IBM Unveils High-Powered PC And an Office-Computer Network

Major Technology Advances Expected to Challenge Variety of Competitors

By Dennis Kneale, Staff Reporter
Wall Street Journal

New York, N.Y. -- August 15, 1984 -- International Business Machines Corp. announced a new high-powered computer, an office-computer network and a flurry of other introductions that mark a powerful jump forward in desktop-computer technology and pose a major challenge to its office-computer competitors.

For perhaps the first time since IBM's late entry into the personal-computer business three years ago, the giant computer company has impressed many in the industry with new technology rather than relying on marketing. Competitors, dealers and consultants are reviewing the IBM introductions, whose full impact may not appear for six months of more. But many say the IBM moves will send major ripples through several segments of the computer business.

An IBM desktop computer that can serve several users has been long awaited. The new machine, dubbed "Popcorn" by the industry and formally named the Personal Computer AT, includes surprisingly powerful features that rival those of the room-sized mainframe computers of just 10 years ago.

Two basic versions of the PC AT, whose designation stands for advanced technology, were unveiled in Dallas at a three-day meeting of more than 2,000 dealers, consultants and developers of software and hardware. The versions sell for $3,995 and $5,795.

"From a technology point of view, it's quite a step forward," said Egil Juliassen, chairman of consultant Future Computing Inc., who was in Dallas. Robert A. Roblin, a marketing manager with Software Arts Inc., said he was "blown away" by the technical features of the computer and marveled that the PC AT's internal memory can readily expand to three million pieces, or three megabytes, of information. That is far more than any other major product and equal to the memory he could address in his university's computer in the early 1970s.

The IBM moves are bound to mean far more competition for smaller makers of so-called multiuser systems, including Televideo Systems Inc., Fortune Systems Corp., Altos Computer Systems, and newcomer Corona Data Systems Inc.

The software industry also may be in for a competitive jolt because of a new IBM program for "windowing," or splitting the computer screen into several sections for different tasks. IBM called the $149 program, known as Topview, "a key foundation for future applications" and apparently rebuffed smaller firms' requests that IBM support their windowing products. "One of the next big thrusts IBM will take is to start doing a whole lot of PC software itself," said consultant Dixon Doll, president of DMW Group Inc. in Ann Arbor, Mich.

Many who saw IBM demonstrations of the new products said they also could pose tough competition to Apple Computer Inc. because they copy many of the easy-to-use features that have been Apple's main selling point. These include the windowing approach and IBM-supplied technical data that will enable software writers to develop programs using the "mouse" pointing device that is a trademark of Apple's Macintosh computer. An Apple spokesman declined comment.

The new PC AT also could pose important competition to American Telephone & Telegraph Co. and its new 3B series of computers, which can be shared by various office workers, analysts said, because of the new ability to hook up 72 PCs, which IBM also introduced yesterday. Such networking of office communications is a centerpiece of AT&T's approach. "There's no other PC in the market today at this price level and memory. That pressures AT&T to come out with something better, and they've got to move quickly," said Robert T. Fertig, founder and president of consultant Enterprise Information Systems Inc. in Greenwich, Conn.

Some consultants, moreover, see the new IBM computer possibly rivaling the bigger minicomputer systems of such concerns as Digital Equipment Corp. and Data General Corp., which haven't before had to compete with IBM with similar products. "Any aspiration DEC has for surviving in the multiuser business will be dramatically impacted. It puts further pressure on DEC to drop prices, but they have room to do so," asserted Mr. Doll. But DEC's John O'Keefe, a marketing manager, countered that the IBM introduction "will have very little impact on our multiuser offerings . . . . I don't expect to see any pricing or competitive pressure based on what I know at this time."

Most of the new IBM products will be available by the first quarter of next year. The PC AT computer and accessories are available immediately -- shipments began yesterday -- and will sell in two versions, depending on data storage capacity. Most dealers and analysts viewed the prices, $3,995 and $5,795, as "reasonably" aggressive; some people had expected a higher-priced product.

IBM will use its ample marketing might in introducing the products. IBM told dealers in Dallas that August "will be the biggest single TV (advertising) month ever for IBM," and that the PC AT pitch will be "the most intensive PC campaign in its history." And customers, for the first time, can buy on credit with IBM-sponsored credit cards at independent dealers.

Ironically, IBM's smaller "clone" competitors, which make lower-priced personal computers that run IBM PC software, may be less severely affected by the new products. Their focus is on the lower-priced end of the market rather than high-priced systems, although recent IBM price cuts have trimmed their profit margins and enhancements of the basic IBM PC are expected.

IBM's multiuser rivals pointed out that the IBM machine will accommodate at most three users while some of their systems will handle more than a dozen -- at a lower price. In addition, the PC AT won't be able to handle more than one user simultaneously until the needed operating-system software for multiuser capability is available in October from Microsoft Corp. Microsoft, Bellevue, Wash., designed the internal programming of the original PC and also the PC AT.

The IBM limitation to three users on each PC AT may be to encourage sales of the computer-network system it also announced yesterday. The network enables as many as 72 desktop computers, printers and electronic files to exchange information. Ed Marill, IBM's PC AT project manager, said that only "current limitations" dictate the three-person maximum and that independent vendors may design accessories enabling the system to take as many as 16 office workers.

The IBM PC network, which falls short of the complex and more-powerful system that IBM plans to introduce within two to three years, will be available in October. It is based on the approach of Sytek Inc., a small Silicon Valley firm that is 51% owned by General Instrument Corp.

More importantly, however, it represents IBM's willingness to offer several competing standards of office-computer networks. That could mean even tougher competition for such competitors as Wang Laboratories Inc., and Xerox Corp., whose different networking approaches may be usurped if IBM offers them, too. IBM would hook up the competing network standards to its chosen approach, known as token-ring architecture. Sytek's approach uses a slower and different cable for information transmission, known as broadband and used commonly in cable television.

"It's really in recognition of the fact that multiple (kinds of) networks will exist in business establishments," said William Lowe, the IBM assistant group executive overseeing most development of IBM's socalled local area network technology. IBM, he said, will "undoubtedly be bridging to other (standards) in the future; it provides us a way to support a total enterprise with IBM offerings." That statement increases the likelihood that IBM will similarly offer the Ethernet office-network favored by Xerox and more than 100 other vendors.

In New York Stock Exchange composite trading yesterday, IBM closed at $121.25, down $1.

Copyright Dow Jones & Company Inc