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IBM vs. Microsoft for Software Championship

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OS/2 is the software champion that never won anything.

International Business Machines Corporation has spent more than $1 billion and years of expertise to make it the best-built, most robust operating system for desktop computers. But every time OS/2 has gone out into the marketplace, the competition has scored a technical knockout.

The chief competitor, Microsoft Corporation, is about to climb in the ring again. Its Windows 95 operating system, set to be unveiled next month, already has analysts predicting a tidal wave of sales. So IBM is having to face a question that's simmered a long time at its Armonk, N.Y., headquarters: What should it do with OS/2?

Many analysts suggest dumping it. Companies that make software for OS/2 want IBM to increase its commitment. A third possibility is to give up the consumer market and target the software for the corporate user.

''They're going to stick with OS/2 for awhile,'' says Scott Vouri, chief executive of Binar Graphics Inc., a San Rafael, Calif., developer of Windows and OS/2 software. ''There are thousands of very large companies out there that depend on it.''

Pursuing a niche strategy or dropping OS/2 altogether would be humble pie for IBM. The company originally expected its software would outsell Microsoft Windows. Technically, OS/2 is better than Windows. It doesn't crash as often, and it does a better job of running programs simultaneously.

''In terms of multitasking and power ... it blows Windows away,'' says Mark Macgillivray, managing director of H&M Consulting in Sunnyvale, Calif. ''I don't blame IBM for not wanting to throw that away.''

But missteps and delays have made OS/2 a backwater of the software world. Many users report problems installing the software. And IBM twice delayed the release of its new desktop computer - the PowerPC - so it could introduce the machine with its own version of OS/2. But the software is still not ready, so the company has belatedly introduced the PowerPC by itself and, thus, ceded the consumer market to competitors.


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