I.B.M.'s New Powerhouse AT

Twice as Fast as Old PC's

By David E. Sanger
The New York Times

Dallas -- August 14, 1984 -- The International Business Machines Corporation, apparently seeking to tighten its hold on the market for sophisticated desk-top computers, today introduced an advanced version of its personal computer that experts said was so powerful it could best be compared with far more expensive systems.

The new Personal Computer AT is an office computer capable of performing numerous tasks at once. It can support the work of up to three people simultaneously, with two of them at remote terminals.

Because the AT uses a new microprocessor, the Intel 80286, the computer works at two to three times the speed of older I.B.M. models. But its cost, $4,000 to $6,000, depending on the configuration of the equipment, is far lower than most dealers and experts had expected.

A Network Introduced

The company also showed its first local area network for personal computers, considered a key element for linking the thousands of personal computers now used by the nation's largest companies. The new system enables up to 1,000 PC's to exchange information and to share printers and other devices.

Today's moves seemed aimed directly at the American Telephone and Telegraph Company, which recently introduced its own I.B.M.-compatible personal computer, and at small companies, such as Fortune Systems, Altos Computer Systems and Televideo, which market similar personal computers.

''This is a very impressive response,'' said Michelle Preston, the technology analyst at L. F. Rothschild, Unterberg, Towbin. ''I.B.M. is making it clear that it is pressing to create every solution to every problem for every user.''

The introduction was the focal point of an unusual and lavish three-day meeting here, sponsored by I.B.M., for more than 2,000 retailers and software developers. The event seemed to be part Texas revival meeting and part Las Vegas stage show, with barbecue and magicians.

But beneath the light-heartedness was a realization that the company has some serious problems to resolve. Dealers contend that although the Personal Computer line has been an enormous success since it was introduced three years ago, they have been badly hurt in the last year - mostly by I.B.M.'s own actions.

The company's entry into the home computer market, the PCjr, was heavily criticized, and sales have been much less than expected. A recently imposed 23 percent price cut on the entire PC line has badly squeezed retailers' profit margins.

''I think there is a feeling that the company has become arrogant and uncaring,'' said one dealer, who asked not to be identified. ''One of the I.B.M.er's just said to me, 'We know you have to take our products because we are the only player in town.' ''

But Douglas LeGrande, vice president of operations for I.B.M.'s Entry Systems division, said today that overcoming ''negative implications' was not the reason for the dealers' gathering, the first ever sponsored by I.B.M. ''We wanted to celebrate and recognize the people who have worked with us, and who have made the Personal Computer a success.''

If there was dissatisfaction among the dealers, much of it was dissipated this morning when they saw the AT.

''It is really innovative, and that is a major change,'' said Jack Cashman, who heads the Boston branch of On-Line Computers Plus, a computer retail chain. ''For the past six months, the most innovative announcements have been from Apple.''

The customers for I.B.M.'s new products are expected to be major corporations that have begun using PC's for complex jobs that were previously performed on minicomputers and mainframes, costing from $100,000 to $1 million.

Company's Market Focus

Talking to dealers this morning, Philip D. Estridge, president of the Entry Systems division, said:

''You said the customers wanted to be able to do far more. We are partners. We are listening.''

The new computer is more powerful than its predecessors by nearly every measure. It performs 750,000 instructions per second, a speed usually reserved for minicomputers and small mainframes.

Both versions of the new machine include a disk drive capable of storing 1.2 million bytes, or characters of information, about four times more than standard disk drives. The advanced model, which costs $5,795, includes a hard disk with a capacity of 20 million bytes.

While dealers were enthusiastic, some said the pricing was too aggressive and would hurt them. ''I.B.M. could have charged $1,500 more for the machine and not lost a sale,'' said Seymour Merrin, president of Computerworks, a Connecticut chain of stores. ''This is a much more complex computer that is going to require more support and sales time, and we are receiving no more money for it.''

Mr. LeGrande responded that I.B.M. would supply a ''whole package of aid for the dealers.''

At least for a while, uses for the new machine may be limited. To perform multiple tasks or support several users simultaneously, the machine must run under an operating system different from the basic program used in most I.B.M. PC's.

The new system is Microsoft Corporation's Xenix, a program similar to Unix, the Bell Laboratories' system that A.T.&T. is trying to establish as the industry standard. But relatively few programs that run under Xenix are now available, analysts said.

If Microsoft was one winner in yesterday's announcement, another was Sytek, a Mountain View, Calif., company that will manufacture I.B.M.'s new local area network. The network will cost $695 for each personal computer hooked up to it. 2

Competitors' Reaction Other computer makers' devices are somewhat different from I.B.M.'s - in memory, speed and price - so comparisons are difficult. Nonetheless, they were quick to tout yesterday what they consider their machines' advantages over the AT. In Sunnyvale, Calif., Televideo Systems said it is ''running neck and neck'' with I.B.M. Televideo introduced its own multiuser system four months ago. Sung R. Cho, Televideo's vice president of marketing, said that unlike I.B.M. Televideo already has thousands of programs available for its $8,995 model, which can support 16 users in contrast to I.B.M.'s three.

In Palo Alto, Calif., Bill J. Murphy, a personal computer marketing manager at the Hewlett-Packard Company, said I.B.M.'s new computer, would help H.P. because the company already has a family of Xenix-based computers used by engineers and scientists and the AT, will help establish Xenix as a standard.

In Redwood City, Calif., Fortune Systems Inc. said the I.B.M. machine would probably cost as much as Fortunes' comparable system when one considers that users must buy extra terminals separately for the I.B.M. machine. Fortune offers an $8,995 system that includes two work stations, according to James S. Campbell, the chairman and chief executive.

Apple Computer Inc. of Cupertino, Calif., said its executives were still studying the I.B.M. announcement. But Christopher P. Bowman, an Apple spokesman, said the company's top-of-the-line Lisa model may have better graphics capabilities and be easier to use than the new I.B.M. machine.

GRAPHIC: photo of I.B.M.'s new features; graph of division of Micro computer