In the Business for Keeps, Firm Vows : AT&T; Unveils 40 New Computer Products

Vowing that American Telephone & Telegraph is in the computer business “for keeps,” the telecommunications giant on Wednesday unveiled more than 40 products, including a new top-of-the-line personal computer and a minicomputer whose performance approaches that of a mainframe.

AT&T;’s computer operation lost more than $800 million last year and is expected to lose another $400 million this year, according to industry analysts, fueling intermittent speculation that the company might abandon the market.

But with Wednesday’s product announcement and other recent changes in direction, “they are on the right track,” said David Carnevale, a vice president at Infocorp., a Cupertino, Calif., market research concern.

Shares a Design

AT&T; has revamped its product line, brought in new management and cut thousands of jobs in an effort to turn its computer operations around. Now, Carnevale said, “they’re not amputating anymore, and they are stemming the flow (of financial losses) from the major arteries.”

AT&T;’s new 6386 Workgroup System PC, based on Intel’s powerful 80386 microprocessor, shares a common design with AT&T;’s minicomputers and can be used by up to 32 people simultaneously. The machine currently accommodates both the UNIX and MS-DOS operating systems, the two main standards in personal computers, and will be able to handle OS/2, a new IBM standard, when it is released next year. An operating system controls a computer’s basic functions.

Many other companies, including Compaq and IBM, have already shipped 80386-based machines. However, AT&T; said its machine includes a unique feature, known as DOS Supervisor, that will let the unit run up to eight software applications simultaneously. Applications include word processing, accounting, communications and database management.

AT&T; Senior Vice President Vittorio Cassoni said at a news conference that McDonald’s restaurant chain had contracted to install 6386 machines at each of its approximately 1,800 company-owned outlets. The machines will be linked into a network.

Better Than Expected

AT&T; also introduced its most powerful minicomputer ever, the AT&T; 3B4000. It said the biggest version of the 3B4000 can handle more than 43 million instructions per second and support up to 300 users. With this kind of power, the 3B4000, whose list price begins at $187,000, could be used in airline reservation systems and automatic teller networks, lucrative markets AT&T; had not previously addressed.

Cassoni said AT&T;’s computer results to date have been 36% better than the company’s international projection, although he declined to provide specifics.

“What this announcement tells me is that AT&T; has given up on trying to appeal to individuals and is now concentrating its marketing efforts on big companies,” said Stuart Alsop II, publisher of the PC Letter.

“They are becoming an integrated systems company, as opposed to a PC company,” he added. “They are going up against Digital Equipment and IBM, rather than Apple and Compaq.”

‘Strategy Makes Sense’

Analysts and industry observers said the strategy makes sense, given AT&T;’s dismal performance in the retail marketplace, where its domestic market share is as little as 1%.

“AT&T; has no choice but to compete in the computer industry if they want to grow,” Carnevale said.

The company should be particularly strong in networking, or linking scattered computers and peripheral equipment, because “nobody understands communications better than them.”

Although it will take years to see whether the company succeeds, Carnevale said, “AT&T; has more patience and cash flow than any of the other contenders except the Japanese.”