Go back to News pageSAN FRANICISCO -- A month ago, top officials from Apple and IBM conceived a grand alliance to create a new force in personal computers. But when the agreement was finally announced earlier this week, it was more like a nonaggression pact.
The two former adversaries say they will develop a new generation of PCs capable of running either company's software operating system. But they failed to join forces in designing mutually compatible software. Analysts called that a critical mistake in a world where software is much more profitable than hardware, which has become a commodity.
"The only thing that's going to matter in this industry in the future is going to be software. Hardware is not going to matter,'' said one industry expert.
If that is true, the real winner in Apple and IBM's watered-down deal has got to be Microsoft's Bill Gates. Together, Apple and IBM might have forged a software strategy with enough clout to eat into Microsoft's near-total domination of the software market. But if Apple and IBM insist on sticking to their own operating systems, Microsoft's Windows will continue to pick them off like crows on a fence.
In addition, the new IBM-Apple common computer will not reach the market until 1996. By that time, Gates says, Microsoft will have sold some 30 million copies of its next generation of Windows, which is due out in a few months.
Computers using Intel-style chips and Microsoft's DOS and Windows operating systems run more than 80 percent of the world's PCs. Most of the remaining machines use Apple's Macintosh system, while a very small percentage adhere to IBM's OS system.
It was with the hope of turning back the Intel-Microsoft juggernaut that Apple, IBM and Motorola developed the PowerPC microprocessor, which runs the latest Macintosh computers. IBM, however, has failed so far to come out with a PC using the new chip and its OS/2 operating system.
When Apple Chief Executive Michael Spindler met last month with James Cannavino, IBM's head of strategic planning, talks reportedly involved a much grander plan than the one announced Monday. IBM was set to invest heavily in Apple, while Apple would agree to help develop a common computer and license its Mac operating system to IBM.
In the end, however, both companies decided to keep betting on their own operating systems. Silicon Valley insiders say IBM officials decided that if they got into the business of cloning Macintoshes, it would kill any momentum for OS/2.
"When news of a possible licensing deal for Mac OS got around, IBM corporate customers began questioning the company's commitment to OS/2, and that really got the company to rethink the deal,'' said Tim Bajarin, president of Creative Strategies.
Apple, meanwhile, may feel that it is in a position to call the shots in any deal with IBM. Apple's earnings in the fourth quarter were much better than expected, and the December quarter promises to be strong as well. In addition, a number of companies will soon announce agreements to make Mac clones, enabling Apple to broaden the base for the PowerPC without relying on IBM.
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