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July 27, 1994

IBM’s POWERPC STRATEGY “WILL FAIL UNLESS APPLE LICENSES SYSTEM 7” – ANALYSTS

By CBR Staff Writer

Today’s PowerPC market has reached something of a hiatus. The hubbub of the initial Power Macintosh launch is over and the Macintosh community is generally enjoying the products and waiting for more native software, laptops and servers. Over in the personal computer camp, the picture is akin to one of those pre-battle scenes with generals poring over maps while the troops hang around telling rude jokes to each other. Not much is happening, there is a note of expectation and there are signs of nerves. And not much will happen, it seems until IBM Corp yells ‘charge’ and launches its machines. That is, unless the Taiwanese or other motherboard manufacturers strike some spectacular OEM deal and beat them to the market – which does not seem likely. Certainly Dataquest Inc’s Dominic Ricchetti believes it will be up to IBM or Apple Computer Inc to lead. The Taiwanese are not going to create the market, he says. All the pieces bar one are ready for the off – the missing piece is software. It is all software – software is everything.

Niche market

Until the processor gets a broad-based operating system it will be a niche market, says Ted Julian, an analyst in International Data Corp’s personal computer hardware programme. Software really is the key enabler for success these days, says Richard Buchanan, senior analyst with Forrester Research Corp’s Computing Strategy Services. A recent paper from Computer Intelligence InfoCorp makes exactly the same point: Success in the marketplace requires a mass operating system that end users are able and willing to use. That’s why personal computer vendors are not leaping in droves to PowerPC-based processors, they face difficulties finding a suitable operating system. There are no big surprises there, and IBM is acutely aware of the importance of operating system support, hence the highly unusual decisions to actively support Microsoft Corp’s Windows NT and Sun Microsystems Inc’s Solaris alongside its strategic Workplace microkernel and OS/2 for the PowerPC. The official line from IBM is: We let the customer choose. After years when IBM was perceived as leading its customers by the nose, it seems like a good idea. However, this pragmatic approach has caused a lot of angst both among OS/2’s loyal supporters and, indeed, some workers within IBM’s Personal Software Products division. The atmosphere in some of the Internet newsgroups and Compuserve fora has been considerably enlivened recently by IBMers from the OS/2 and NT camps taking pot-shots at each other, and OS/2 fans heaping vitriol on IBM’s treacherous decision. An outsider can only guess what the atmosphere must be like in the IBM corridors. Journalists, of course, love this kind of stuff, but usually the real world can comfortably ignore it. However, in this case there is a real fear abroad that the multiple-operating system strategy is confusing developers and users. There is also a general perception among the analysts we spoke to that, no matter what IBM says, the schedule for Workplace OS is slipping and the company will not get OS/2 for PowerPC finished by the end of the year. And there is no general acceptance that IBM will manage to define the personal computer market in the way it hopes, using its human-centric computing model planned to include intelligent agents and speech input-output.

By Chris Rose

It is a good plan to have this availability [of operating systems], says Dataquest’s Ricchetti. However, he warns: IBM must clarify its operating system strategy in order to win independent software vendors and applications. IBM recently agreed to license and resell Solaris. What direction will AIX go, or will it compete? Will IBM position OS/2 against Windows NT or fully support and sell Windows NT implementations? When and under what terms will Apple license System 7 for PowerPC compatible vendors? These operating system issues are the biggest challenge to the success of the PowerPC architecture. Paine Webber’s Stephen Smith makes the same point, and is dismissive of the strategy of getting every operating

system under the sun… what you need is one operating system with a healthy dose of applications. Ricchetti says that there is still market optimism that PowerPC can make a big splash, but he warns of concerns surfacing that were not there a few months back. He believes OS/2 for PowerPC will not appear before 1995, a position backed by Smith, who offers a small bet on the subject. Computer Intelligence takes the same stance. Its aforementioned paper says simply that there are only two suitable operating systems available today – Windows NT and Apple’s System 7.0: IBM’s OS/2 is due in the first quarter of 1995 and is also a third potential operating system, but is one with few supported applications. To be fair, Computer Intelligence is pretty scathing about Windows NT too, describing market reaction as ‘underwhelming’ and characterising the Microsoft operating system as resource-hungry and, on the desktop at least, offering no compelling performance or applications advantages. Julian of IDC has similar qualms about NT’s ability to drive the PowerPC market. Its positioning as a general purpose, friendly operating system is fine, he says. But in terms of shipments? He pauses with the hint of a chuckle, not really. In addition he points out that NT’s success, such as it is, has been in the server sector of the market. These are big, expensive machines where the processor is a smaller proportion of the total cost and he is dubious about the extent to which PowerPC’s price performance will shine through. Dataquest’s Ricchetti has more time for NT, describing it as a wild card. However, he sets a tough performance target for PowerPC vendors to meet – PowerPC manufacturers will have to offer twice the performance of a Pentium system running NT, for the same price, to be onto a sure-fire winner, he believes. It sounds like a tall order. As far as Computer Intelligence is concerned, the great hope is Apple’s System 7, which it describes as a potential field-leveller when combined with PowerPC. The crunch is that Apple will have to get on and actually license System 7, at reasonable rates to the PowerPC clone manufacturers. There is no doubt that a number of manufacturers are very, very keen to get their hands on the Macintosh operating system and Computer Intelligence says licensing is a potentially workable and profitable model for Apple and argues that it would eventually boost Mac sales. In fact Computer Intelligence states bluntly that if Apple does not make this leap of faith, it will suffer a slow decline to death. Despite the public pronouncements from Apple that it will license System 7, if the price is right, Computer Intelligence believes there is still an internal debate raging at Apple. The number of users who pop up asking will I be able to run Apple applications on an IBM Power Personal? highlights both the attraction, and the reason for Apple’s nervousness. There are persistent rumours that IBM and Apple are close to inking an agreement on System 7 licensing.

Ascloseasthis

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Ricchetti also believes System 7 licensing is important to the success of PowerPC. Indeed, one of his main concerns is the lack of progress on this front, particularly since he recalls an IBM vice-president insisting a few months back that the two companies were ascloseasthis on the agreement. In seems that Apple is still playing the field. Neither System 7 nor Windows NT were uppermost in the mind of IDC’s Julian; instead he picks OS/2 as the wild card, but not on the grounds that IBM would necessarily choose. Where IBM is hoping to tout OS/2 for PowerPC on the back of human-centric goodies, Julian says: In terms of running Windows applications, they may be able to pull something off.

Chris Rose is editor of PowerPC News, published fortnightly on the Internet at power.globalnews.com

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