TECHNOLOGY/ATT'S <T>  EFFORTS TO SELL COMPUTERS
American Telephone and Telegraph Co is
another illustration of a maxim already learned by several
other huge corporations - that success in one segment of the
electronics industry is very difficult to translate into
success selling computers.
    ATT is learning the hard way that all the resources and
technological advances in the world can not make up for weak
marketing and sluggish responses to one of the most rapidly
changing and competitive industries.
    Consequently, ATT will try again this week to convince the
world that it is serious about computers, after four years in
the business, by announcing a set of new products and
showcasing its latest computer chief, Vittorio Cassoni,
formerly of ATT's Italian affiliate Ing. C. Olivetti and Co.
    Industry consultants said ATT will announce a faster
addition to its 3B line of minicomputers, improved connectivity
products, a new version of its Unix software operating system
and assortered peripheral equipment, including a laser printer.
    The announcements, however, hold "minimal significance" for
both ATT and the industry, said Forrester Research consultant
John McCarthy. "They are just never going to be a significant
player in this market as long as computers play a subjagated
role to the (telephone) network," he said.
    ATT, the world's largest company before its breakup in 1984
and still the pre-eminent phone company in the United States,
has only been able to carve out a fractional share of the
computer industry.
    Last year was particularly disastrous for the company's
data systems division, which posted a pre-tax operating loss
for the year of 1.2 billion dlrs (ATT as a whole reported a
1986 profit of 139 mln, after a 1.7 billion dlr charge against
earnings, down from 1.56 billion dlrs the prior year).
    Morale is down throughout the company after ATT reduced its
work force by 32,000 people last year, leaving a work force of
290,000, but analysts say the situation in the computer
division is particularly bad, especially since the computer
merged its computer and network sales forces.
    Meanwhile, the company's most successful product, the 6300
personal computer, ran out of steam in the last three months of
the year after gaining some five pct of the market.
    "ATT seemed to lose their focus with the 6300," said
consultant Norman DeWitt, president of Dataquest Inc. "There
were no major product enhancements last year and a perception
developed in the marketplace that the product was tired."
    Meanwhile, the 6300 had to face increasingly aggressive
competition from smaller companies that undercut ATT on price
and offered more technologically advanced machines. "I would
have to say that, after a fast start, ATT just lost momentum on
the pc side," said DeWitt.
    The 3B line of minicomputers has never found great
acceptance in the market and ATT's Unix operating system,
though loved by scientists and engineers, has yet to put a
serious dent in the much more widely used systems adopted by
industry giant International Business Machines Corp <IBM>.
    By last fall, ATT executives found themselves trying to
defuse widespread speculation that ATT was going to abandon or
sell off the computer division and the company turned over all
responsibility for personal computers to Olivetti, in which its
owns a 23.5 pct stake.
    But analysts said the company's image was dealt another
blow last week when ATT senior vice president James Edwards,
who preceded Cassoni as head of the computer division,
announced he was leaving to become president of TelWatch Inc, a
small developer of systems to manage networks.
    Several other executives have also left in recent months,
including John Walsh, head of the 3B minicomputer line. And,
although the 43-year old Cassoni has considerable experience
running Olivetti's successful computer operations, analysts
expressed concern about his approach to ATT's business.
    Cassoni has said he wants to acheive recognizable success
in both within ATT and in the marketplace within two years and
it is widely assumed that he will rapidly abandon any product
that does not meet those profitability goals.
     The problem with such a strategy, analysts said, is that
it may not give certain products enough time to become
established and customers may be reluctant to buy a product
that could be discontinued in a year or two.
    ATT chairman James Olson took a slightly more conservative
view of the computer division recently. He lauded Cassoni's two
year goal but said he expects the data systems division to turn
around within five years.
    Olson denied the perception that ATT was retreating "to the
womb, going back to our old business" of long distance
telephone systems at the expense of the computer division.
 Reuter
