BIG BLUE'S BEST-KEPT SECRET FROM KIOSKS TO SET-TOP BOXES, IBM IS QUIETLY BECOMING A MULTIMEDIA LEADER

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With great fanfare, IBM Corp. three years ago unveiled Ultimedia, a brand name meant to unify a multitude of Big Blue's multimedia offerings.

Ultimedia, IBM trumpeted, would encompass "the broadest array of flexible, cost-effective multimedia products and solutions ever offered by any company in the field."

Today, IBM has more entrance ramps onto the information superhighway than any other company.

But don't look for Big Blue to claim leadership in the interactive multimedia market. Partly by design and partly by default, IBM has taken a curiously low public profile on the heavily hyped highway.

Ultimedia, meanwhile, languishes as a brand.

"We're as yet undecided what we're going to do with it," explained Peter Blakeney, a longtime IBM multimedia executive who is manager of IBM Consulting Group's U.S. multimedia consulting and services. "We just got a study back that didn't come to any clear conclusion."

IBM had intended the Ultimedia logo to identify multimedia tools across all product lines, but now the company uses the phrase only sporadically.

In the meantime, others have far outmaneuvered IBM in marketing themselves as interactive leaders. AT&T has promised the future in the "You will" ad campaign. Time Warner, Bell Atlantic Corp. and Tele-Communications Inc. are promoting various schemes for interactive TV.

Closer to home, Larry Ellison, president-ceo of database software company and interactive TV wanna-be Oracle Corp., made the cover of Fortune. Microsoft Corp. Chairman-CEO Bill Gates is literally writing the book on the information superhighway with a tome set to be published in November.

IBM's low multimedia profile in part stems from a change at the top, as ex-RJR Nabisco Chairman Louis V. Gerstner Jr. replaced John Akers as IBM chairman-ceo a year ago. While interactivity has been getting so much attention, Mr. Gerstner has been huddling with aides trying to chart a course for the ailing giant.

"It's not propitious to burst from the gate beating your chest when you don't know what you're beating it about," Mr. Blakeney said.

IBM's image hasn't been helped by the departure over the past year of two respected and high-profile multimedia gurus. Lucie Fjeldstad, general manager of multimedia and a rising star at IBM, resigned a year ago to become an industry consultant. Last month, Robert Carberry, president of Fireworks Partners, a multimedia strategy and development arm of IBM, quit to become VP-technology at Blockbuster Entertainment Corp., an IBM customer. (See related story on this page.)

IBM's new multimedia captain, Paul Loftus, general manager of multimedia systems, declined an interview request. But his chief spokesman, David Harrah, said IBM is more interested in building technology in a formative market than in hyping that IBM owns the end-all interactive solution.

"It's much too early for people to start crowning themselves as winners," Mr. Harrah said. "We're getting our act together internally and externally to try to get experience on every piece of the [interactive] puzzle. We will [succeed] based on reality becoming perception."

The reality, however, is that IBM is perceived as an ailing computer giant, not as the rising star in the emerging interactive market. IBM, Mr. Harrah acknowledges, is "not cool."

Mr. Harrah contends the people who count-the movers and shakers of the interactive world-know IBM is a force in the market, and he points to myriad deals with high-profile players.

"The people we're talking to are not the channel surfers, [the] couch potatoes" who might see an AT&T ad, Mr. Harrah said. "The people that we need to talk to are the guys who are putting these systems together and the guys that are trying to exploit the technology."

Yet if IBM does get its act together, the company could establish a leadership position because of its unparalleled set of interactive multimedia technologies that spread across the company.

IBM is selling interactive technology in business, consumer and educational markets today and is developing technology to play in emerging markets like interactive TV. IBM also has a long history in selling and designing products for a broad range of customers. And it has a more cooperative attitude brought on by the recognition that Big Blue is no longer omnipotent.

These are bankable traits in a market tired of hype and arrogance. Far from being a company that has fallen and can't get up, IBM has the potential to be the leading supplier of interactive technology.

Online services? Prodigy Services Co., co-owned by IBM and Sears, Roebuck & Co., is the biggest.

CD-ROM? IBM has been developing CD-ROM titles for years. Last week, IBM and Children's Television Workshop, the respected producer of "Sesame Street," announced plans to co-develop educational titles.

IBM Personal Computer Co., one of the shining lights inside IBM, is a leading marketer of multimedia PCs. At the Fred Meyer Inc. hypermarket chain in the Northwest, meanwhile, employees learn how to stack bananas on an IBM-designed CD-ROM training system partly underwritten by Chiquita Brands.

Interactive TV? IBM is developing TV set-top boxes for Bell Atlantic Corp. and a Canadian cable service from Groupe Videotron. IBM also is working on storage systems and video servers, the infrastructure needed to produce two-way TV.

Interactive kiosks? IBM is a leader. At the Stop & Shop Cos. supermarket chain in Boston, customers can enter an order in the deli kiosk on the way in and then pick it up with no waiting.

Hollywood? IBM multimedia technology has been used to produce special effects in movies like Sylvester Stallone's "Cliffhanger." IBM also owns half of a commercial production house, Digital Domain.

Videoconferencing? IBM's there, too.

A single toll-free number for information on all this? IBM has one, promoted in trade ads.

IBM even created hardware and software for the National Science Foundation that serves as the backbone of the Internet, arguably the trendiest piece of the information superhighway. But the Internet connection is little known.

"Nobody wants to associate IBM with it," Mr. Harrah said.

IBM, better known for superior marketing and sales prowess than for technology, is nevertheless staking its bet on technology.

However, IBM, humbled since the days it ruled the computer world, does not expect itself-or any single company-to dominate the enormous interactive market. Nor does IBM feel it gets to mandate what technology will be used.

"One of the things we've had to change about the company is working [with customers and other companies] to answer the question instead of telling the world what the answer is," Mr. Harrah said.

As backlash against interactive hype grows, no one can accuse IBM of hyping the future. Mr. Gerstner seems intent on underpromising and overdelivering.

In the short term, IBM's interactive plans may get buried by the hype of rivals. In the long term, it's possible that IBM's quiet execution will have its rewards.

"We have concluded that there's no real value to crowing about something that will inevitably change and change radically," said Mr. Blakeney. "But we believe IBM has the depth and breadth of research capability and the technological wherewithal that we have the competitive edge to build the premier systems for the information superhighway of the future."

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