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 Recently, Corporate Software, Inc's Jennifer McNight interviewed Lucy
 Baney, IBM's Personal Systems Director of Software Business Development,
 on the Apple/IBM alliance and the future of IBM's OS/2.  Following are the
 comments from that interview which was published in Corporate Software's
 February issue of Update.  Update is a monthly newsletter that is
 circulated to over 25,000 subscribers from various corporations.
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Q: Apple and IBM have promised a number of exciting new ideas and
   technologies.  But are these goals driven by customer requirements?  How
   do you balance the incorporation of new technology with customer
   requirements?

   A: Many independent studies, as well as those conducted by IBM and
      Apple, highlight a number of key market requirements and
      opportunities.  Customers are expanding the use of intelligent
      workstations beyond personal productivity to include workgroup
      computing, access to their total computing resource such as midrange
      and mainframe systems, and new advanced mission critical
      applications.

      In addition, the user community expects an intuitive, graphically
      oriented user interface.  They also need applications delivered
      quickly that are flexible enough to meet constantly changing
      business demands, and can be tailored for the way they work.
      Customers also want more open systems that give them the
      flexibility to choose among system vendors, while maintaining
      portability of applications and minimizing the complexity of
      managing a heterogeneous environment.

      Application developers face a tremendous challenge in meeting these
      requirements.  They are looking for breakthrough technology that
      will address the need for portability, and will reduce
      development/enhancement cycle time, cost and complexity.

      We believe that the IBM/Apple/Motorola technology alliance will
      provide benefits to customers, not only today, but also in the
      future.  The products that are derived from our two new joint
      ventures and the PowerOpen/PowerPC work will create fundamentally
      new ways of working and learning.

      For example, Apple and IBM believe that the integration of of
      sound, video, graphics and animation with computers has enormous
      potential in education and business.  Our multimedia joint venture,
      Kaleida, was formed to address this opportunity.  Yet, multimedia
      has not become pervasive, in large part because there is no
      widespread industry agreement on data formats and system specifics
      to support these technologies.  As a result, few developers have
      the economic incentive to develop and market multimedia products.
      It is our intention to provide these specifications and formats
      that can be widely accepted and used in multimedia, encouraging a
      vibrant and innovative industry.

      On another level, as computer systems and users have become more
      sophisticated, a new class of computing problems has emerged.  For
      example, software development has become difficult, costly, and
      inefficient.  In large companies, there is a huge backlog of
      application demand, yet it can take more than a year for an
      in-house development team to create an application that may be
      critical to the business.  Apple and IBM intend to address this
      area with the Taligent joint venture.  Object-oriented software
      technology will make it much easier and quicker for applications to
      be created.  This will result in new, innovative applications for
      customers and exciting new opportunities for developers.

      This relationship is not about one company or three companies but
      about how to grow the industry for both vendors and developers.  It
      aims to provide a series of open platforms upon which any developer
      can build and in turn provide low-cost, high-quality products to
      our customers.  The customer is the ultimate beneficiary.

Q: In the past, the industry has seen a number of unsuccessful strategic
   alliances between vendors.  Why do you think this agreement with
   Apple will prove more productive and successful than some past
   alliances?

   A: First of all, you seem to imply that most strategic alliances
      don't work, which isn't the case.  Our work with Intel has gone on
      for ten years and essentially created a $100 billion dollar
      industry.  Our work with Microsoft created the highly successful
      DOS machine.  Other successful alliances are in effect with Lotus,
      Novell, Borland and dozens of other companies in the industry to
      provide new uses at lower prices.  This alliance is focused on four
      essential areas and will produce solid technology foundations that
      we hope will profoundly influence the future of computing.

      To begin, networking products will make it easier for Apple's
      systems to participate as clients in large enterprise networks.
      Products such as the new Apple 16/4MB Token-Ring adapter have
      already been announced, and IBM has licensed Apple's AppleTalk
      protocol stack.

      PowerOpen is an open computing environment comprised of three
      elements:
      A single-chip RISC design based on IBM's RISC POWER architecture.
      It also includes an operating system based on IBM's AIX software
      and its implementation of OSF/1 technology.
      The third area that comprises PowerOpen involves that Macintosh or
      Motif graphics interface on top of AIX.  When you incorporate
      Apple's Macintosh interface and the capability to run OSF's Motif
      applications, you are looking at an open platform with what we
      expect to be the broadest application suite of any UNIX-based
      platform in the industry.  Apple will base its next generation of
      Macintoshes on this hardware and software and IBM will bring out
      products as well.  Both the chips and software will be available
      for other vendors in the industry.

      The third area of influence is the Kaleida multimedia joint venture
      which I just discussed.

      And finally, the Taligent object-oriented software project which I
      also just told you about.

      IBM and Apple share a common vision, and have complementary skills.
      In addition, we've specifically set up independent, jointly-owned
      ventures with Taligent and Kaleida so that they could pursue their
      own business objectives.

Q: Specifically how do you think the alliance between IBM and Apple offers
   a more compelling scenario for system and application development than
   that offered by other major vendors - like Microsoft?

   A: IBM and Apple are forming this alliance to bring to market new
      foundation technologies that will not only address today's needs
      but be a superior base for building more sophisticated and useful
      future applications.  Object-oriented technology, for example, has
      been under development in both IBM and Apple for quite some time.
      One of the key objectives in forming the Taligent joint venture is
      to bring the benefits of this breakthrough computing environment to
      customers sooner.

      Object-oriented technology is being widely embraced by the
      computing industry because of the substantial increase in developer
      productivity and increase in software reliability, extensibility,
      and maintainability.  Object-oriented technology encourages more
      shared application function, easier functional enhancement, and
      end-user customization.  It is particularly well suited to address
      the new interfaces, distributed applications, multimedia support,
      and rapidly changing business requirements.  Taligent is charged
      with building a complete object environment.  Today's systems are
      layered, meaning they will gradually incorporate object technology
      onto the kernel.  That's what's new, different and compelling
      about it.

Q: What are predictions for the market acceptance of IBM OS/2 2.0 and
   future versions of OS/2 and Windows from Microsoft?  Do you think IBM
   OS/2 2.0 can really edge out Windows from the desktop perspective?  If
   so, why?

   A: OS/2 2.0 offers a state-of-the-art development and operating
      environment.  More than 25,000 DOS, Windows and OS/2 applications
      are available for it.  But OS/2 goes beyond the desktop
      perspective.  It was developed from a conviction that the inherent
      limitations of DOS would inhibit the evolution of the next
      generation of applications.  These applications will demand
      multiple threads of execution, large storage use, memory
      protection, and support for enterprise and database access.  As
      such, OS/2 is much more than the addition of simple ease-of-use
      features on top of DOS.  It harnesses the power of the complete
      computing environment:  desktop, midrange and mainframe.  That's
      why so many large systems customers and application developers are
      eager to get it.  Windows extends DOS and makes the desktop easier
      to use, but OS/2 harnesses all the capabilities and resources
      --especially data--available to computer users who need easy-to-use
      access beyond the desktop environment.

      Let me try to size the situation for you.  Windows introduced a
      graphical extension to DOS.  However, DOS cannot handle pre-emptive
      multi-tasking system requirements, or run sophisticated mission
      critical business applications in a complex communication
      environment without reliability concerns.  OS/2 can do all this and
      more, while being simple for virtually any user.

      Today we're beta testing with over 20,000 users.  While we will
      officially deliver the fully enhanced shrink wrapped version of
      OS/2 2.0 in March, 1992, we delivered OS/2 2.0 to customers who
      needed it with all the base function we promised by the end of
      1991.  By the way, we incorporated improvements that were requested
      by customers and developers who participated in the most aggressive
      early experience and testing program IBM has ever initiated for any
      of its products.  IBM has a lot of 32-bit experience with MVS, VM,
      OS/400, AIX and OS/2.

Q: When we spoke with Bill Gates, we asked him about the IBM/Apple
   announcement.  He responded, "We honestly don't understand how the new
   IBM/Apple offering will affect the industry.  It is so confusing.  At
   first glance, it seems to obsolete OS/2, yet IBM is pouring all this
   money into OS/2 today, and is trying to convince major customers to
   invest in it (OS/2) as a long-term strategy.  But either this new thing
   isn't real, or OS/2 has been replaced as IBM's long-term strategy."  How
   do you respond to that statement?

   A: Since the details of the alliance were announced October 2nd,
      Bill wouldn't have known much about it when you interviewed him for
      the Octber issues.  As I said earlier, the Apple/IBM alliance
      doesn't obsolete OS/2 at all.  In fact, it strengthens the OS/2
      strategy by laying out the roadmap for users through the end of the
      decade.  Remember, Microsoft is just getting started with its
      32-bit strategy.  We'll deliver ours in a full shrink-wrapped
      version in March--and there was limited availability in December.
      The key thing to remember is that the whole strategy we've laid out
      protects users' investments in application software and hardware.
      For example, a DOS or DOS/Windows application runs on OS/2.0.
      Similarly we intend a compatible migration path to Taligent's
      software environment when it's ready.  In addition, new
      object-oriented technology developed by Taligent can be
      incorporated into the OS/2 environment as appropriate.  This will
      make it easier for our customers to move to the new environment
      when they're ready and when it makes good business sense for them.
      So you see, the object environment is a logical extension to OS/2,
      an environment we've been working on for some time.  OS/2 has been
      and continues to be one of IBM's strategic operating systems for
      the nineties.  We have never wavered from that position.

Q: Once the promised object-oriented environment is introduced from the
   joint venture, what happens to OS/2?  What happens to the Macintosh
   System?  Will customers lose the investment they've made in these
   environments?

   A: We intend to provide the capability for the Taligent joint
      venture's product to run OS/2 applications.  That will protect
      customer's current investments.  We will continue to enhance the
      OS/2 environment with object technology from Taligent.  Because
      we're providing application compatibility, our customers can choose
      if and when to migrate to the new object environment.  People use
      what gets the job done for them.  I'm sure you'll see millions of
      OS/2-based machines around well into the next century.  The press
      so frequently portrays this as a binary issue and it's not.  People
      are going to use OS/2 for a long time.

Q: IBM is a major player in both the network and OS market.  What impact,
   if any, do you think Novell's acquisition of Digital Research will have
   on the networking market?  What impact do you think it will have on the
   operating systems market?

   A: You really need to ask Novell about this.

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 Since Joining IBM in 1973 as a systems analyst, Lucy Baney has held a
 number of positions within the marketing organization.  She is currently
 the Director of Software Market Development.
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