A Computer Maker's Power Move

Steve Jobs's NeXT Computer Inc. dropped out of the brutally competitive computer-making business a year ago to concentrate on the higher-margin software market. But a handful of former NeXT employees apparently didn't get the message.

On Mar. 1, PowerHouse Systems Inc.--founded by a group of former NeXT hardware designers with $11 million in seed money from NeXT partner Canon Inc.--will announce plans to provide computer makers with everything from blueprints to entire systems based on the PowerPC microprocessor. That's the speedy silicon brain created by IBM, Apple, and Motorola.

Using PowerHouse's designs, computer makers will be able to build PowerPC machines quickly. The ultimate result may be a PowerPC clone market that will eat into Intel Corp.'s near-monopoly on the microprocessors used by the $43 billion PC industry.

BIG GUNS. Already, PowerHouse--started by Jon Rubinstein, formerly NeXT's chief designer of hardware--has snagged a big ally in Japan's Canon. Canon will build and sell PowerHouse-designed desktop machines. It also is providing management muscle: Hideyo Kondo, a Canon director, is CEO of the startup. Rubinstein, chief operating officer, hopes to sign up three or four more customers by early 1995, when he expects to unveil his machines. "We're just trying to push a lot of large companies who can pull this off," he says.

The PowerPC chip already is gaining momentum. On Feb. 22, Canon signed a separate deal with IBM to use the chip in computer and office products. Canon is also teaming with Big Blue to develop PowerPC-based subnotebook-size PCs and personal digital assistants. "Canon's experience in the consumer end of the market is going to help us out dramatically," says Richard A. Guarino, general manager for IBM's Power Personal Systems unit. On Mar. 14, the PowerPC will get another boost: Apple Computer Inc. will introduce new Macintosh computers that use the chip.

Rubinstein and his 50 employees know the PowerPC intimately. At NeXT, they had completed a PowerPC machine before Jobs pulled the plug on the business. Now, the company hopes to be among the first to capitalize on the chip's key advantages. Because it uses a more efficient technology called reduced instruction-set computing (RISC), the PowerPC chip offers as much as double the power of Intel's new Pentium chip at the same price, analysts say. That allows functions such as graphics or video compression to be included in the basic machine.

Rubinstein expects to set his company apart by specializing in machines that can use more than one PowerPC chip at a time. He claims PowerHouse's first machines, at $3,000 to $6,000, will run even faster than today's engineering workstations. Canon's expertise in printers, cameras, and copiers may provide another edge: Rubinstein plans to imbed these imaging technologies into his hardware.

Even with help from its friends, PowerHouse faces sizable challenges. For one, there's no guarantee that other computer makers will want PowerHouse's designs, which will adhere to specifications set by IBM, Motorola, and Canon, among others. And the PowerPC is no shoo-in. It doesn't yet work with Windows, the Microsoft Corp. operating software that runs thousands of PC programs. Software to do that will begin to trickle out only during the second half of 1994.

As a result, PowerHouse's fate rests largely on forces out of its control. Even its moniker is in doubt: Rubinstein recently discovered that another company already uses it. Still, if PowerHouse can pull off even a few of its plans, it surely will make a name for itself.

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