UBS Securities vice-president Marc Schulman has revised his Advanced Computing Environment analysis Microsoft and the New World Order in the light of on-going events. The following is a precis of his latest thinking published under the title IBM and Apple: From Foes to Friends.
An alliance that will alter psychology of computer buyers and change buying decisions
Regardless of the ultimate success or failure of the alliance between IBM Corp and Apple Computer Inc, the psychology of computer buyers will be altered. This change in psychology will immediately influence buying decisions. Within this context, we have compiled a list of implications resulting from the announcement of the IBM-Apple partnership. We believe that these repercussions will be felt whether or not the partnership is ultimately a success.
The prospects for IBM’s OS/2 2.0 have been enhanced, and, correspondingly, those of Microsoft Corp’s Window 3 are diminished. Apple is hardly likely now to sue IBM over WorkPlace Shell, the Mac-like graphic user interface it’s using in OS/2 2.0. Windows 3 on the other hand has just been included in Apple’s suit against Microsoft. If the court rules in Apple’s favour, Microsoft could be required to alter the functionality and operation of Windows. To a user then, following Microsoft’s path entails the risk that the path will be fundamentally and abruptly altered, a risk avoided by following IBM.
Because the outlook for OS/2 2.0 has been strengthened, the prospects for Unix systems have been weakened. Vendors selling only Unix-based systems would be better served if Windows 3 prevailed and OS/2 2.0 flopped. In that case, the first real challenge to Unix would come from Microsoft’s OS/2 3.0 – which has now been renamed Windows NT and has lost any lingering relationship with OS/2 – and Windows NT won’t be available for at least a year after deliveries of OS/2 2.0 start.
The outlook for vendors like Data General Corp that use Motorola Inc’s 88000 has deteriorated. The death knell of the less than successful 88000 RISC microprocessor has been sounded. Both users and independent software vendors will now seriously question Motorola’s commitment to the 88000. This questioning will result in fewer sales of 88000-based systems and lessen software developer interest in developing applications for them.
The acceptance of Open Software Foundation technologies, Motif, Distributed Computing Environment, Distributed Management Environment – which figure in both Advanced Computing Environment and IBM-Apple plans – will be spurred. As users become aware of the IBM-Apple intent to employ Software Foundation technology, a growing number of them will conclude that such technology is the wave of the future and require that their current vendors support it. As a result, Unix International Inc will find itself weakened.
The success of the Advanced Computing Environment consortium is less certain. Users who would have followed the Advanced RISC Computing path to Microsoft’s Windows NT will now delay their decision in order to take a look at the portable IBM-Apple operating system.
Because the IBM-Apple alliance threatens them both, Hewlett-Packard Co and Sun Microsystems Inc will move closer to each other. A common software environment would be in the interest of both companies. Because of Sun’s large installed base, Hewlett-Packard, which operating on its own faces a much smaller market share than MIPS Computer Systems Inc, Sun or IBM, would be assured of a continuing flow of new applications. Because of Hewlett-Packard’s support of the Open Software Foundation’s technology, Sun’s systems would be able to interoperate with Distributed Computing Environment-based networks.
Microsoft Corp is the target and the biggest loser in the alliance
IBM’s primary goal in siding with Apple is to remove itself from the clutches of Microsoft and Intel Corp (and at the same time reduce its exposure to Digital Equipment Corp’s competitive incursions); improving its competitive position against the Advanced Computing Environment and other wor
kstation vendors is secondary if important. By establishing a jointly owned and independently managed systems software company with Apple and agreeing to have a third party, Motorola, manufacture and sell the microprocessors on which the software will run in the open market, IBM has maximised the probability that others will adopt its technologies and, accordingly, that the market control exerted by Microsoft and Intel will decline. By changing the perception of computer users, the IBM-Apple partnership will soon exert a negative influence on Microsoft. With the Advanced Computing Environment, Microsoft succeeded in positioning itself at the centre of a constellation of companies that would further its goal of extending its reach beyond personal computers. IBM has now created an opposing constellation that includes every significant software company except Microsoft – Novell Inc, Micrografx Corp, Borland International Inc, Lotus Development Corp. It is now armed for battle with Windows 3. The battle will erupt in the fourth quarter of this year, probably in October, when deliveries of OS/2 2.0 are due to begin. While the impact on Microsoft should be immediate, Intel should feel little or no impact until systems using the Power PC chip are shipped two or more years from now. IBM’s introduction of an under $10,000 RS/6000 workstation expected by the end of 1991, may provide a preview of the future. Expectations are that the company will greatly enhance the attractions of the RS/6000 in a client-server environment by coming out with diskless models at the bottom end that will cost only about $5,000.
