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Two joint ventures being formed by Blockbuster Entertainment Corp and IBM could fundamentally alter the economics of the music and other industries. NewLeaf Entertainment Corp and Fairway Technology Associates Inc will develop and market retail systems that manufacture and dispense audio compact disks on request. The technology could be adapted to sell video games, computer software and even videos of movies. Because the systems would access audio recordings on huge data bases, customers need never worry about a sought-after recording being out of stock. The success of the systems would require licensing agreements with major music publishers, who might be leery of the systems' theoretical ability to mix and match music from different artists, albums and labels. The two new joint ventures will be based near Blockbuster's Fort Lauderdale, FL, headquarters.

IBM debuts about twenty new mainframe-computer products, but the chief of the company's mainframe group, Nick Donofrio, predicts that its sales will drop again in 1993. IBM also laid out plans to incorporate microprocessor technology in all of its computers within the next few years. This means that the days of IBM's water-cooled mainframes are numbered. The announcements include new high-end mainframes, better performance, a new feature that will save data-storage space, and the abolition of a price list for the new computers. Donofrio stresses the value of IBM's MVS operating software for mainframes, which is renowned for its stability and security. Analysts generally praise the honesty of IBM's announcements, but say the company has little margin for error in delivering on its new strategy.

IBM's workstation group introduces a variety of computers based on the reduced-instruction-set-computing (RISC) microprocessors the company uses in its popular workstations. The new products include a color workstation that will sell for only $3,995 and the parallel-processing SP1 supercomputer, ranging in price from $312,000 for an eight-chip version to $2.76 million for a 64-chip machine. IBM's mainframe group will work with the workstation group to develop new products. IBM's first 'parallel mainframe' is expected to ship in 1993 and could make an attractive upgrade path for IBM's long-time mainframe customers. Bill Filip, the head of IBM's workstation efforts, says he would like to put RISC chips on devices as small as hand-held personal communicators.

IBM launches Fireworks Partners, an internal unit that will spend tens of millions of dollars on joint projects developing multimedia products and services with outside companies. IBM plans to announce the new unit's first development pact by the end of Feb 1993. Fireworks Partners will also take over IBM's Kaleida Labs joint venture with Apple and its NBC Desktop News alliance with NuMedia Corp and General Electric Corp's NBC unit. Michael Braun and Bob Carberry will run Fireworks; they will report to Jim Cannavino, the senior vice president in charge of the Personal Systems unit.

In an effort to stop the hemorrhaging of its profits, IBM takes a three-pronged course for its large computers. According to IBM president Jack Kuehler and Nick Donofrio, IBM mainframe chief, the strategy involves making its current mainframes cheaper and more powerful, developing massively parallel supercomputers and building 'moderately parallel' mainframes that will be based on the company's 390 microprocessor. Unlike traditional mainframes that require expensive plumbing to cool them, IBM's new mainframes will use hundreds of microprocessors that will need only a fan for cooling. IBM's hardware plans still have to overcome the obstacle of software development, however. Massively parallel machines require a different set of software than conventional computers. IBM is designing its new machines to run a new version of its MVS mainframe-control software.

IBM plans to announce a major effort to develop 'client-server' computing, in which a microcomputer, or client, draws on the resources of a bigger computer, or server. Because the server is often just a more powerful microcomputer, client-server is seen as the microcomputer industry's response to the mainframes that have been IBM's bread-and-butter products for years. The announcement is more important as a symbolic than as a tangible move for IBM, which already promotes itself as a leader in client-server computing. Industry observers say that IBM is essentially conceding that it cannot base its product strategy on mainframe computers. A new client-server business unit headed by Tom Furey will report directly to IBM Pres Jack Kuehler.

IBM unleashes a torrent of multimedia announcements. The company believes that its mainframes are ideal for handling the high demands of digitized video signals. In 1993, IBM and NBC plan to run a pilot project that will provide companies with NBC and CNBC business-related broadcasts on demand. Companies could call up the clips on microcomputers and use them to make internal video news programs. IBM faces cultural barriers in its bid to enter the multimedia market. Most innovators in the field are working with smaller computers, especially Apple Macintoshes, and disdain IBM's corporate image. Analysts say that IBM's basic assumption that multimedia is just another variety of computer data has yet to be proven. Most competitors and consumers are apt to put off a decision on multimedia until they see what IBM's rivals, especially Microsoft Corp, have to offer.

IBM and Motorola Inc have developed a prototype for the PowerPC 601 microprocessor, the first product resulting from the companies' 1991 cooperative agreement with Apple Computer Inc. The new chip will be used in IBM's new line of low-cost workstations, which are expected to be available in late 1993, and will also be featured in Apple's Macintosh computers in 1994. In addition, the French electronics companies Cie des Machines Bull and Thomson-CSF will be using the new chips in their machines. The chip is expected to perform comparably to Intel Corp's Pentium chip, Sun Microsystems Inc's SuperSparc and Silicon Graphics Inc's R4000. The chip will use reduced-instruction set computing (RISC), but will be smaller and more energy efficient than its competitors that use the same technology.

Xerox Corp introduces its $43,665 4700 color laser printer that is designed to work with networks and computers utilizing several platforms, including the Apple Macintosh and IBM AS/400 computing platforms. The 4700 can print 7.5 pages per minute in color or 30 pages per minute in monochrome, and will be available in Oct 1992. Xerox also introduces other high-speed and color laser printer that utilize digital technology. Company officials hope that the new printers will allow Xerox to realize double-digit growth during the mid-1990's. Chmn Paul Allaire indicates that Xerox's efforts to develop laser printers with Compaq may expand and that it may work to become a component supplier to other companies.

IBM announces that it will delay the release of its much-anticipated PS/ValuePoint line of microcomputers by one month, with the introduction now expected in Oct 1992. IBM had not previously indicated a specific date for the product roll-out, it had tied the introduction to other announcements expected in Sept 1992. The company is delaying the product introduction in order to make sure that it will have adequate supply to meet the anticipated demand. Industry analysts note that IBM needs the introduction of the PS/ValuePoint to go smoothly, as its microcomputer market share has fallen from an estimated 30 percent in Jul 1991 to 18 percent in Jul 1992. The target for the new line is corporate users desiring low-end microcomputers. IBM's main rival in the low-end microcomputer market is Compaq, which introduced the Prolinea line earlier in 1992.

Semiconductor firms forge international alliances to develop microprocessor technology. IBM joins forces with Toshiba Corp and Siemens AG to develop advanced memory chips that will not hit the market until the turn of the century. Advanced Micro Devices Inc has reached a cooperative agreement with Fujitsu Corp to exchange stock and develop new microprocessors. Additionally, Intel Corp has negotiated an agreement with Sharp Corp. The high costs of product development has forced rival companies to cooperate to maximize their profits. This trend towards international cooperation stands in contrast to the effort led by IBM to advocate an independent US semiconductor industry, a movement that ended in 1990 less than a year after it started. Industry analysts speculate that American companies, with strong design and research efforts, compliment Japanese companies, which typically have superior manufacturing capabilities.

IBM, Toshiba Corp and Siemens AG enter into a cooperative agreement to jointly develop 256-Mbit dynamic random access memory (DRAM) chips. DRAMs currently on the market have a capacity of only 16M-bits, and an intermediate generation of 64-Mbit DRAMs is expected to enter production by 1995. The product development venture will cost $1 billion or more, and the three companies are working together to reduce individual costs. While the companies will cooperate on research and development, they do not plan to jointly manufacture the chips. IBM's East Fishkill, NY semiconductor facility will be the center for DRAM development. The agreement marks a departure for IBM, which has historically developed and produced microprocessors for its exclusive use. IBM has previously worked with Siemens to 16-Mbit chips, and Siemens has previously licensed memory technology to Toshiba.

'Smart card' technology is being used for tickets at the World's Fair Expo '92 in Seville, Spain, another indication of Europe's top position in the field. Fair attendees receive a 'smart' ticket that they insert into a slot, they enter a finger and the machine reads the fingerprint. Thus it is nearly impossible for attendees to cheat the fair. The system was developed by Compagnie des Machines Bull of France and Fabrica Nacional Moneda y Timbre of Spain. 'Smart card' technology involves a silicon chip used on a card, providing substantially more information than the traditional magnetic-strip card. Smart cards are more expensive than magnetic-strip cards, but they are more flexible and more secure.

IBM announces plans to market a new line of microcomputers in Europe that will bear a different label. The plan is part of a marketing strategy to counteract IBM's image as a high-priced microcomputer manufacturer. The line will perform most of the functions that IBM's two more expensive models do, but will be sold at a lower price point. Company officials stress, however, that while the microcomputers will be quality products, they will not meet the same standards as do units bearing the IBM label. In addition to entering a different market segment, IBM hopes to reinforce the image that IBM-label microcomputers are higher-quality products. Market observers predict that if the line is not successful, IBM will be forced to reduce prices on its existing products in order to remain competitive. IBM holds a 19 percent market share of the $27.4 billion European microcomputer market.

Ing C. Olivetti & Co is interested in forging new cooperative agreements with computer companies and would particularly like to broaden its relationship with DEC. The two companies currently share some technology and work together in research and development. Representatives from Olivetti revealed that the company hopes to use DEC's Alpha technology in future microcomputers. Olivetti has also endorsed MIPS Computer Systems Inc's chip, which was officially supported by the Advanced Computing Environment (ACE) consortium. DEC's Alpha microprocessor relies on reduced-instruction-set-computing (RISC) technology and is relatively expensive. Olivetti emphasized that any relationship with DEC or other companies would not necessarily involve an equity stake or financial investment.

Groupe Bull is negotiating with both IBM and Hewlett-Packard Co about the possibility of a technology agreement. Bull is especially interested in reduced instruction set computing (RISC) technology. According to Bull's chairman, Francis Lorentz, any final agreement will require the company involved to make a small equity investment in Bull. Lorentz adds that a final agreement will require time because any proposals must be submitted to the French government for approval. Both IBM and Hewlett-Packard are said to be interested in a possible agreement with Bull to open outlets for marketing their products in Europe.

IBM and Siemens AG announce the development of their first production prototypes of 64M-bit dynamic random access memory (DRAM) computer memory chips. Some Japanese companies have previously introduced working models of similar semiconductors, but these were mere research and academic models, never intended as prototypes for potential mass production. Semiconductor companies that participate in the race to develop DRAM technology are considered to be at the forefront of the industry. Siemens had relinquished its superior standing in the semiconductor industry in the 1980s, but this announcement may place it back in the limelight. Production for the chips is scheduled for 1995, but the companies must first test and confirm mass production potential, improve performance and cut out all errors.

IBM and Apple Computer Inc announced an alliance, on Wednesday, Jul 3, 1991, which could rearrange the balance of power in the computer industry. IBM and Apple will develop a new operating system for their microcomputers, and they will share technology involving microprocessors and workstations. Their agreement challenges Microsoft Corp, which currently controls 90 percent of the market for operating systems that run on DOS-based microcomputers. It is hoped that the new agreement will vivify the computer industry by solving two pressing problems: lack of compatibility among microcomputer systems; and a lack of appealing and powerful uses for them. Both IBM and Apple are motivated by weakness: Apple is trying to increase its market share, and cutting its prices has not worked very well because of narrowed margins; IBM has been losing market share, being undersold by competitors.

Lotus Development Corp plans on licensing portions of its Notes office automation software program to IBM for use in the IBM OfficeVision office automation software. Industry observers note that the Lotus Notes program, which has been well-received by customers but lacks market share, will now have a powerful sales force behind it. Lotus Notes is an innovative network software program that allows users to conference via networks. Analysts note that the Lotus Notes program might be able to rescue IBM's OfficeVision office automation software, which has suffered delivery delays and technical problems.

Wang Laboratories Inc and IBM have a strategic agreement under which Wang plans to decrease its presence as a computer manufacturer and instead sell IBM microcomputers and workstations under its own label and minicomputers under the IBM name. This withdrawal from hardware production and emphasis on office automation software is a significant change for Wang. Industry analysts expect the decision to lead to additional layoffs at Wang and additional restructuring charges. These problems should be partially offset by IBM's expected $25- to $75 million investment in Wang. IBM gains access to Wang's customers and the exclusive distribution agreement prevents Wang from making a similar deal with another computer maker. Observers express doubts that Wang can make the transition to primarily a software publisher in the brief time it has, given its financial difficulties.

IBM states that it has developed a low-cost way of making tiny lasers to be used in moving data between computers and distant storage devices. The computer maker says the technology may be able to transport data within computers, and even within computer chips. IBM, which would not comment on whether or not it would license the technology to other companies, says that the laser can be made in large quantities. The company is able to keep the production costs down because the lasers are being manufactured in existing facilities, and the testing process has been streamlined to cut those costs by 50 percent. Industry observers note that though IBM's method is not revolutionary, it is likely to shape the semiconductor laser market.

IBM is working on a microprocessor technology that will enable it to build faster computers. The technology involves a technique for insulating silicon semiconductors that will not only increase speed, but will also prvent chips from leaking power or making errors because of radiation. IBM does not expect its technology to be important immediately, but states that the advance is important in building high-performance microcomputers for the late 1990s. The technology uses complimentary metal oxide semiconductor (CMOS) chips, which are popular because they give off less heat, require less power and are faster than conventional devices.

Xerox Corp plans to announce a $200,000 machine on Oct 2, 1990, that combines high-speed computing, printing, scanning, facsimile and computing capabilities into a single unit. The output aims to match the quality associated with offset printing. The machine will augment the wide-ranging package of computers and software announced on Sep 19, 1990. The technology is a strategic attempt by Xerox to automate the office and provide seamless solutions to companies swamped with paperwork. Xerox is using an approach that is easy-to-use, provides consistent displays, facilitates good communications and emphasizes work groups. The new system will eventually be able to take in everything an office now receives - paper documents, computer information, pictures, graphics and mail - and process and redistribute the information.

IBM and Microsoft Corp are expected to announce a cooperative agreement to further develop the OS/2 operating system. Analysts note that if OS/2's development is split, users' confusion on who to follow may lead them to UNIX, a competing operating system. Microsoft is now willing to carry the OS/2 version that IBM is pushing and IBM has said that it does not view Microsoft Windows graphical user interface as a threat. Computer industry observers tend to believe that the two companies disagree over OS/2 development and view the IBM-Microsoft relationship as strained. Officials at IBM say that a rift is not imminent but are not elaborating on any agreements.

IBM will introduce several models of a low-cost microcomputer in summer 1990. These product introductions signal a renewed attempt in a market where IBM has not done well in the past. Executives say IBM's new machines avoid previous mistakes: the new micros will run popular software, they will be powerful, and they will be easy to use. The microcomputers will be based on the Intel 80286 microprocessor, the basis for many of IBM's other low-end microcomputers. Pricing will be aggressive - between $1,000 and $2,000. In an expansion of a trial program, IBM plans to sell through department stores such as R H Macy & Company Inc and Sears, Roebuck & Co.

Origami, the Japanese art of paper folding, helps researchers at AT and T's Bell Laboratories, who are trying to get the most processing power out of small computers. The lab, which wants to patent a 'problem-folding' process, is investigating the power of parallel processing, which involves using many small processors that work simultaneously. A $750,000 security system now being used in airports uses neural networks that process information in a way that mimics the way the brain works. The system, from Science Applications International Corp, examines checked-in baggage for explosives by seeking out nitrogen, which all known explosives contain. The system is expected to detect explosives 96 percent of the time. Xerox Corp introduces the government-approved Xerox Encryption Unit, $4,995, which scrambles outgoing files and unscrambles incoming files on a microcomputer network.

IBM is reportedly developing a microcomputer to be used as part of a mobile communications system that uses satellite links. IBM has declined to comment about the product, which one industry analyst says would be used mainly in the transportation industry to keep track of location and status of trucks, trains or airplanes. Terminals would be carried on board the vehicles and would communicate with information centers and terminals on other vehicles via satellite communications equipment. The market for such equipment was $50 million in 1989, but the market is expected to reach $4.15 billion by 1995. If IBM is able to be among the first to introduce the satellite terminal, company sales could be as high as $1 billion on the product by 1995. The terminal is rumoured to be debuting during 1st qtr 1990.