A beaten-down IBM turns for help to a prime competitor, Bill Gates Microsoft chief advises keeping focus on mainframe computers

April 05, 1993|By New York Times News Service

SAN FRANCISCO -- It may be the clearest evidence yet of the humbling of Big Blue.

As IBM spent the last two months asking more than 100 industry executives to propose a cure for the weakened computer company, the company's board turned to one of IBM's archest rivals: William H. Gates, chairman of Microsoft Corp.

Mr. Gates said in a telephone interview last week that he met several times with IBM officials during their search for a replacement for the former chairman, John F. Akers, including a visit by an IBM board member, Thomas Murphy, to Mr. Gates' office at Microsoft's headquarters in Redmond, Wash. IBM was not trying to recruit the nation's richest man but was sim

ply asking his advice, Mr. Gates said.

Mr. Gates' vision of a stripped-down and more aggressive IBM may be at odds with the version of IBM that seems likely to emerge under Louis V. Gerstner Jr., the former RJR Nabisco chairman whom the computer company has hired as chairman and chief executive.

In the world according to Mr. Gates, IBM would not turn away from the mainframe, corporate data-center approach to computing, as so many other experts are now advising.

Instead, Mr. Gates suggested, the Armonk, N.Y., computer maker should sharpen its focus on this business, which it thoroughly dominated before the rise of the desktop personal computer.

"To me, if there is one core business, it's maintaining the data center," said the personal computer entrepreneur, whose company's climb to the top of the software industry was based on the meteoric rise of the IBM PC and its clones during the 1980s.

"As the computer industry evolves," Mr. Gates said, "the data center is going to be of even greater importance in the future."

Mr. Gates said he did agree with those who have counseled IBM to strip away its unprofitable assets and concentrate on a narrow set of businesses.

And he said that he had read with keen interest a report by an East Coast market research firm that had suggested that IBM select Henry R. Kravis of the leveraged-buyout specialists Kohlberg, Kravis, Roberts & Co., to be its new chairman, in order to dismantle the empire in the most profitable fashion for IBM shareholders.

"Well, they didn't pick Kravis, but they picked one of his operations guys," Mr. Gates said, referring to the fact that Mr. Gerstner was brought to RJR Nabisco after Kohlberg, Kravis acquired it in a leveraged buyout.

"This is a guy who knows plenty about selling assets."

Mr. Gates' list of sell-off candidates include IBM's money-losing personal computer business and the profitable AS/400 minicomputer line. He said that the question of whether IBM should keep or sell its RS/6000 workstation line and its semiconductor business was more difficult and would depend on the continuing relationship of these divisions to the company's core data center business.

But what of the widely held view that the era of the mainframe computer has come and gone? Mr. Gates insists that IBM can create a dynamic business based on large systems.

He says every big corporation in the future will still require such computers as the ultimate clearinghouse for the copious data by which Information Age companies will manage even the tiniest facets of their business.

"The mainframe is still a huge cash cow," he said. "You don't even need a large sales force to sell them."

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