Irvine’s AST Among 60 Firms Planning to Develop New System : Personal Computer Industry Gangs Up on IBM
After years of playing follow the leader, a group of personal computer makers joined forces Tuesday to endorse a new computer design that will pose a direct challenge to IBM’s market dominance.
The alliance of more than 60 computer companies announced plans to develop a new computer “bus” to control how different parts of a personal computer communicate with each other.
The bus would be an alternative to the one developed by IBM for certain models of its Personal System/2 computer line. IBM introduced its so-called Micro Channel bus in April, 1987, and had hoped it would become the standard for the next generation of personal computers. But the industry has mostly turned up its nose at the Micro Channel design.
“The industry is saying: ‘Why go with (IBM’s) new standard, which has not proven to offer one single advantage over the old one and has failed to rally the industry’s support?’ ” said Thomas C.K. Yuen, executive vice president at AST Research in Irvine. AST is one of nine personal computer makers that organized the group.
“IBM has not only lost control of the industry standard it helped create,” said Richard A. Shaffer, a New York computer analyst, “but, if this group is successful, then IBM has lost control of the future of the market.”
Analysts generally praised the group’s plan but some questioned whether the new computer design will further muddle an already confusing personal computer marketplace.
When IBM introduced its first personal computer in 1981, the machine was so successful that it established a standard for how information would be routed inside a computer. Companies seeking to produce inexpensive copies, or “clones,” of IBM’s equipment have had to adhere to that standard.
Last year, IBM unveiled its Micro Channel design for its Personal System/2 machines. IBM touted the Micro Channel, which is supposed to permit faster data transmission and provide other features, as the main improvement over the bus contained in its older machines.
But the Micro Channel design has a major drawback. The same add-on circuit cards that run on millions of older machines, particularly IBM’s popular AT model and clones made by other companies, won’t work on the Micro Channel computers. The cards are used for such purposes as adding more memory to the computer.
“Our customers have told us they’re very concerned about giving up that large investment” in add-on cards, said Bill Johnson, marketing manager for Hewlett-Packard’s personal computer group in Sunnyvale.
For their part, many personal computer makers have protested what they contend are excessive licensing fees IBM has set for companies that want to produce Micro Channel-compatible machines. IBM holds patents on various aspects of the Micro Channel design.
Dataquest, a San Jose market research firm, said the alternative design, known as the Extended Industry Standard Architecture, is “a natural outgrowth of the outrageous licensing fees” for Micro Channel. Dataquest blamed IBM for doing “an exceedingly poor job of selling the advantages” of Micro Channel to its customers.
IBM’s share of the personal computer market has slipped from 41% in 1985 to 30% in 1987, according to Dataquest figures.
An IBM spokeswoman said the company had no comment on the EISA program. Instead, the spokeswoman cited sales statistics for the PS/2 line, calling it “the fastest-selling computer in IBM history.” IBM said it has sold more than 2 million PS/2s, about half of which have been equipped with the Micro Channel feature.
At the same time, however, IBM seemed to acknowledge the popularity of its old AT bus by unveiling plans Tuesday to introduce a new personal computer, the Model 30-286, that will be compatible with both the old AT bus and the Micro Channel design.
“Making the PS/2 incompatible with its earlier machines was one of the biggest mistakes IBM ever made,” said analyst Shaffer. “Today’s announcement by IBM is, in effect, conceding that.”
Earlier this summer, several personal computer makers, led by Compaq Computer of Houston, began discussing an alternative bus that would offer the performance gains of Micro Channel while maintaining compatibility with the AT bus.
At a New York press conference Tuesday, the companies said the first machines incorporating the new standard are expected to be available in late 1989.
Analysts said the announcement might confuse corporate computer buyers, who may be skeptical about whether the EISA computers will actually offer performance similar to Micro Channel. Many businesses may delay new computer purchases until the EISA machines come on the market, they said.
Besides Compaq and AST, the other seven originators of the new standard are Hewlett-Packard, Tandy Corp., Wyse Technology, Zenith Data Systems, Japan’s NEC Information Systems, Epson America and Italy’s Ing. C. Olivetti.
Among the more than 50 other companies that have endorsed the new standard are Intel Corp., a major computer chip supplier, and Microsoft Corp., a major software developer.
Besides AST, two Orange County companies, Western Digital and Advanced Logic Research, formally endorsed the new standard.
Last fall, Irvine-based Western Digital, a semiconductor and computer products company, was one of the first companies to introduce a set of computer microchips that duplicated the functions of IBM’s Micro Channel design.
At the time, industry analysts speculated that the Western Digital advance would be a boost to companies seeking to clone IBM’s PS/2 model and would bring clones to market by sometime this summer.
But the flood of clones hasn’t arrived. And Tuesday’s announcement casts doubts on whether the market Western Digital sets its sights on will ever materialize.
“People making chips sets for Micro Channel are going to be disappointed,” said AST’s Yuen. “I think this (EISA plan) is going to have a negative impact on them. There won’t be a large number of people that are going to build a Micro Channel machine.”
In a statement Tuesday, Western Digital Chairman Roger W. Johnson promised to “aggressively support” the new proposed standard.
Analysts said that by the 1990s, three basic computer designs will dominate the industry: IBM’s Micro Channel, the new EISA bus announced Tuesday, and another design, NuBus, used in Apple Computer’s most powerful machines.
COMPANIES WITH LARGEST SHARES OF U.S. PERSONAL COMPUTER MARKET *Compaq, Zenith and Tandy are part of a group of personal computer makers originating a joint effort to develop a new personal computer format to compete with IBM’s advanced PS/2 machines. The others are Irvine-based AST Research, Epson, Hewlett-Packard, NEC, Olivetti and Wyse Technology.
(Ranked by 1987 revenue)
1987 % 1986 % 1985 % 1. IBM 29.7 30.0 41.0 2. Apple 13.8 9.3 10.4 3. Compaq* 7.3 6.7 5.3 4. Zenith* 5.5 3.5 2.4 5. Tandy* 4.9 3.6 4.7
Source: Dataquest
