Apple, IBM Discussing Technology Swap? : Computers: Although company spokesmen refuse comment, such a move would help both firms deal with increasing competition.
Apple Computer and International Business Machines may be discussing a technology swap or other business deal to bolster their respective operations amid increasing competition, analysts said Friday.
However, spokesmen for both firms declined to confirm or deny a published report that a deal involving IBM’s workstation microprocessor and Apple’s operating system software is under discussion.
Both computer giants said technology swaps between themselves and other companies would be consistent with their general business plans. However, they declined comment on a report in the Wall Street Journal that Apple is talking to IBM about licensing the microprocessor that powers Big Blue’s RS6000 workstation and that IBM would be interested in licensing the operating system software that gives Apple’s popular Macintosh personal computer its unique on-screen appearance and functions.
Analysts say both are probably talking to each other--and a host of other companies as well--as they try to bolster their business amid the tremendous upheaval in the computer market. But several analysts doubted that Apple would end up swapping its Macintosh software for IBM’s workstation microprocessor.
Until this month, Apple and IBM have never established any wide-ranging technology agreement. However, Apple recently started shipping Macintoshes equipped with IBM-made hard disk drives, the first time the two companies acknowledged any formal ties.
The reported talks come as the companies are rethinking their full range of business operations to cope with rapid technological changes and increased competition from makers of inexpensive personal computers, consumer electronics manufacturers and such traditional domestic rivals as Sun Microsystems, Compaq Computer and Microsoft.
Apple, in particular, has embarked on a sweeping reworking of its operations during the past year to expand its presence in the PC market. It has introduced lower-cost models of the Macintosh to reach customers unable to afford its traditional high-priced systems. Friday, it expanded on that thrust by announcing a deal to sell its machines in two national discount chains, CompUSA and CompuCom Systems Inc.
The entry into the lower-profit end of the PC business has hurt Apple’s earnings and is forcing it to lay off employees and trim costs.
Apple confirmed Friday that it may reduce the pay of its executives by 10% as part of a broad cost-cutting plan. Apple’s five highest-paid executives together earned $9.9 million in salary and bonuses last year, including $2.2 million for Chairman and Chief Executive John Sculley, one of the nation’s highest-paid executives last year.
Last month, the company said it would cut 10% of its worldwide work force of 15,600 during the next 12 months.
“Apple is retooling the entire business from top to bottom,” said Richard Shaffer, publisher of a technology newsletter in New York. “And it is willing now to do things that were considered heresy in the past, such as licensing the Macintosh operating system software.”
Sculley has broadly hinted that the company, which has jealously guarded its unique and inventive Macintosh software, would be willing to license it to achieve its goal of building a larger base of users of the software. This step is aimed at keeping developers of application software, such as word processing and spreadsheet programs, working on Macintosh programs rather than defecting over to Microsoft’s rival offering, Windows.
Apple’s reported talks with IBM regarding its workstation microprocessor are significant because they signal Apple’s growing interest in entering the market for workstations, machines traditionally considered too expensive and sophisticated for the typical PC user.
Apple’s selection of IBM’s chip for such a machine would hurt makers of rival chips, particularly Motorola of Schaumburg, Ill., which has traditionally supplied Apple with all the microprocessors for its PC models. Apple said it will choose a chip using an advanced process called reduced instruction set computing for future workstation computers, possibly this year.
IBM’s reported interest in Macintosh software for its workstation line could indicate its interest in expanding the market for its relatively new line of workstations. That could be a potential blow to Next Inc. Chairman Steve Jobs, whose software IBM has already licensed for its workstation.
