IBM Unveils High-Powered Line of PCs Aimed at Engineering, Technical Users

By John Marcom Jr., Staff Reporter
The Wall Street Journal

January 22, 1986

New York -- International Business Machines Corp. introduced a line of high-powered small computers, giving it an entry into the fast-growing engineering workstation market and signaling a broader assault on the engineering and technical markets.

The products, which IBM calls RT Personal Computers, mark a significant new direction in computer design and represent a strong entry for IBM. While the introduction had been widely expected, IBM didn't announce another product that had been the subject of industry speculation: a lap-top computer.

The RT refers to the use of reduced-instruction-set-computer, or RISC, technology, a design approach developed by IBM scientists in the 1970s to reduce the complexity of computer operations and improve performance. IBM considers its RT line ideal for a wide variety of tasks that require more speed and power than ordinary personal computers offer. The RT PC starts at $11,700, about twice the price of a PC AT, the high end of IBM's PC line.

While IBM trumpeted the technology, some criticized the RT PC's limited graphics and networking capabilities. "It's a good start for IBM, but they've got a long way to go," said David Burdick, an analyst with Dataquest Inc., San Jose, Calif.

IBM said it believes that despite the rather large price difference between the RT PC and the PC AT, the new computers could tap a substantial market. "We believe it to be a big new business," said W.W.K. Rich, assistant group executive of IBM's Rye Brook, N.Y.-based Information Systems Group, its U.S. marketing arm.

IBM said the primary market in the U.S. consists of some three million "technical professionals," such as engineers, mathematicians, geologists and statisticians, who use complex calculations or complex graphical images in their jobs. The machine also offers an affordable entry-level computer-aided design system for manufacturers. IBM said its studies show that 85% of U.S. companies that could justify using CAD-CAM devices don't yet have a system.

Sales of comparable machines, often called workstations, have soared in recent years for such companies as Apollo Computer Inc., Chelmsford, Mass., and Sun Microsystems Inc., Mountain View, Calif. The machines offer power that only a few years earlier required investments of hundreds of thousands of dollars in hardware. Dataquest, a market-research company, expects revenue from workstations to grow to $1.1 billion this year and $2.5 billion in 1989 from $735 million in 1985. And shipments should jump to 191,000 units in 1989 from 21,000 last year, Dataquest added.

IBM's entry could fuel growth of the segment. "We see it as significantly expanding the pie," said Tom Kehler, executive vice president of IntelliCorp, Mountain View, Calif., which is adapting its expert-systems development software to run on the RT PC.

But IBM -- and the RT PC's association with the company's highly successful PC line -- also adds to the pressure those small makers of workstations already face. "It seems to us to be a very strong entry regardless of the label -- coming from IBM; it should do very well," said John Butler, vice president of Applix Inc., Westboro, Mass., which is providing office software for the RT PC. Mr. Butler said that the IBM RT PC is faster than any of its rivals in running his company's software.

Apollo "realizes that with (IBM's) size and installed base it will have an impact in the marketplace," said Edward Zander, Apollo's marketing vice president, but he expressed confidence that Apollo's products could compete on their technical merits. While the RT PC is comparably priced with rival machines, exact comparisons are difficult because of differing features.

Software will ultimately determine the success of IBM's machine, and IBM orchestrated a flurry of initial support. IBM itself will sell nine applications packages with the machines, which are scheduled to begin delivery in March. The packages include electronic-circuit design, CAD-CAM and electronic publishing programs. Several other companies, including IntelliCorp and Teknowledge Inc., Palo Alto, Calif., also said they will adapt their software to work on the RT PC. Others will likely rush to adapt programs written for similar rival machines. With optional hardware and software, the RT PC can also run software written for the IBM PC AT.

In several respects, the RT PC line parallels the PC. Like the PC, the RT PC was developed by a relatively small group of engineers, in this case IBM's Milford, Conn.-based Engineering Systems Products Independent Business unit. In an open acknowledgement unusual for teamwork-minded IBM, Mr. Rich said credit for the RT PC goes to W. Frank King, the group director who oversees the unit's engineers.

As with the PC, IBM is being "open," encouraging others to write software for the new computer. For instance, accessories designed for the PC fit the new machine. Also, IBM will allow certain PC dealers, in addition, to its direct sales force, to sell the RT PC.

But while the PC used off-the-shelf parts and operating system software developed outside IBM, the RT PC uses IBM parts: an IBM-developed microprocessor, an IBM-developed memory management chip that allows access to large amounts of data and a version of American Telephone & Telegraph Co.'s Unix software that IBM has extensively enhanced and refined. Having control over all the parts "lets you stay right at the leading edge," Mr. King said.

IBM's overhaul of Unix helps to establish the system as a standard for technical users, but could diminish AT&T's influence. "IBM has added so many new features that it becomes an IBM de facto standard," argued Robert T. Fertig, president of Enterprise Information Systems Inc., a Stamford, Conn., consulting firm. An AT&T spokesman said that AT&T's System V, on which IBM's version is based, remains the standard for software developers, and is being enhanced with features that users want.

Although IBM pioneered RISC technology, several young companies already sell machines incorporating the technology, and Hewlett-Packard Co. is planning an entire product line using RISC. But some companies are skeptical. RISC "doesn't necessarily mean you can do a given job faster" because software has to be written differently, said Jeffrey Kalb, a Digital Equipment Corp. vice president. Digital, which last year introduced new workstations based on its own designs, has decided against using RISC, he said.

Digital has a loyal following among engineers. "For customers to integrate (the IBM RT PC) into their systems would be difficult without performing open-heart surgery on their systems," said Aryeh Finegold, president and chief executive officer of Daisy Systems Corp., Mountain View, Calif. "It's something you wouldn't do unless there was a significant price-performance breakthrough." The RT PC doesn't represent such a breakthrough, he said, and Daisy, which incorporates workstations into engineering design systems, expects to buy $50 million of equipment from Digital over the next two years.

But Scott McNealy, president and chief executive of Sun Microsystems, said that Digital will have to move to a Unix-based system. He added: "It's hard to say how IBM will do. Working in its favor is the safe-buy attitude of corporate America." And that attitude is the workstation maker's biggest concern, he said.

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