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— Appendix B —
Apple/IBM Joint Venture

In late 1991, executives from Apple, IBM, and Motorola announced their intent to ensure the control of the desktop market with a new hardware standard for the desktop computer. Their motives were driven by the following factors:

Their much-heralded announcement centered around several key joint ventures.

The next generation of entry-level Power PC machines will have the power of a current IBM RS6000. Pricing for desktop machines will start at $1,000 for entry-level systems and rise to only $3,000 for the most powerful configurations. All machines will be LAN-ready and operate both as remote and local workstations. Motorola's considerable expertise in the cellular communications arena will ensure that these machines come WAN-ready and able to use cellular communications. Motorola's marketing might add to that of IBM and Apple to create considerable market acceptance and demand.

With the announcement of their joint ventures, Apple, IBM, and Motorola are betting that microprocessor marketshare leader Intel will stumble. Most important is the trio's belief that Intel (maker of the 80x86 processor products) has the disadvantage of being stuck with an architecture defined prior to the 80386 chip set. Intel may, and should, decide to drop this downward compatibility in the Pentium and follow-on the next generation's chip set. Intel's reluctance to have its chip set second sourced and the relatively high cost of the 486 and other chip sets, and a clear statement of direction for 686 and beyond may allow Intel to maintain its strong lead on the desktop. Recent contracts that allow IBM to develop 80x86 chip sets and the Supreme Court's acceptance of Advanced Micro Device's right to second source has driven prices down on 386 chips and has pressured 486 prices.

With the work at Taligent, IBM and Apple want to define a new desktop software standard. Apple has97Äthrough its license relationship with Microsoft—the user and application interface that everyone wants and IBM has the basic software everyone uses and needs for future compatibility. Software development productivity—especially through end-user access—is becoming the overriding consideration for organizations that make platform technology buying decisions.

The combination of the three companies—IBM, Apple, and Metaphor—brings together the necessary expertise including personnel from IBM's software company, Metaphor, to build a new object-oriented operating system platform with embedded support for UNIX, OX/2, Windows 3.x, DOS, and MAC OS without the need to maintain a compatible hardware platform. This software will be made available to any and all developers at very competitive prices in an attempt to create the new desktop standard. Compatibility with Microsoft's next generation 32-bit Windows (Chicago) or Windows NT will not be provided except as these products are compatible with existing Windows 3x.

IBM and Apple believe Taligent can gain a substantial share of the OS market, because they are assuming that the need to maintain architectural and binary compatibility with old DOS-based applications constitutes a ball and chain to Microsoft's future OSs. If this compatibility is provided through emulation in future Microsoft product lines, serious performance problems may occur. Unless the new platform is better than the IBM/Apple platform, there will be no motivation for users to support it. If support is provided at the native level, all new applications will suffer from the performance limitations inherent in the old architecture.

In the new IBM/Apple model, all PCs will provide the necessary multitasking and multiuser capabilities required for applications, database, and communication servers. All internetworking will be peer-to-peer. The distinction between client and server will blur as the desktop adds server functionality. Truly distributed processing will be the norm.

Organizations that want to be ready to take advantage of this technology when it becomes available within the next four years should use tools that absolutely isolate the developer from the underlying OS and hardware. This requires discipline in the establishment of standards and use of development tools. Products such as Windows 4GL, Easel, PowerBuilder, and, to a lesser extent, Oracle provide the appropriate isolation of developer from platform. If Microsoft's Chicago or NT platform is successful, these tool vendors will provide support for that environment.

For Fortune 1,000 users, the Apple/IBM alliance could offer some important benefits: easier integration in from Mac to IBM-based networks; IBM's AIX fans get popular personal productivity applications; and a RISC-based, follow-on product is sure from Apple. Within the next few years, the barrage of new technologies, such as those begun by the IBM, Apple, and Motorola alliance will hit the market. These technologies promise to radically change your relationship with your customer, product features and service delivery, and the structure of manufacturing, sales, service, and distribution.

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