Who wins and who loses in the alliance between IBM Corp and Wang Laboratories Inc? Clearly IBM wins – it gets much of Wang’s VS customer base handed to it on a $25m plate without having to work for it, which given the impression created by the latest decorous – outburst by John Akers, is the way many IBMers seem to like to get their business these days. Wang is nominally committed to continuing to develop the VS for customers that want to remain loyal to what was in many ways an AS/400 a decade before IBM created the machine, but with the cost of development spread over a dwindling customer base, that position is not going to remain tenable for long. IBM also gets a new adherent to its RS/6000 at a time when the Unix line is beginning to look like a repeat in slow motion of the RT fiasco – the Wang deal and the putative one with Apple Computer Inc could well be crucial to a prosperous future for IBM’s last make-or-break effort to crack the Unix market. And as IBM itself makes clear, one attraction of the Wang deal is that it prevents the company going to a competitor. What’s in it for Wang? Strikingly little unless the company really was on the brink of a Chapter 11 bankruptcy filing without an IBM rescue. It means a big new round of lay-offs after the company has already cut its workforce by almost half over two years as the company runs down hardware development and most remaining manufacturing. And it saddles a demoralised sales force with selling products that until this week they were competing most fiercely against and disparaging most strenuously. Several Wang office software products will be included in future IBM products, the companies said, but there is no detail on that. Richard Miller, Wang’s chairman and chief executive said This alliance should assure our customers that their investment in Wang products and services is a wise decision… our ability to offer IBM’s products together with our own provides a clear and certain path for Wang’s past, present and future customers. And that is the crux of the deal: Wang’s customers had so little confidence in the future of the company that they had stopped buying, so that although Wang has made a remarkably successful effort to eliminate its debt, it has not reaped the reward that effort deserved: the improvement in its financial position that should have followed has simply not materialised, it will report another big loss for the current fiscal year just ending – on sharply declining turnover. The other losers in the deal – apart from MIPS Computer Systems Inc, which will now almost certainly lose Wang as an OEM customer, have to be all the smaller companies that might have reached some kind of agreement with Wang – from Digital Equipment Corp on down – but didn’t. One can think of Siemens-Nixdorf Informationssysteme AG, which desperately needs to go big in the US and the Far East if it is to survive, and has a product line that would have fitted well with Wang’s channels. NCR Corp would have provided Wang with an ideal partner had it not been preoccupied itself fighting off the eventually successful AT&T Co bid just at the time when Wang was ready to surrender – NCR and Wang discussed a merger three years ago. And Wang would have provided any of the ambitious Japanese with an entree into the US market for their arrays of internationally weakly-marketed products. And despite the fact that much of Wang’s salesforce is today seen as so demoralised it couldn’t sell its way out of a paper bag, with a hot new set of products and a big company to underwite its survival, Wang would have been able to tempt back some of the best sales talent that has departed. For IBM, the Wang deal is only a beginning and many similar OEM agreements for major product lines may well follow – Terry Lautenbach said IBM was talking to other companies in the industry, but he declined to elaborate.
