Newspaper article The Christian Science Monitor

Apple-IBM Linkup Shows Pressures Facing Industry

Newspaper article The Christian Science Monitor

Apple-IBM Linkup Shows Pressures Facing Industry

Article excerpt

A NEW deal between IBM and Apple Computer - the United States' largest and second-largest computermakers - is a sign of things to come.

Economics and rapidly changing technology are pushing computer companies into strategic alliances - a sharp change from a decade ago.

"These kinds of relationships will probably continue to form for the foreseeable future," says Bruce Lupatkin, managing director of technology development at Hambrecht and Quist, a San Francisco brokerage house.

Some of these alliances are more tactical than strategic and won't last long, he says. But even the biggest companies are struggling with thinner profit margins and the demand of consumers for industry-wide standards. This means more partnerships.

In April, 21 companies, including No. 3 computermaker Compaq, announced that they would work together to offer machines with standard central software (operating systems) and hardware (microprocessor chips). The consortium is known as ACE, for Advanced Computing Environment.

Last week, International Business Machines Corporation and Apple Computer Inc. signed a wide-ranging pact that, if successful, could boost the fortunes of both companies.

Specifically, the deal would:

*-Form a joint company that would create a new software platform based on object-oriented programming. This kind of programming breaks up computer programs into building blocks that can be reconfigured to suit the need. The operating system would be open, meaning that it could run on a wide variety of hardware.

This move could help both companies shake the competition from Microsoft Corporation, an ACE member whose Windows operating system has gained widespread favor.

*-Build products that would make it easier for Apple's Macintosh computers to work in networks with IBM machines. The two companies will also develop and market an enhanced version of IBM's UNIX operating system.

*-Allow both companies to build new personal computers using IBM's RISC microprocessor architecture. RISC, which stands for reduced instruction set computing, is an alternative to the chip architecture used by industry leader Intel. Motorola, which makes its own RISC chips for Apple, will work with IBM to design and manufacture the new version of the IBM chip.

*-Create software platforms that incorporate multimedia technology - the merging together of text, graphics, video, and sound.

Analysts are not sure the deal will work, since the companies have not laid out how they'll solve the technological problems.

"Obviously, there's been a lot of buildup toward the Great Promise," says an analyst whose company prefers anonymity. …

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