Apple Considers Major Changes to Stay Ahead : Technology: The firm is even discussing a link with longtime rival, International Business Machines Corp.

Apple Computer Inc., inventor of the personal computer in the mid-1970s, now appears to be reinventing itself as it struggles to extend its successful machines into an extremely competitive market.

In the past few weeks it has lopped staff, mulled an executive pay cut and slashed PC prices.

Now it is taking the unprecedented step of discussing a link with its longstanding nemesis, International Business Machines Corp.

While analysts say the alliance makes sense, the clash of cultures is astounding. Apple was founded in the mid-1970s in a California garage by a college dropout with a penchant for Eastern religions, blue jeans and a fruit-based diet.

Its mission was to bring computing to the individual and it became a multibillion dollar success story in the process, leaving its counterculture founder, Steven Jobs, rich.

Jobs left the company in the mid-1980s.

IBM, the bluest of blue chip companies, has dominated computing by offering powerful machines to the biggest corporations. Its executives wear white shirts and ties and keep their hair short.

But Apple, trying to alter itself to maintain a leading role in the personal computer industry, is now changing its stripes.

In the new market, brand names no longer mean much. Price, software availability, and the ease of linking with other machines determines one’s place in the market. And if that means shaking hands with a rival, so be it.

Although Apple and IBM will not confirm it, analysts said the two companies are talking about possible exchanges of technology to help both companies meet new demands of the consumer.

“They don’t have a choice,” said industry analyst Kevin McCarthy at the brokerage of Mabon Nugent in New York. “They (Apple) have to restructure their business. “The overall personal computer industry has matured to a point where price has become the only differentiating factor in the acquisition of market share.”

Apple Computer extended its reach in the past decade on the phenomenal success of its Macintosh line of personal computers.

The company’s sneakered and denim-clad work force in Silicon Valley used unconventional computer design and marketing techniques to take on much larger and entrenched rivals such as IBM, which was slow to recognize the boom in PCs.

Since the early days of success, newcomers have entered the market and IBM--the world’s biggest computer marker--has gained the top position in the field.

Apple’s unique personal computer system hasn’t been powerful enough on its own to hold back this tide and the strain is showing. Apple’s shares have been rocked in recent weeks because of frank disclosures by the company that its profits are eroding. The stock fell 12.5 cents Monday to $46 on the over-the-counter market.

Apple has slashed prices on its computers, and while sales are high, profit margins have dropped. To counter this squeeze Apple is cutting up to 10% of its 15,000 member work force and is considering executive pay cuts and other cost-cutting measures.

There also are newspaper reports that Apple’s dedicated work force has become demoralized.

But most shocking would be an alliance with IBM.

“My first reaction is with the difference in cultures, would it (an alliance) really work?” one former employee said.

Industry analysts believe that the two companies are holding wide-ranging discussions to consider exchanging technology that could lead to unheard of cooperation.

Apple is considered vulnerable in the new area RISC, or reduced instruction set computing, a technology that allows computers to run faster while handling complex problems. It is believed that Apple may be considering using IBM’s RS600 to help it produce more advanced computers.

Apple realizes that to be more attractive to corporate computer buyers it must learn how to link its machines with the industry’s biggest player, IBM.

Timothy Bajarin, executive vice-president of Creative Strategies Research International in Santa Clara, Calif., says “The fact of the matter is no one company is going to have their systems used exclusively in any one business.”