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PC crunch could spawn unlikely alliance

It was a TV commercial that summed up the state of the computer industry at the time. A vast room of zombies watched a giant television screen on which Big Brother intoned about the way things are done. Suddenly a woman in track clothes ran in, twirled a sledgehammer and shattered the screen to bits.

The 1984 commercial introduced Apple Computer Inc.'s Macintosh line, and the image of IBM as an Orwellian despot was unmistakable.

Seven years later, how times have changed _ Apple reportedly is negotiating with IBM about joining forces in the increasingly cutthroat personal computer business.

The two companies are said to be talking about Apple licensing its operating system software to IBM, and IBM licensing to Apple a powerful microprocessor used in high-powered desktop computers called workstations.

Such a technology-sharing agreement would create very odd bedfellows.

International Business Machines Corp. is part of the East Coast establishment, a company where male employees are frowned upon for wearing shirts any color but white and where decisions require rounds of meetings.

Apple is the most successful Silicon Valley startup, a brash competitor where even top executives wear sport shirts and jeans to its Cupertino, Calif., headquarters and where quick-footed innovation is a hallmark.

Apple's dislike of IBM, and IBM's scoffing at Apple, were the stuff of industry scuttlebutt for years.

"There's no question that each one considered the other to be the Antichrist," said industry analyst Tom Willmott.

But rapid changes in the personal computer industry apparently have forced the two largest PC makers to bargain.

Profits have been squeezed as various brands of PCs become almost interchangeable and computers increasingly are sold in discount stores. Sales are slowing in a saturated market hit by the recession.

In April, 21 computer hardware and software makers formed an alliance to develop the next-generation workstation. The group doesn't include Apple or IBM.

At the same time, computer software giant Microsoft Corp. is increasing its influence over the industry, apparently causing concern at IBM and Apple, analysts say. Microsoft makes the base layer of software used on all IBM-type personal computers, and it is the largest maker of applications software for Macintoshes.

Computer makers "are circling the wagons and looking for help," said analyst Pieter Hartsook of International Data Corp. An IBM-Apple alliance would provide formidable competition to Microsoft since together they ship 35 percent to 40 percent of all PCs, he said.

Neither Apple nor IBM would comment on the reports of their talks, which have appeared in The New York Times and The Wall Street Journal. The Times reported that Apple executives were meeting with IBM officials on Monday at IBM's Armonk, N.Y., headquarters.

Willmott, of the Boston technology research firm Aberdeen Group Inc., said IBM may be interested in an Apple linkup to further popularize the microprocessor it developed for IBM workstations. A microprocessor, a tiny silicon wafer, acts as the "brains" of personal computers and workstations.

IBM also appears to be interested in licensing an advanced operating system Apple is developing. An operating system is the base layer of software that controls a computer's internal functions; on top of it, users run applications programs like spreadsheets and word processors.

For Apple, putting an operating system on IBM computers would vastly expand the market for it, and presumably attract more software developers to write applications programs, analysts say.

It also would represent a stark departure _ Apple has never licensed the current Macintosh operating system, preferring to keep the easy-to-use, graphics-based features to itself.

Hartsook said Apple's reported talks with IBM show the 15-year-old company has matured.

"They've gone from being an adolescent to an adult. They're much less concerned about culture than getting the job done," the IDC analyst said.

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