IN THE NEW IBM, MAINFRAMES ARE NEITHER BIG NOR BLUE

By THOMAS McCARROLL

They still call it big blue, but maybe not for long. Back when IBM acquired the moniker, blue referred to the signature color of its computers, and big described their size. Called mainframes, the mammoth computers were as massive as locomotives and just as powerful when it came to processing data. Big Blue once held more than 80% of the market in its iron grip.

But not even IBM could withstand the seismic shifts that rocked the industry in the early 1990s. As personal computers increased in power, many customers began moving their data-processing chores to smaller, desktop systems. The shock waves bent many "big iron" manufacturers out of shape, including Prime Computer and Control Data Corp., which stopped making mainframes after heavy losses. Many companies like Wang Laboratories and Unisys have largely switched from hardware to software. The biggest fallen giant is Digital Equipment Corp., which last week reported a larger than expected quarterly loss of $66 million. Once the No. 2 computer maker after IBM, DEC has downsized in a so far unsuccessful effort to transform itself into a chip company.

IBM is leading the charge to restore the majesty of the mainframe by giving its System/390 mainframes a complete makeover. The size of the machines has shrunk some 80%, and prices have dropped nearly 90%, to an average of $5 million. While mainframes still function as the old-fashioned workhorse for payroll departments and number-crunching scientists, they have also expanded into hipper new markets like the Internet, where they act as network servers. IBM even changed its trademark color to yellow or red stripes. "We don't even call them mainframes anymore," says Linda Sanford, an IBM general manager. IBM may be in need of another nickname, but somehow "Little Yeller" doesn't quite have the same ring.

--By Thomas McCarroll