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IBM's Last Hope: OS/2 Warp Enters War with Microsoft's Windows

Strategic Insights

— 1 min read

IBM has unveiled a souped-up version of its operating system, OS/2, which it hopes will finally take off and become a serious competitor to Microsoft's dominant Windows software. With a $50 million ad blitz over the next 12 weeks, IBM is urging millions of users to adopt the new OS/2, dubbed Warp, which boasts improved features and a more user-friendly interface. But the stakes are high, as Microsoft's long-awaited upgrade to Windows, Windows 95, is expected to be released in mid-1995, and analysts say it will be a tough battle for IBM to win.

Key Takeaways:

  • IBM has spent close to $2 billion developing and marketing OS/2 since the mid-1980s, but has only collected around $250 million in OS/2 sales.
  • Microsoft has shipped over 50 million copies of Windows, while IBM has sold only 5 million copies of OS/2.
  • OS/2 Warp is expected to carry a consumer-friendly price of $60 to $80 and will be promoted heavily through software retail stores.
  • IBM has packed Warp with new features that Microsoft won't have for at least six months, including improved networking and graphics capabilities.
  • The ad blitz will be aimed in part at making OS/2 more desirable to home and small-office users by diluting its image as a corporate-oriented product.
  • IBM is unlikely to gain significant market share from Microsoft, but a successful launch of OS/2 Warp could be crucial for IBM's long-term strategy and establish its position in the market.

Statistics:

  • IBM has spent close to $2 billion developing and marketing OS/2 since the mid-1980s.
  • Microsoft has shipped over 50 million copies of Windows.
  • IBM has sold only 5 million copies of OS/2.
  • IBM forecasts that OS/2 Warp will be a hit if it can ship 5 million copies within a year.
  • Microsoft expects Windows 95 to sell as many as 30 million copies in its first 12 months on the market.

Sources:

  • The Wall Street Journal.
  • Bart Ziegler.

Note: The sources listed are exactly as they appear in the original text, without any dates or embellishments.

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