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INFORMATIONWEEK PUBLISHES EXCLUSIVE ARTICLE FROM TWO EXPERTS DETAILING THE FALL OF IBM AND THE PROBLEMS THAT LIE AHEAD FOR BIG BLUE

 MANHASSET, N.Y., Jan. 29 /PRNewswire/ -- What really went wrong at IBM? According to Charles H. Ferguson and Charles R. Morris, far more than has heretofore been told. The Feb. 1, 1993 issue of InformationWeek contains an exclusive article detailing IBM's fall from grace, based on Ferguson and Morris's new book "Computer Wars," released this week from Times Books, New York.
 Ferguson is a former MIT researcher who is now an independent consultant in Cambridge, Mass. Morris is a partner in Devonshire Partners, a technology consulting and financial advisory firm, also in Cambridge.
 In their article, the authors chronicle the events that led to IBM's catastrophic $5 billion loss and the end of John Akers' tenure in far more depth than anything published to date.
 Big Blue's decline, they say, has been a long time in the making. Since its peak earnings year in 1984, IBM has been losing share -- and leadership -- in almost all of its major markets. In their interviews with dozens of present and former IBM executives and technologists, the authors found an almost unanimous sentiment: anger that their company, once the best in the world, was run into the ground by its top management.
 The story is one of missed opportunities and deeply politicized management. Among the litany of major blunders listed in the InformationWeek article:
 -- As far back as the early '70s, IBM responded to disappointing results for a major product release with "Future Systems," or the F/S project, spending hundreds of millions on absurdly ambitious hardware and software projects that were doomed from the start. Not only did the company lose time and money, it lost its long-held tradition of candor among staff and management. F/S was the major responsibility of then- president John Opel, who reacted defensively as the project headed for disaster. Dissent was treated as disloyalty. As one former IBM top executive puts it, "Outspoken criticism became politically dangerous." And it only got worse when Akers, who fostered what one former IBM division president calls "a cult of personality," took control.
 -- Political dissent in the ranks also led to IBM's near-fatal missed opportunity in the RISC market. The company's RISC team had built PC microprocessors that ran up to 10 times faster than the processors IBM was using at the time, but status quo politics prevented their adoption. The mainframe division saw RISC as a threat; it refused to participate in the strategy, instead holding onto what is now an old and creaky mainframe architecture. As the authors state, "By slipping in its own morass for 15 years, IBM missed the chance to dominate one of the critical computer technologies of the 1990s."
 IBM's fateful decision to use outside suppliers for key PC components was perhaps its biggest catastrophic blunder. It failed to exert any control over Intel and Microsoft, leaving them free to supply IBM-standard components to all comers, thus begetting an entire industry of IBM-PC clonemakers. IBM had dismissed Bill Gates and his coterie as "just a bunch of nerds," failing to perceive Gates' shrewdness, and thereby virtually handing him an empire. In fact, IBM, hoping to get a much-improved version of Gates' DOS 1.0 operating system, actually developed much of the code for the DOS 2.0. As one former designer recalls, "People were really upset. Gates was raping IBM. It's incomprehensible." Big Blue, once the preeminent leader in the PC market, today loses money on every PC it sells, while Microsoft is riding high."
 Can IBM be salvaged? The final word isn't yet in, but if the market reaction is any indication, Big Blue will have a tough time recovering from this pattern of mismanagement. Authors Ferguson and Morris state, "Without sweeping changes at the top, IBM will continue to careen headlong toward disaster. IBM's shareholders, and the rest of the nation, deserve better."
 As InformationWeek editor Jerry Colonna puts it, "IBM under Akers was run largely as an old boys' club with an agenda designed to protect the status quo -- i.e., mainframes -- and further the careers of the favored few." Colonna's advice to those IBM directors seeking Akers' replacement? "Add some outside perspective to the board to make it more responsive to the realities of today's marketplace." In other words, abandon what has been a failing corporate culture."
 InformationWeek, published by CMP Publications Inc., Manhasset, N.Y., is the leading publication for those executives who oversee the computer and communications systems in the country's largest corporations. It has a national circulation of 200,000.
 -0- 1/29/93
 /CONTACT: Jerry Colonna, editor of InformationWeek, 516-562-5690/


CO: CMP Publications Inc. ST: New York IN: PUB SU:

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Date:Jan 29, 1993
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