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  1. Technology
June 25, 1987


By CBR Staff Writer

On Tuesday, feeling thoroughly misrepresented and misunderstood, IBM called in a coven of consultants to listen to the greatest and the best of the company’s managers to hear the naked, unvarnished truth about the Personal System/2. Having thoroughly debriefed one of the attendees at the meeting – no tea, no crumpets – Hesh Wiener puts the IBM message and the cover of Business Week into perspective.

Competition in the PC business once involved the touting of such wholesome qualities as clock rate, memory capacity, disk performance and price. These homey, nerdish aspects of desktop computers were part and parcel of what now appears to be the a bygone era of marketing, the Age of the IBM Personal Computer. Now is the Time of the PS/2, according to IBM. Also it is the Era of the Industry Standard, which means the defunct IBM PC, according to Compaq. In the long run, it won’t be both, and it might be neither. However it works out, these two of the industry’s most eminent organisations have apparently concluded, after careful study of their customers, that it is time to loosen their grip on technical reality. They have instead sought out the real essence of marketing, the raree, and are quickly developing their high tech versions into art forms.

Brooks Brothered

Yesterday, IBM fulfilled in part this publication’s forecast (CI No 708) by bringing forth a pair of its luminaries before an audience of consultants, Wall Street analysts and some of the more compliant elements of the press. The company trotted forth Mr William C Lowe, grand poobah of its Entry Systems Division, and Mr Ned C Lautenbach, czar of National Distribution. These defenders of an IBM on the offensive rattled sabres and rattled off numbers. Their exotic dance before a Brooks Brothered multitude was designed to prove that the PS/2 was selling like hotcakes, and that it was inimitable… on the off chance IBM’s guests thought otherwise. For the record, our published error was the suggestion that IBM might feed its guests something as tangible as a few sandwiches, but that was not to be. According to those at the entertainment, IBM’s executives boasted that their company has shipped some 250,000 PS/2 machines thus far. At facilities in Austin, Texas, and Boca Raton, Florida – soon to be supplemented by lines in Raleigh, North Carolina – robots are sweating pneumatic fluid as they assemble, every business day, some 2,000 model 30s, 1,000 model 50s, 800 model 60s and, sadly, a mere handful of 80386-powered model 80s. This is a rate that approximates a million units a year. Overseas production is projected to reach an additional 450,000 units a year. One or the other of the Messrs L reportedly cited other numbers the company’s competitors might find daunting: IBM’s backlog was put at half a million machines, and its sales mix at 80% retailers, 20% direct corporate sales. All this trumpeting of its prowess came from an IBM that is, according to distinguished experts in the press, saddled with a product line that displays flaw upon foible. Experts with callings less noble than journalism, such as economic analysis, were doubtless similarly surprised by the evidence that IBM understood the computer business. Stocks of the companies that will soon be rent asunder by the PS/2 have been soaring like one of Malcolm Forbes’s balloons, buoyed by the projections of analysts. These fiscal wizards have thus far failed to understand that the appropriate mechanism for the lifting of equities and that for the lofting of balloons may not be one and the same. The penetrating minds of IBM’s invitees was further evidenced by their careful probing of the distinguished hosts. Obviously aware that IBM’s PS/2 was developed as a public service, none of the honoured guests asked whether IBM was making appropriate margins on one or all of the machines, at least not in public. And, in keeping with this spirit, none of IBM’s heavy hitters volunteered to deal with that topic. To the dismay of IBM and its loyal fans, Compaq, the clone prince, has just gotten itself on the cover of Business

Week. If Business Week is right, Compaq – and Olivetti in Europe – will continue to sell machines that are no longer electronically compatible with IBM’s, in large measure as a result of the largesse of the industry’s most thoughtful company, Microsoft.

Tragic hero

IBM has not always ground its competition to a pulp. The company ballyhooed many of its contributions to the science of computing with brave pronouncements, only to find itself later playing the tragic hero. Historians of the workstation world will recall such feats as the unveiling of PCjr (designed to pulverise Apple’s model II), the launch of the RT Personal (right at the heart of the DEC MicroVAX), and the development of the TopView program (to prove that Microsoft’s Windows was inadequate). Nevertheless, the PS/2 line, which will soon grow to include additional models, is almost certainly going to do all at once what a succession of PCs did before. The failures of several members of the family – a list that could yet include the Convertible, about to be relaunched – is insignificant when compared with the immense successes of the PC, XT and AT. IBM will not be alarmed if half its new line succeeds while the other half is lost, just so long as a million, a million five get out the gate every year. Any moment, the ever-vigilant, always indispensable gaggle of consultants, analysts and scribes spearheaded by the group at yesterday’s meeting will awaken to the new crusade. Their powerful minds will come to a new focus. They will heartily debate the relative merits of various PS/2 models. And as they do so, they will quickly forget the alternatives offered by companies such as Compaq and Olivetti.

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