A.T.&.T. Offers Its Computers

A.T.&.T. Offers Its Computers

By Andrew Pollack
The New York Times

March 28, 1984

The title bout has been postponed. The challenger isn't ready yet.

The computer industry has been bracing for a battle of the titans between newcomer American Telephone and Telegraph Company and the International Business Machines Corporation.

But A.T.&T., which announced its entry into the computer market yesterday, showed itself to be merely an interesting challenger that still needs some seasoning before it can do battle with the champ, according to analysts. The company, despite an impressive breadth of products, still lacks the software and marketing to be a major contender.

''They're not really ready to sell full systems to the office,'' said David Moschella, an analyst with the International Data Corporation, a market research firm.

Six Models in 3B Series

A.T.&T. introduced six models of its 3B series, ranging from a $10,000 desktop microcomputer capable of supporting several users, to a $340,000 superminicomputer that is fault tolerant, meaning it has backup circuits that allow it to keep operating even if some fail.

The company also introduced two network products that can tie various computers together. One was a local network, 3B-Net, that allows various 3B computers to talk to each other. The other was a system that would allow personal computers, including I.B.M.'s, to connect to the A.T.& T. 3B computers. This should help A.T.& T. sell its computers to large corporations that are buying thousands of personal computers.

To many in the industry, the entry of A.T.&T. is viewed as the most significant event since I.B.M. entered the personal computer business in 1981. Despite many hurdles it still must overcome, A.T.&T. has the size and technological prowess to become a major player in the market it gained access to by spinning off its local telephone companies.

A.T.& T. did manage to convey that it will be a broad-line supplier, introducing a range of products and making it clear that more will be coming. The company also showed that its line would be compatible from top to bottom, with all the computers using A.T.&T.'s increasingly popular UNIX operating system. Users will be able to use the same programs for such tasks as word processing or accounting on all the A.T.&T. computers, making it easy for a company to expand its computer capacity.

A.T.& T. also wants to position itself as a reliable supplier, one that because of its size will not go bankrupt and leave its customers in limbo. ''We're into this business in a big way and we're in it to stay,'' said James E. Olson, A.T.& T.'s vice chairman.

The company has also carefully picked its products to stress its strengths - communications, and reliability, for which its telephone products are known. It also avoided major areas of I.B.M. strength, notably mainframes and personal computers. A.T.& T. will offer personal computers by mid-year, when it has more software ready.

A.T.& T. instead decided to pursue the market for minicomputers - machines costing tens of thousands to hundreds of thousands of dollars used largely for scientific and engineering tasks. It also chose to enter the unpopulated market for supermicrocomputers - desktop computers that fit between personal computers, used by one person, and minicomputers.

Its new products will put A.T.& T. into competition with companies such as the Digital Equipment Corporation and the Data General Corporation. Indeed, A.T.&T.'s product line bears a resemblance to Digital's, which is no surprise, since A.T.&T. has been one of Digital's largest customers. ''It looks like they had the D.E.C. product manual next to them when they did it,'' said Steve Cohen of the Gartner Group, a research firm.

Nevertheless, the new products highlighted several A.T.& T. weaknesses. The choice of minicomputers shows A.T.& T's technological, rather than marketing, bent. The minicomputer market has always been known as one that competed on the basis of computer speed and price, rather than on sophisticated marketing.

A.T.& T. also does not have much software for its computers yet. Instead, it will initially sell its products to other companies, known as value- added resellers, which will write software for particular industries and resell the machines. It will also sell to large companies that can write their own software.

This is the traditional minicomputer approach: Sell computers to sophisticated users who can write software for them. But companies such as Digital and Data General are now moving away from that strategy of ''pumping iron.'' ''You have to come to the market with a full repertoire of software,'' said Robert C. Miller, senior vice president of Data General. He noted that last year Data General won a contract from the United States Forest Service over A.T.&T., which had bid the 3B series, which it was making and using internally.

By using such resellers, A.T.&T. is limiting initial sales of its computers, because it will take time for resellers to obtain an A.T.&T. computer and write the software. A.T.&T. officials conceded that, at least in the first year, sales of all 3B computers will be mainly to Bell operating companies, which have been using some of the computers for years.

Another potential drawback is that A.T.&T.'s prices are somewhat high, especially considering that, initially, the company will compete on price and performance alone. Analysts said A.T.& T.'s pricing was comparable to Digital's, but noted that some of Digital's products are old and are priced higher than those of competitors.

Wall Street agreed. Digital's stock, which had dropped $2.875 the day before on rumors of A.T.& T.'s entry, rebounded $3.75 yesterday, to close at $91.25. Data General rose $1.75, to $44.75. A.T.& T. dropped 12 1/2 cents, to $15.75. All trade on the Big Board.

The top of the new line is the 3B20- D, which is a superminicomputer used widely within the telephone network. The computer, priced at $340,000 in a basic system, is really two computers in one, meaning it can keep running if one computer fails, which is necessary to prevent phone outages. A.T.& T. hopes the computer could be sold for use in reservation systems and other applications critically dependent on computers.

Entry Price of $230,000

The 3B20-S is a single computer version that can support up to 100 users on terminals and will have an entry price of $230,000. The 3B20-A is a more powerful version, up to 1.8 times as powerful as the 3B20-S. It sells for $330,000 for a complete system, and an upgrade to turn the model S into the model A will sell for $120,000. The 3B5 series are minicomputers based on A.T.& T.'s 32-bit microprocessor. The model 100, which can support 30 users, costs $57,000. The model 200, which can support up to 60 users, costs $73,000.

Analysts were most intrigued by the 3B2 model 300, a desktop computer that can support up to 18 users working on separate terminals. This product also uses the 32-bit microprocessor and has an entry price of $9,950, without the terminals.

GRAPHIC: photo of A.T.& T. employee demonstrating 5620 computer terminal; chart of company's new computers and their competitors