I.B.M. Adds 7 Computers, Cuts Prices

By John Markoff
The New York Times

June 3, 1988

The International Business Machines Corporation yesterday introduced seven desktop computers and price cuts in its Personal System/2 product line. It also suggested that its capacity to produce advanced one-megabit memory chips might become an advantage in its competition with other personal computer makers later this year.

The new I.B.M. computers include the company's fastest desktop machine to date, a redesigned and faster mid-range model and an improved version of its least expensive personal computer aimed at classroom users.

I.B.M., the world's largest personal computer maker, said it was now producing more than 85 percent of all the memory chips it uses in its personal computers. During the next quarter, it said, it will be able to produce enough chips to meet demand, even for its most memory-hungry models.

Shortfall of Some Chips Seen

Japanese manufacturers currently control an estimated 90 percent of the world market for computer memory chips, and analysts have suggested that there may be a 20 percent to 50 percent shortfall of one-megabit chips this year. I.B.M. and the American Telephone and Telegraph Company are the only American computer makers that manufacture their own memory chips.

I.B.M. officials said they thought that Japanese chip makers were facing problems as they tried to refine the process used to manufacture the complex one-megabit memory chip. That chip can store the equivalent of 62 pages of double-spaced type.

''I'm very pleased to have the internal supply,'' said William Lowe, an I.B.M. vice president and president of the entry systems division.

A Speed War in Computers

With its new personal computers, I.B.M. upped the ante in the industry's speed war. The new machines include a top-of-the-line model that will fit on a desk, called the Model 70. Versions of this desktop computer are available at three speed ratings; all are driven by the 80386 microprocessor made by the Intel Corporation. The fastest machine uses a 25-megahertz 80386 chip, company officials said. Called the Model 70-A21, it can run applications 50 percent faster than I.B.M.'s previous top-of-the-line machine, the Model 80, which stands on the floor.

I.B.M also announced price cuts of 5 percent to 18 percent for its Model 60 and Model 80 computers.

Industry analysts said the Model 70 was faster than other companies' personal computers based on currently available versions of the Intel chip. I.B.M. said it would stress the speed of its new models in an advertising campaign that will begin this week.

''We all seem to be involved in this speed war,'' said Andrew Seybold, publisher of Andrew Seybold's Outlook, an industry newsletter. ''Compaq has made a big issue of speed and corporate buyers probably have been getting pressure from their users,'' he said, referring to the Compaq Computer Corporation.

A Response to Demand

But Compaq's president, Joseph R. Canion, said computer makers were not racing each other so much as responding to customer demand.

''We aren't reacting to I.B.M.; we're reacting to market needs and to what technology provides,'' Mr. Canion said. He suggested that while I.B.M. announced a machine based on the fastest Intel chip before Compaq did, it might not be the first company to bring one to market.

''It will be interesting to see when they actually ship,'' he said. ''We don't announce things early, but we do move quickly. My bet is that Compaq ships 25 megahertz before I.B.M.''

The three new Model 70 computer are the same size as I.B.M.'s Model 50 desktop machines.

I.B.M. also introduced two versions of its Model 50 line, both known as the Model 50 Z, based on the Intel 80286 microprocessor. They offer faster memory and storage features than the existing Model 50 and have been extensively redesigned. The company said it had reduced the number of key logic chips in the computer to 5, from 65, by extensively using custom-made very-large-scale integrated-circuit technology.

Analysts said the redesign would lower I.B.M.'s manufacturing costs and make it more difficult for competitors to copy the computer's design.

Prices for the new Model 70's range from $5,995 to $11,295. I.B.M. said the price of the Model 50 Z would be $3,995 for a computer with a 30-megabyte disk storage system and $4,595 for one with a 60-megabyte disk.

I.B.M. also introduced two versions of the low-end member of the PS/2 line, the Model 25. Designated LS, they include a local area network connection and offer a choice of hard disks.