IBM Set to Unveil a Crucial Line of Mainframes

IBM on Sept. 5 will unveil plans for the long-awaited next generation of IBM mainframe computers, machines the company says will set its tone in this all-important market for the rest of the century.

Code-named “Summit,” the new system will offer a world in which IBM computers can be easily linked to computers made by others and located anywhere on Earth. The Summit mainframe will offer about twice the computing power of the current generation and come in various models to handle specific tasks, such as automated bank teller operations and airline reservations.

But the new machines are not expected to be available until mid-1991, and in the interim, IBM faces the formidable challenge of maintaining sales momentum in its most important product line.

The company is expected to tackle the task with the announcement Sept. 5 of more than 100 new products, including a new top-of-the-line model of its current mainframe system that will stretch the life of the current generation and provide a bridge to the next.

Mainframe computing is nothing International Business Machines Corp. takes lightly; worldwide sales of these machines--among the biggest and fastest used by business--accounted for about half of IBM’s sales of $62.7 billion last year and perhaps 60% of its $3.7 billion in profit. IBM has spent at least seven years developing the new mainframe family.

But Summit’s unveiling comes as the world’s largest computer maker is under increasing pressure from hard-charging Japanese competitors Hitachi and Fujitsu and amid a persistent slump in computer sales, particularly in the United States, IBM’s biggest market.

According to Computer Intelligence, a San Diego market research firm, IBM’s share of U.S. mainframe computer sales has slipped from 95% in 1987 to an estimated 87% this year, while Hitachi’s share has grown from 2% to 4% and Amdahl, 46% owned by Fujitsu, has increased its share share from 5% to 9%.

Despite unprecedented efforts by IBM to prepare for a smooth succession from one generation to the next, analysts say they are prepared for a rocky transition and a potential dip in sales and profits at the world’s largest computer company.

“Transitions are rough even in times of strong demand,” said Ulrich Weil, a technology analyst in Washington. “But we are not in good times; the U.S. computer market is weak and Europe’s is softening. I expect lower IBM earnings for the next four quarters.”

Analysts say using a machine from the current line to act as a bridge to the next is a first for IBM and is designed to give customers a reason for continuing to buy or lease current models and avoid the end-of-model sales slump that traditionally occurs as new generations near release.

Analysts said they expect IBM to offer sweetened deals to spur sales and leases of current models, but several predicted that many customers will wait for the power and features of the new generation.