Computer, Software Firms Join Forces to Compete Against IBM

Times Staff Writer

Leading computer hardware and software manufacturers are ganging up this week on industry giant International Business Machines, forming alliances to match IBM's latest generation of products for business users.

Microsoft and Torrance-based Ashton-Tate, the nation's first- and third-largest software makers respectively, announced Wednesday the introduction of a software system that will let a network of personal computer operators using a variety of computer languages share a common database.

Analysts, meantime, were expecting an announcement Friday morning by Apple Computer and Digital Equipment--two major manufacturers specializing in opposite ends of the computer hardware market--of an agreement to jointly develop compatible products.

Both joint undertakings should position their participants to survive--and perhaps thrive--during a make-or-break period of contraction in the computing marketplace, industry analysts said.

The software to be introduced in the latter half of this year by Microsoft, based in Redmond, Wash., and Ashton-Tate is called SQL Server and will have capabilities similar to that of the new OS/2 "extended edition" software package that IBM is scheduled to make available for its personal computers this spring.

Microsoft designed the IBM software as well but is hoping that SQL Server can edge out several competitors to become the standard operating system for non-IBM computers, said Gary F. Hromadko, an analyst with the brokerage of Robertson, Colman & Stephens in San Francisco.

"Microsoft's effort is simply to make sure that, as everybody gangs up on IBM to compete, the fundamental, foundation software with which they do that is provided by Microsoft," Hromadko said.

The linkup gives Microsoft easy entree to the more than 1 million current users of Ashton-Tate's dBASE product and strengthens Ashton-Tate's competitive position as database programs enter a new generation of development, added William J. Higgs, director of software research for Info Corp., a market research firm in Cupertino, Calif.

In over-the-counter trading Wednesday, Ashton-Tate stock fell $2.75 to close at $24.75, while Microsoft closed unchanged at $56.75.

Analysts said Apple, headquartered in Cupertino, has scheduled a press conference Friday morning to announce an agreement with Maynard, Mass.-based Digital under which the two companies will develop a full line of compatible products to compete with IBM--from the personal computers that Apple pioneered to the mid-size and, lately, mainframe computers with which Digital has gone toe-to-toe with IBM.

Suzanne Peterson, an analyst for the investment firm of First Boston in New York, said the companies will promote the interconnectibility of the new products but have not yet agreed to market each others' goods.

According to Peterson, Digital sought the joint undertaking to extend its computer networking capabilities, while Apple is developing a new generation of personal computers and wanted to link up with a manufacturer of larger computers. Both saw an alliance as a way to more fully invade the technical and business marketplaces, she said.

And each firm--surveying an industry that is likely to lose some noteworthy players as it matures--decided that the other would endure, Peterson said.

"It's the survivors fingering each other," she said. "Here, both Apple and (Digital) are saying, 'Isn't it nice to be on the short list?' "

Apple closed at $42.24, up 25 cents in over-the-counter trading. Digital slipped $2 to $122.75 on the New York Stock Exchange. IBM was up 87.5 cents to $116.125 on the Big Board.

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