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Union of IBM and Apple Creates Odd Couple

By United Press International / July 5, 1991



NEW YORK

A DEVELOPMENT agreement announced between computer giants International Business Machines Corporation and Apple Computer Inc. may establish two warring camps in the computer industry, analysts said.Apple and IBM could make up one faction and the manufacturing alliance Advanced Computing Environment (ACE) - led by Microsoft Corporation, Compaq Computer Corporation, and Digital Equipment Corporation - could comprise the other. "You'll have Apple and IBM against ACE," said Wendy Abramowitz, technology analyst for Argus Research Corporation. David Wu, technology analyst at S. G. Warburg & Co., said, "IBM and Apple both have a common enemy and its name is Microsoft. It's like England and France uniting against Germany." "This agreement is a good move for both Apple and IBM. It will give Apple entrance into corporate accounts and let IBM fight against its dependence on Microsoft," Ms. Abramowitz added. Microsoft, the leading software company, originally united with IBM to develop software systems, but relations have become strained between the two companies. The link with Apple, known for its software, could free IBM from any dependence on Microsoft for its operating systems. Microsoft, of Redmond, Wash., supplies the operating system for IBM desktop computers and application programs for Apple. The union of Apple and IBM creates the odd couple of computers. Apple, known for its irreverence, tried to ridicule IBM in its television commercials as an uptight corporate clone. But necessity has now driven the two computer giants together. However, Abramowitz said, "This agreement won't have any effect for two to three years. You won't see any products before then." Other analysts said the IBM-Apple link accentuates the trend of technology sharing among computer leaders. "We're generally shifting from where a computer company has to make everything itself," said Mark Jordan, assistant vice president at A. G. Edwards & Sons Inc. in St. Louis. "If you try to do everything, you can't have economies of scale." Under the agreement, long rumored in the computer industry, Apple and IBM will develop and share hardware and software. IBM, the world's largest computer company, has the lead in hardware while Apple has innovative software but needs the corporate might and name identification of IBM. ACE is a group of hardware, software, and microchip manufacturers seeking to form a broad-based alliance with its own systems standards. The ACE alliance apparently convinced IBM to seek a new ally, Apple. Apple, which has its own economic problems, apparently decided it wanted to turn a former enemy into an ally.

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