IBM Introduces Clone-Resistant PC Line : Analysts Praise Products but Doubt Firm Will Regain Market Share
Threatened on all sides in a market that it once dominated, International Business Machines on Thursday introduced a new line of personal computers with key proprietary components that the company hopes will be far harder for encroaching “clone” imitators to duplicate.
In a glitzy introduction that it compared to the 1981 unveiling of the IBM Personal Computer, the Armonk, N.Y.-based company brought out four models of the Personal System 2, priced from $1,695 to $10,995, and an array of printers, software and disk drives.
The products, more than two years in preparation, are expected to heighten competitive pressure on such adversaries as Apple Computer and Compaq Computer.
“This represents a turning point in the evolution of personal computing,” Edward E. Lucente, an IBM vice president, declared to applauding IBM dealers at a presentation in Miami. The program was beamed to analysts and reporters in New York and to IBM customers at locations across the company.
But while many industry analysts and officials praised the products, few outside the company predicted that the new line would allow IBM to regain its dominance of 1984, when it held over half of the market. “This may stabilize their loss of market share, but it won’t reverse the situation,” predicted David Moschella, an analyst at International Data Corp. in Framingham, Mass.
Stock Price Declines
In New York Stock Exchange composite trading, IBM shares closed the day at $148, off $3.125, while competitor Digital Equipment was up $2.625 at $164.875. Compaq rose $1.625 to $31.125, Tandy gained $1.25 to $49.25 and, in over-the-counter trading, Apple closed $5 higher at $71.75 a share.
IBM’s new computers will accept software written for its earlier PCs, although software developed on the new machines cannot be used on the predecessor machines, company officials said.
With the hardware, IBM brought out an updated version of its 6-year-old computer operating system--the basic software--called PC DOS 3.3. IBM also offered a more advanced operating system, Operating System 2, that will be ready for sale in the first quarter of 1988, according to the company.
Many in the industry had speculated that IBM might build the new computers with a so-called closed architecture--or proprietary design--to hold at bay the imitators that have chipped away IBM’s market share to less than 40%. Such an approach held a danger, for by using an open architecture with its earlier models, IBM allowed software and hardware firms to make a profusion of complementary products that helped the IBM Personal Computer become an industry standard.
IBM’s strategy with this latest series of computers, it turned out, was to design key components that would be hard to duplicate. That way, the company enabled others to produce complementary products but made life hard for those that aim to do business simply by producing imitations of IBM computers.
“This has laid to rest a lot of rumors about IBM going to a closed architecture,” said Safi Qureshey, president and co-founder of AST an assortment of add-on products for personal computers. “This shows they’re going to stay with an open architecture for at least five years.”
At the low-priced end of the line is the Model 30, listed at $1,695, which has at least 640 kilobytes of internal memory and, like the other new models, graphics that are superior to what IBM has offered in earlier personal computers.
At the top end is the Model 80, which is based on the advanced Intel Corp. 80386 microprocessor and has at least 1 megabyte of internal memory and can be expanded to as much as 16 megabytes. All of the new models will use hard-shell 3 1/2-inch diskettes rather than the 5-inch floppy disks that have been standard.
IBM said it would simultaneously cut prices for older PC models.
Introduction of the new computers has brought changes for IBM’s dealer network that have not been universally well received. In an effort to tighten control over the network, IBM is requiring dealers that want to carry the new products to undergo lengthy training, meet sales quotas and stock the full line of IBM products, including less-popular items.
The company is expected to reduce the number of dealerships by about one-third.
“This is going to make them even more dominated by IBM than they have been,” said Michael Pocock, senior director of marketing for personal computer maker Epson America in Torrance.
While threatening to some makers of “clone” machines, the new products are likely to benefit other companies, including several software firms.
