Lee Courtney asks:

> On the general topic of CSY's purchase of OpenSkies (BTW congrats to the
>  OpenSkies folks and more power and success to you), why did CSY chose
>  this particular application niche? I remember when the BIG apps on the
>  3000 were manufacturing (MANMAN and HPs package) and finance (HP and
>  others).

It is my impression that HP isn't really creating an application package such
as MANMAN or SGA to sell to customers. Rather, what they are doing is creating
a service organization that will essentially recreate the era of time-sharing
services, but this time, instead of servicing a small area of some city
somewhere, they're going to serve the world through the internet. And if I
understand correctly what they are doing, I think it's really quite a good
idea.

We ourselves (AICS Research) began life as a time-sharing service, and I know
for a fact that there are an awful lot of businesses out there who do not want
to become computer experts. They'd rather saw lumber, build buildings or fly
airplanes or do whatever they do instead. It's what they know, it's what they
enjoy.

Now that the internet is well in place, we as a group may be on the verge of
going right back where we started 25 years ago -- a return to host-based,
remote-terminal time-sharing, except that now the terminals will be called
"extremely thin clients" and the mainframe host will have been relabeled a
"server". Lou Gerstner, IBM's CEO, said essentially the same thing last
Thursday. I've enclosed a newswire report of his speech below.

The host server, for whatever kind of business service is involved, can now be
pretty much anywhere. While the advantages of running an HP3000 are well known
to this group, the fellow who writes the checks really doesn't care, so long
as the system is always up, never breaks, and is inexpensive enough.

And there are truly significant advantages to the individual businesses that
sign on to such a born-again time-sharing service: (i) the customer can be up
and running in just a week or two rather than the time associated with a
typical application installation, which often takes months, stretching on to
years, (ii) further, the requirement for maintaining a well-trained staff
become almost nil, (iii) new installations can be put up and taken down almost
at will, (iv) there are virtually no up-front costs to be incurred, and (v)
because of that, almost no risk. If other similar customers are satisfied, the
likelihood that you will be too are extremely high.

This is my impression of what "Open Skies" is really doing. If so, I think it
is an excellent idea. They're not selling a hardware/software installation,
with all of its obvious pitfalls and turf battles that must be fought.
Instead, they're selling an application that is executed at a remote site,
monitored and maintained by excellent people.

Open Skies, beyond being an application, is a reservation system -- and there
are a lot of regional airlines out there (more than a thousand I would think).
It would seem the ideal market on which to start time-sharing services again.
The cost to the individual client could be conducted either on a fixed monthly
cost basis or as a per-transaction cost. Either way, small organizations that
could not afford their own computer system, with all of its attendant costs,
could almost certainly afford this.

But more than that, by taking on this kind of business, CSY can point with
pride to the demonstrable benefits of using HP3000s to other customers. The
claims won't simply be theoretical.

I know of no other computer manufacturer that has done anything like this,
with the exception of Digital and AltaVista. But this could be significantly
different than AltaVista in that there is at least a good chance that this
could be a real money maker. If so, I doubt that CSY will be the last computer
manufacturer to do this.

Wirt Atmar


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PALO ALTO, Calif., Oct 22  - Louis Gerstner, chairman and chief executive of
International Business Machines Corp., on Thursday declared that the era of
the personal computer was over, as the world shifts to a new model of
computing.

Gerstner, in his fifth year at the helm of the world's largest computer maker,
made the comments in an interview Thursday with cable television network CNBC.

"The era of the PC is over," Gerstner said.

In its place will be a new model of so-called network computing. While PCs
will still sit on nearly every desk, the programs, data and other information
will reside on powerful computer servers linked by networks.

Coupled with the proliferation of the Internet, this new model will allow
small companies to function as bigger companies with deeper pockets, and allow
large companies to push further into international markets, Gerstner said.

Despite global economic turmoil and ruinous economies in much of Asia, IBM on
Tuesday reported third-quarter earnings that rose about 7 percent as robust
sales in North America more than offset weakness in Asia.

Per-share gains were helped, as in past quarters, by aggressive share buybacks
while overall profits were paced by a 23 percent increase its services
business.

Revenue in the services business, which helps customers set up, run and
maintain computers and networks, rose to $5.8 billion and grew far faster than
the overall services industry.

Net income rose to $1.5 billion, or $1.56 a diluted share, from $1.4 billion,
or $1.35 a share, surpassing Wall Street profit forecasts for $1.53 a share.

"Overall, it was a very good quarter," Gerstner, 58, told CNBC. Gerstner's
first day at Armonk, New York-based IBM was April Fool's Day 1993.

He went to IBM after top-level stints at RJR Nabisco and American Express, and
was the first chief executive at IBM not to have come from inside, and up the
ranks.

Gerstner, though far from a technologist, brought to IBM a maniacal focus on
its customers -- something the executive said IBM lacked.

"We had to focus this company maniacally on the customer," Gerstner said. "We
eliminated a lot of the internal focus."

When Gerstner came to IBM, the company was bleeding red ink, having been
caught flat-footed first by the shift to minicomputers from mainframe
computers, then by the quick shift to the PC.

IBM has grown to revenues of about $80 billion under Gerstner's stewardship,
while its stock price has -- on a split-adjusted basis -- surged more than
five-fold to $141.81 little more than $25 a share when he took over.

Earlier this week, the stock touched a record high of $143.69. IBM closed down
81 cents on Thursday at $141.81.

Even so, IBM had come under criticism in recent quarters by analysts and
investors for revenue growth of 3 percent to 5 percent, excluding the effects
of currencies. The concern was that IBM could only continue to cut costs and
lower its tax rate for so long before profit growth stalled.

Gerstner also sounded a note of caution for other, large successful companies.
Bringing to IBM a change in focus, a change in preoccupation and a re-
energizing of its employees, Gerstner said his work and the work of every
employee at a large, successful company is never done.

"We're never done," Gerstner told CNBC. "That's my point. You're never done.
And when you think you're done, you're in trouble."

==============================================