faces the risk of creating a RISC standard, only to lose sales to clone vendors (a repeat of the PC scenario). Further, the underlying hardware is becoming increasingly irrelevant; mainstream OS and applications support will drive hardware sales and microprocessor dominance in the mid to late 1990s. IBM and MIPS Computer Sys
tems are well positioned in this respect (with the new Apple-IBM OS and ACE, respectively), as well as Sun, which continues to gain independent software vendor support. We believe the losers are Hewlett-Packard, which does not yet have the support of a mainstream OS, and NeXT, which now cannot rely on IBM to promote the NextStep interface. Finally, Motorola will benefit as a manufacturer of the Power PC chip, but its 88000 RISC line will be negatively impacted, while Intel’s PC microprocessor dominance will remain largely unchallenged. The IBM-Apple agreement underscores the fissure in the desktop OS market, with Microsoft and ACE members moving in completely different directions to IBM and Apple. Users should make current desktop operating system decisions based on the future directions and strategies of their vendor/suppliers and their allies.Meta Group’s Desktop Computing Strategies Service
Amy Wohl
Why are IBM and Apple coming together now?
Politics may make strange bedfellows, but the need for success in business can make stranger ones. We wonder how Steve Jobs feels about the fact that the sacred Macintosh interface is going to succeed where his NeXTStep never quite happened – on the face of an IBM RS/6000 workstation? The IBM-Apple alliance makes lots of sense in terms of why these former competitors can see each other as partners; each has strengths that play right into the other’s weaknesses. IBM is hoping for substantial assistance in designing graphical user interfaces and understanding object oriented software. Apple is looking for large account credibility and help in obtaining the right chip to bring a high-end workstation to market. This is the easy part and we can expect to see some success for this part of the IBM-Apple relationship, some of it, perhaps, in fairly short order. We could expect, for instance, to see AIX on a Macintosh or an Apple RISC workstation in 1992 and hope for an Apple-inspired user interface for IBM’s RS/6000. On the other hand, the hard parts are much harder. If Apple and IBM are to together create a separate and independent new company to build operating systems software for a new generation of personal computers and workstations, well that’s not easy. And it’s fair to note that neither vendor has a lot of experience at rapidly creating low-end operating systems. Apple has a history of underestimating the time required and IBM doesn’t have a lot of success in this arena yet (although a revived OS/2, under IBM’s nurture and control could rapidly change that perception). Then there’s the question of who’s in charge of what. And how does Patriot Partners fit in? Then there is the question of how all this will meet the marketplace. There is no blank sheet of paper here. The ACE initiative, however weak, is still in progress, and Microsoft is unlikely to give it up easily. And MIPS, having just lost some of its market as Wang becomes IBM’s largest value-added reseller, is likely to argue strongly for keeping on with the effort. Ah well. It’s too soon to tell. The future is in the future. And think what fun they’re having in Seattle, trying to figure out what to do about all this! Amy Wohl is president of Wohl & Associates
