Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: WEDNESDAY, June 7, 1995                   TAG: 9506080045
SECTION: BUSINESS                    PAGE: B-5   EDITION: METRO 
SOURCE: Los Angeles Times
DATELINE:                                 LENGTH: Medium

BUYOUT CAN MAKE PC A BUSINESS TOOL

For if IBM's brash takeover move is successful - and all indications Tuesday were that it would be - it will clearly mark the mainstream PC software industry's transformation from a hobbyist's heaven to a more traditional business that mostly serves large corporate customers.

Lotus shares edged up 37.5 cents to $61.81 on NASDAQ as investors looked for a rival bidder - considered unlikely by most analysts - or for IBM to sweeten its $60-per-share offer in order to convert the hostile offer into a friendly merger. IBM added one-eighth of a share to close at 913/8 on the New York Stock Exchange.

IBM and Lotus have been closely intertwined since 1983, when Lotus launched its 1-2-3 spreadsheet. The program went on to become one of the most important software products in computer history and did much to spur the development of the entire PC industry. At that time, however, two years after the launch of the IBM PC, there were few computer stores and none that carried software exclusively.

Lotus founder Mitch Kapor, a college dropout and one-time Transcendental Meditation instructor, loaded packages of 1-2-3 into the trunk of his car and knocked on the doors of computer retailers. When he discovered they were slow to pay their bills, he began calling directly on large companies.

``It was like going into the wilderness to carve out a place to live,'' Kapor remembered. ``That was before the software companies started to fight against each other after all the low-hanging fruit got picked. This was before the battle to be king of the hill.''

The subsequent battle for king of the hill has swallowed up nearly all the companies that had invented software for the first IBM PC. Some, such as Ashton-Tate and Word Perfect, have been acquired. Others, such as Borland International and Software Publishing, are struggling along as they wait to be rescued. Many others, like Wordstar, have all but vanished.

Only Microsoft Corp., with its dominance in the operating system software that controls basic PC functions, continues to thrive.

As the PC grew more powerful, though, it became clear that it could do a lot of things better than a big machine, and more cheaply. It became a serious business machine. It began to change the way companies organized their work, giving individual managers power that was once the province of the computer department and creating demand for new kinds of software that could manage the interactions among hundreds or thousands of linked PCs.

But with this change, the task of the software supplier changed too. It was no longer adequate to simply deliver a word-processing package - it now had to work with the spreadsheet and the database. Corporate customers needed the vendor to show them how workers could share information across large networks.

Notes, the Lotus software that IBM covets, needs lots of customization and support. IBM, with its vast resources and experience in serving large corporations, has the opportunity to make Notes a broad success, something that Lotus, with its roots in the garage, couldn't do.