A Blue Chip Case of Blues

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The new chip itself has provoked bitter conflict within IBM. Among other things, IBM hoped the PowerPC would break the stranglehold that Intel has on the production of chips for IBM-compatible personal computers. The partners also sought to end the dominance of Microsoft as far and away the largest provider of the operating system, or master software, that runs the IBM compatibles. But Corrigan had loudly doubted the wisdom of the PowerPC strategy before he stepped down as head of the personal-computer business last week, arguing that Intel and Microsoft were too entrenched to be dislodged by the new chip.

The controversy provides a vivid example of the crosscurrents that roil IBM. It has a motley collection of computers and software that fail to fit ( comfortably together. IBM solved a similar problem in the 1960s when it launched a family of computers called the System/360, which were all compatible with one another. "IBM has to find a way to pull its product lines together into a coherent whole," says Stewart Alsop, editor in chief of the trade journal InfoWorld. "That's the question about Gerstner: Does this guy know enough about computers to know what makes a good product?" Microsoft chairman Bill Gates, who is both a supplier and a rival for IBM, puts it more delicately. "I don't think it's clear where IBM will be in three to five years," Gates says, "but they've made a lot of progress in adjusting their cost structure and getting a new focus."

Critics derided Gerstner last summer for proclaiming that "the last thing IBM needs right now is a vision." These days, at least, no one doubts that Gerstner is in pursuit of one.