Ibm and Apple Computer Alliance (a)

10 Pages Posted: 21 Oct 2008

See all articles by Robert E. Spekman

Robert E. Spekman

University of Virginia - Darden School of Business

Lane Crowder

affiliation not provided to SSRN

Katarina Paddack

affiliation not provided to SSRN


This case series (labeled A through D, UVA-M-0509 through UVA-M-0512) help students understand and articulate the stark realities that bring competitors together as alliance partners. The A case sets the stage for the series, describing the rationale for the alliance, the areas of conflict, and how each company sees the problems. Students are urged to examine strategies to solve the two partners' differences and to determine whether the alliance is even worth salvaging.




At 8:30 a.m. on October 1, 1994, Apple Computer's alliance managers Joan Higgins and Darryl Bass met with International Business Machine's (IBM) alliance managers, Bob Raite and José Cabot, at the Miami Hilton. The four managers were to review the state of the historic alliance formed between the two rival companies in 1991, an alliance whose goal was to create a new standard for the computer industry. Higgins and Bass politely greeted Raite and Cabot and took their places across the table. Managing the five-part alliance over the past three years had not been easy for any of them, given the vast differences between the two company's corporate cultures and strategies. Originally intended to wrest back control of the future of the personal computer (PC) industry from competitors such as Intel and Microsoft, the alliance was faced with production delays, an inability to decide on a common platform standard, and operating system licensing disagreements. Despite their differences, however, all four of the managers agreed that the alliance was at a crossroads and in need of serious review.

The Alliance

On July 3, 1991, two former rivals, Apple Computer and IBM, astonished the world by announcing plans to collaborate in the development of computer software, hardware, research, and sales. The alliance promised to put aside the companies' ten-year history of aggressive competition in order to form a partnership which would redefine the personal computer industry and challenge Microsoft's and Intel's dominance. The announcement sent ripples throughout the computer industry. On Wall Street, rival Microsoft's stock plunged $ 4.125 a share, Intel's lost 66 cents, Apple's rose 87.5 cents, and IBM's lost $ 1 per share.

Plans for the “grand alliance” were finalized on October 2, 1991. IBM's president, Jack Kuehler, announced, “For IBM, the scope of this alliance is truly unprecedented . . . the second decade of personal computing . . . begins today.” Apple's president, John Sculley, proclaimed that the alliance was “a renaissance in technical innovation. Two companies who defined personal computing in the 1980s, separately, are revitalizing that industry for the 1990s, together.”

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Keywords: UVA-M-0509 strategic alliance strategic alliance failure computer industry Apple computer IBM no blame review strategic planning technology conflict resolution

Suggested Citation

Spekman, Robert E. and Crowder, Lane and Paddack, Katarina, Ibm and Apple Computer Alliance (a). Darden Case No. UVA-M-0509, Available at SSRN:

Robert E. Spekman (Contact Author)

University of Virginia - Darden School of Business ( email )

P.O. Box 6550
Charlottesville, VA 22906-6550
United States
434-924-4860 (Phone)


Lane Crowder

affiliation not provided to SSRN

No Address Available

Katarina Paddack

affiliation not provided to SSRN

No Address Available

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