The Northern Spy
RIP the IBM PC
Aug 1981--Dec 2004
Phenomenon or Phoenix
It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of Light, it was the season of Darkness, it was the spring of hope, it was the winter of despair, we had everything before us, we had nothing before us, we were all going direct to Heaven, we were all going direct the other way--in short, the period was so far like the present period, that some of its noisiest authorities insisted on its being received, for good or for evil, in the superlative degree of comparison only. --from A Tale of Two Cities, by Charles Dickens
Disclaimer: Given the content of this column, the reader should note the print publication date (February 2005) and the release date (December 2004) and properly conclude that this piece, though its predictions are speculative, is not one of the Spy's famous April Fool's pranks. The facts are correct, and important enough to displace the tutorial series for a month.
A Tale of Two Cultures
The last twenty years have told the tale of two visions of computing--that of the corporate enterprise on the one hand, and that of pop culture on the other. In 1981, when IBM introduced its PC, the term "personal computer" was already synonymous with the Apple ][, // line, which had come by that time to dominate all aspects of the market.
The original PC had pedestrian engineering, and its OS and software were sufficiently bloated in the initial incarnation that it was scarcely an improvement over the competition. However, deep pockets and the unquestioning emotional loyalty of the business world to everything Deep Blue prevailed, and the market began to shift.
IBM stumbled badly in failing to insist on exclusivity for PC-DOS, and Microsoft was able to market a generic version called MS-DOS that allowed a thousand imitators to reverse-engineer the IBM machines and saturate the market with near-compatibles. Even an early catastrophe with the ill-fated PC-jr could not then turn aside the combined juggernaut as the "PC" commoditized.
Meanwhile, Apple stumbled even more. Initially fat and confident, the company rushed the Apple /// to market before it was ready, then introduced the Lisa as a too-high-end innovation. The first Macintosh was indeed the computer for the rest of us, but a series of bad decisions (closed box, hard to program, poor corporate structuring, ineffective CEOs, abandoning the education market, and abysmal marketing) led to the near collapse of mindshare, then of marketshare. See the Spy's fourth law in last month's column.
For a time, after this IBM was London--brash, bold, and commercial, ruler of an empire on which the sun never set. Apple was Paris, home of the artist, the whimsical, the disaffected, the laid back, a cultural icon, its superior technology ruling only a BMW-style market niche. At the worst of times, the industry's columns were filled with Apple obituaries, their writers desperate to ensure that despite massive evidence to the contrary even in hard times, they'd backed the right horse by purchasing Wintel.
But a funny thing happened on the way to the crematorium.
The very commoditization of the PC that put the screws on Apple turned it into wax paper--a brand too successful for any one company to retain control. IBM's own market share began to shrink, and the company's attention gradually turned elsewhere. Perforce, they returned to the basics, concentrating on research and development, forming strategic alliances for new products and, as all successful fourth civilization enterprises must do to survive, re-invented the company underneath itself.
In the new millennium, IBM was producing better products for all their markets, selling the custom Power4 chip as Apple's G5, a friend of the open source community, had metamorphosed into, if not a blue Apple, at least a well-thought-of citizen. However, by 2004, the company was in the paradoxical position of owning one of the best quality small computer brands, and also the very best microprocessor, yet not using the latter in the former. As the Spy has previously noted, their consumer machines were Intel-compatible and MS-compatible, but not IBM-compatible! Something had to give.
And so, on December 8, 2004 (drumroll, funeral march)
IBM shocked the world by announcing it had sold its entire PC business to Lenovo Group Ltd. of China. The new venture would start life with some $12 billion in sales on about twelve million units a year. The deal, for $650 million in cash and $500 million in shares sees IBM depart the business it helped define for over two decades, turn over all its brands and become a minority shareholder (about 18%) in the new enterprise, this probably only until such time as it becomes expedient (and profitable) to sell the rest.
Meanwhile, Apple soldiers on, not dead per the pundits schedule after all, its products more popular than ever, still innovating, still defining new markets, still making small computers better than anyone else's, its newly earned mindshare putting it on the verge of huge increases in marketshare, its stock in record territory. Who'd 'a thunk it? (Old Fortran reference there, kiddo.) Apple stays in the business and prospers while IBM gives up, packs their metaphorical bags, and walks away from the small computer marketplace altogether.
Or, did they?
Frankly, if you believe this is the end of the road for small computers from IBM, the Spy has a bridge he'll sell you. Or, perhaps you'd like to buy a slightly-used Teletype machine and a copy of the Red Book's diagram for a current loop to hook same to an Apple ][ (not plus) for use as your primary printer.
Get this straight, folks. IBM is like a cowboy, who only sells his horse when he's already arranged to have another one. They have no plans to walk. The slogan ain't "I've been moved", but "I shall not be moved." (Literary reference there.)
Make no mistake, IBM is in all sectors of the computing business to stay for the course. In this case, their eye is to making money in the long term, not holding on to the sentimental and obsolete past. What they've left is the Wintel computing market, period. The company still makes the best line of chips available, ones they rely on for their own high-end servers, modified versions of which Apple buys in quantity. The only reasonable conclusion: Leaving obsolete dead-end technology behind opens the opportunity to sell higher quality machines based on superior chips IBM designs and manufactures already.
"But, professor," Nellie interrupted from over my shoulder. "Apple already makes those selfsame boxes. Surely IBM won't reprise 1983 by bringing out their own proprietary line in direct competition, especially not with the same chips."
"Hi, Nellie," I shot back. "Nice of you to knock." I continued to type, ignoring the intrusion. Gotta meet deadlines, even if I set them myself, and this was the hottest news of the decade, a revolution in the making, provided you looked at it the right way. Besides, Nellie comes and goes as she wills.
Certainly, Apple already occupies IBM's natural market, that is, selling desktops and laptops based on Power chips. Of course IBM would love to replace what they've just sold to go along with their server business. But 1981 was a long time ago, and the landscape has changed dramatically. It is about to change more.
Nellie butted in again. "So, you think like the other rumourmongers, that Big Blue will buy Apple out? It would be a simple way to accomplish the obvious goal, like plucking low hanging fruit." She helped herself to one of the apples I'd brought to bribe the other professors to come to our faculty association meeting.
"Not a chance, Nellie. Apple's capitalization just reached $25 billion, nearly forty times what IBM got for what they sold, and their stock is rising daily. Steve Jobs could neither take orders from nor give them to Big Blue. He'd surely rather have the Disney job if he was going to make anything by way of a change. Neither does pinstripes selling iPods have the right optics. Moreover, IBM may be on the side of the angels now, but not by enough to prevent their takeover from destroying Apple. No, they won't go that way."
Here's the Spy's take. There is absolutely no reason for a takeover to accomplish what a partnership can do better. Once the dust settles from the Lenovo sale, IBM and Apple will announce they're setting up a jointly-owned subsidiary. The new entity, which for argument's sake the Spy calls Phoenix, will license Apple's Macintosh technology, initially selling high- and mid-range servers based on existing Power4 and XServe platforms into the corporate (and possibly the educational) world, but soon marketing IBMac desktops and laptops in both arenas as well.
The companies would otherwise continue their present courses, IBM researching and making chips, high end servers, and mainframes, while Apple sticks to the consumer-oriented digital hub strategy, OS X development, and the personal workspace. The new entity would be Apple's calling card into the corporate world, and IBM's route back to a leadership role in the small computer market.
The combination would bring together the two most important and best trusted names in the business. It would combine the fruits of the world's best basic research scientists (IBM) with those of the most innovative applied and product design team (Apple). In the long run, such a partnership will matter more to the products we use than anything the low-cost non-researching box assemblers like Dell will do. In the short, computers bearing both logos would stand the industry on its head, not to mention making both partners a lot more money than either does now.
IBM could continue to promote and offer Linux on many of their servers, but for other markets take advantage of the more secure (technically and legally) OS X, a switch to which (say that quickly three times, Nellie) would be trivial to engineer. It makes a lot of sense, folks, and without it, selling off the PC division doesn't. Remember, you read it first in The Northern Spy.
A specific future for some computing technology
may have been unveiled in November by IBM, Sony Corp. and Toshiba Corp. when for the first time they sketched plans for the new "Cell" processor they will jointly produce to run next-generation computers, game consoles and televisions. Further details of the chip were to be revealed in February at the International Solid State Circuits Conference in San Francisco. As the Spy indicated last month, the only way forward in the face of apparent speed limitations for current technology is massively parallel architectures. Cell, a multicore semiconductor is a step in that direction. While Cell is targeted to solve very high bandwidth connectivity problems, its Power architecture means that it and its descendents could become the heart of future IBMac computers, say as the G7. (G6 will no doubt be based on the Power5 or Power6.)
Seen in Passing
The iMac G5 was been named the "Computer of the Year" by The Washington Times which editorialized glowingly of Apple's latest introduction, and deservedly so. This will probably be Apple's best selling desktop of the coming year. It certainly delivers lotsa bang for the buck.
In other news, rumour sites posted leaked photos of Apple's new iPod Flash (the correct name) in early December. Of course there's no display screen on the 2.5" by 1.5" by 0.5" model(note to Nellie, reading over my shoulder: an inch is 2.54 cm), but in the lowest-end 256M version it is expected to start at only $99 US, a price point that should see it dominate the rest of the music player market not already owned by Apple. In view of a new deal inked with Toshiba to supply flash memory to Apple, the new toy could be released any time now.
The iSight, big brother relative of the iPod, had also not seen the light of day by mid-December, but it's only a matter of time. It does appear though that Apple may have gone back to the drawing board for a while on this one, possibly to redistribute features to other devices they have in the works, among them the Apple-Motorola(-AT&T??) iPhone. Or perhaps Steve has been spending more time lately with his lawyers working on the IBM deal than with his engineers evaluating products.
"Take a couple more apples with you, why don't you, Nellie. What tree are they from? Why, of course they're from..."
--The Northern Spy
Rick Sutcliffe, (a.k.a. The Northern Spy) is professor of Computing Science and Mathematics at Trinity Western University. He's written two textbooks and several novels, one of which was named best in the science fiction genre for 2003. His columns have appeared in numerous magazines and newspapers, and he's a regular speaker at churches, schools, academic meetings, and conferences. He and his wife Joyce have lived in the Aldergrove/Bradner area of BC since 1972.
Want to discuss this and other Northern Spy columns? Surf on over to ArjayBB.com. Participate and you could win free web hosting from the WebNameHost.net subsidiary of Arjay Web Services. Rick Sutcliffe's fiction can be purchased in various eBook formats from Fictionwise, and in dead tree form from Bowker's Booksurge.
The Northern Spy Home Page: http://www.TheNorthernSpy.com
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Arjay Books: http://www.ArjayBooks.com
The Spy's Laws collected: http://www.thenorthernspy.com/spyslaws.htm
The Fourth Civilization (text): http://www.4civ.com/
The iMac G5 as computer of the year: http://www.macnn.com/news/27105
Toshiba selling flash to Apple: http://www.macnn.com/news/27251