Software Detente For I.B.M.

By John Markoff
The New York Times

Tucson, Ariz. -- February 26, 1992 -- I.B.M. has quietly retreated from its loudly announced plan to battle the Microsoft Corporation for leadership of the personal computer software industry.

The decision by I.B.M. to avoid thrusting its OS/2 program into direct competition with Microsoft's Windows means that Microsoft can count on the continuing allegiance of hundreds of computer makers and software publishers, and millions of users.

The I.B.M. executive who took charge of OS/2 marketing activities in December is sounding a more conciliatory theme. "I'm not the kind of person who enjoys bashing Microsoft," Fernand B. Sarrat said Tuesday. "Windows is a very successful product and I accept that. I'm not going to buck the trend of Windows. I want to ride with it."

Former Partners

The International Business Machines Corporation and Microsoft, former partners, had been heading toward a showdown over the operating-system software that controls a computer's basic functions. Both companies have promised soon to release new, long-overdue versions of these programs that are supposed to make personal computers much more powerful and easy to use.

Last year, executives of I.B.M., which is based in Armonk, N.Y., staked much of the company's power and prestige on driving Windows from the market and wresting control of the software industry away from Microsoft.

At a splashy introduction last fall in Las Vegas, Nev., the world's largest computer maker promised that version 2.0 of its OS/2 software would even improve the performance of software written to work with Microsoft's program -- running "Windows better than Windows and DOS better than DOS," according to the I.B.M battle cry.

An Industry Standard

DOS is the operating system by Microsoft that became an industry standard through the success of the original I.B.M. personal computer.

In Windows, I.B.M.'s OS/2 faces a competing program with more than 10 million purchasers and scores of allied software publishers, who write compatible programs for word processing, spreadsheets and other applications. And Microsoft, of Redmond, Wash., is on the verge of releasing an improved version.

Microsoft executives say they are preparing to ship at least a million copies of the Windows 3.1 version to dealers on April 6, just a week after the date that I.B.M. has committed itself to begin shipping its latest OS/2 program. Microsoft is also planning to spend $8 million in a nationwide advertising blitz scheduled to start the week before I.B.M.'s shipments begin.

But I.B.M. executives have begun playing down the rivalry and promoting more modest goals, a reversal noted by others in the business. "Whatever happened to the Blue Ninja?" said Terry Garnett an executive at Oracle, a San Mateo, Calif. software developer.

I.B.M.'s new, more accommodating approach was much in evidence at the PC Forum conference here, sponsored by Esther Dyson, a leading industry analyst. Jim Cannavino, the head of I.B.M.'s desktop computer business, pointedly took a seat next to the Microsoft chairman, William H. Gates, in the audience of a panel discussion.

And Mr. Sarrat adopted a much friendlier tone than that of his predecessor, Joseph Guglielimi, who was named chief executive of Taligent, the I.B.M.-Apple Computer joint venture, this week. In an interview Tuesday, Mr. Sarrat said that his sales campaign would initially focus on the company's largest corporate customers, which have been involved in the field testing of OS/2 2.0.

"I don't view Microsoft as a direct competitor," he said. Instead, Mr. Sarrat said he merely wanted to help customers get the most from their computers. "I'm more into developing system software that takes advantage of the most advanced hardware," he said, suggesting that OS/2 will make its biggest impact in future multimedia applications that integrate text, images and sound.

Industry executives and analysts say I.B.M. is worried about its ability to overcome doubts among customers and software publishers about whether its new alliance with Apple, once its archrival, will in a few years render some current I.B.M. products, including OS/2, obsolete. I.B.M. and Apple insisted this week that there would be a painless transition from OS/2 to the Pink operating system that they are jointly developing.