New personal computer model raises IBM horizons yet higher
When IBM executives don cowboy hats and bandannas to whoop it up over a new product, you know something significant is happening. The ''wild'' behavior just doesn't fit the conservative, tight-lipped image that belongs to rock-solid Big Blue.
Computer analysts and IBM-watchers are saying that the new IBM Personal Computer AT, which IBM introduced to dealers in Dallas this week, is an exceptional product that will give IBM a chance to enter new markets. The AT (for advanced technology) is bad news for competitors, but for IBM it's ''very, very important, perhaps more so than (IBM's) original personal computer,'' says Frederic Withington, an analyst at Arthur D. Little, the Cambridge, Mass., consulting firm.
It's no wonder the company appears overcome with excitement. The European Commission recently dismissed an antitrust suit which had been hanging over IBM's European operations for a decade. And the PCjr, the IBM home computer which experienced only lukewarm interest on the market earlier this year, has just been revamped with a new keyboard, more memory, and a lower price. Analysts say that at least now the PCjr has a fighting chance.
When people talk about the AT, which comes in two models, they remark on two things: power and price.
''This is what I would call the first model of a second generation of personal computers,'' says Carol Muratore, a computer analyst at Prudential-Bache Securities in New York. The computer uses a new microprocessor chip, the Intel 80286, which is ''three times as powerful'' as most chips in today's personal computers, she says, allowing the AT to work much faster than the IBM PC. She calls the price ''fabulous.'' The AT model with the most memory capacity sells for $5,795 and the second model for $3,995. The memory capacity, she adds, far outstrips all other personal computers today.
Ms. Muratore points out that the combination of a good product at a low price is ''very dangerous'' for the competition. It seems that IBM has now achieved two of its four company goals: highest quality at the lowest price. Ms. Muratore explains that IBM has beaten the competition to the marketplace with a technologically better product. Price and performance should give IBM a head start in sales volume. The company will be able to maintain its low price because of economies of scale and extremely efficient manufacturing facilities, benefits most competitors don't have.
''In general, in order to compete with IBM a company has to offer more performance for less money,'' says Kenneth Bohringer, an analyst at Value Line Investment Survey. ''It really puts the screws to them when IBM comes up with something that looks this good.''
Other than power and price, the AT has something else going for it. It's not available now, but in the first quarter of 1985, IBM has said it will have a new operating system and network available to allow as many as 72 users (up to 1,000 , with tinkering by specialists using non-IBM equipment) to hook up with the AT to share data and peripherals, like printers. Computers riding on the system can be any IBM-compatible models except for the PCjr. The AT will also be able to perform more than one function at a time, such as word processing and data processing. In computer circles, these two attributes are referred to as multiuser and multitasking capabilities. They are becoming key features demanded by users.
It is price again, combined with all these features - especially the multitasking, multiuser ones - that will open new markets for IBM. Although a number of analysts have said the new computers will do especially well with corporations, Mr. Withington, at Arthur D. Little, says the AT will be a big hit in the education and small-business market, now dominated by Apple. Here are people, he says, who need systems allowing many to use them at one time and at a low price. Recently, IBM has stepped up its push in the area of education.
While these new markets seem good targets for IBM, the AT is such that it will also chip away at areas controlled by all sorts of competitors.
''It certainly will have an impact on any computer participating in networking,'' says Michael Reisman, an IBM spokesman. ''It's going to have an impact on multiuser systems. It's going to have an impact on the stand-alone personal computer. Don't get caught up in the multiuser aspect of the AT and forget that it's a very powerful stand alone.''
In the stand-alone area, the threat is to Apple. Multiuser manufacturers such as Digital Equipment, AT&T, Data General, and Altos may also feel the heat. (Multiuser systems are a step up from personal computers. They are minicomputers , selling in the $10,000-to-$15,000 range, that support many users.)
AT&T, which entered the personal computer race this year with a similar approach, ''will be forced to cut prices and add functions,'' says William Easterbrook, a computer analyst at Kidder, Peabody & Co. ''It will need prices 15 to 20 percent below IBM's to gain market share,'' he says - a huge challenge.
Mr. Easterbrook says the AT will not bring big financial gain in the next quarter or two but will contribute greatly in the long run. Says Ms. Muratore: ''The AT is another three-year product at least.''