Time May Have Passed The Powerpc By

Delays and infighting have cost the partnership dearly

Apple Computer Inc. employees worried about their jobs weren't the only ones who sighed with relief when, shortly after Gilbert F. Amelio took over as CEO, merger talks with Sun Microsystems Inc. collapsed. Apple's decision to go it alone was also welcome news for Motorola Inc. and IBM, its partners in the design and production of the PowerPC microprocessor. If Apple, which last year shipped 4 million Macs using the PowerPC, switched to Sun's SPARC chip, the venture known as Somerset would be sunk. "Apple is critical," says Didier Breton, a vice-president at Groupe Bull, which is building PowerPC-based systems. "If they move out, we have to consider the situation anew."

As it is, Somerset hasn't even come close to its goal of posing a serious challenge to Intel Corp.'s dominance in microprocessors. First, IBM and Apple dickered over whether Big Blue would license the Macintosh operating system; that delayed for years an agreement between the two companies for a common hardware specification for a PowerPC-based computer design that could be widely cloned. Meanwhile, Somerset fell behind schedule on more powerful versions of the PowerPC chip. Then IBM folded the division that had botched plans to build PowerPC desktop computers in volume. On Jan. 25, IBM announced that it had pulled the plug on its lengthy efforts to run its OS/2 software on the chip.

The Feb. 19 announcement that Motorola plans to license the Mac operating system could help revive Apple's flagging efforts to create a Mac clone industry. In addition to using the Mac software in its own low-volume computer business, Motorola plans to license the Mac operating system to other companies and sell them complete motherboards for building Mac clones. Motorola has identified China's Panda Electronics as a customer and says it has other prospects among Asia's electronics companies. "We see tremendous opportunity in the Far East," says Joseph M. Guglielmi, a Motorola vice-president.

DAMAGE CONTROL. Still, none of these clones is likely to appear before 1997. For now, that leaves the original Somerset plan in tatters. While the partners claim the alliance is intact, Big Blue is quietly making alternate plans around its own next-generation PowerPC chips and continues to flip-flop on whether to license the Mac software. The latest: IBM is considering a deal like Motorola's--mainly to build Mac clone components for other computer makers, not to sell Mac clones under the IBM name.

Meanwhile, Somerset is approaching a critical deadline: The partners have no agreement to cooperate on developing PowerPC technology beyond a first-generation 64-bit chip due in early 1997. That could mean--after pumping in what one Motorola exec says has been "billions"--the partnership could dissolve.

Even if the group hangs together, IBM starts building Mac clones, and Apple rebounds strongly, the PowerPC partners may never regain what they've lost. "Three years ago, they had it in their hands," says Jon Rubinstein, president of Firepower Systems Inc., one of the few companies outside the Somerset trio to use the PowerPC. "While they haven't blown it, they sure haven't grabbed the opportunity. They're just not working together."

Back in 1993, the PowerPC partners had the jump on rivals in the development of speedy chips for workstations and network servers. But technical difficulties, internal bickering, and management upheavals delayed successor chips by 18 months. Says Sun CEO Scott G. McNealy: "The PowerPC is on real shaky ground."

TOO LATE. The new chips--a multiprocessor version of the PowerPC 604 and the 64-bit 620--are critical. These chips, which can be strung together in multiprocessor systems, are crucial for the fast-growing network-server market. Sun and Hewlett-Packard Co. already sell multiprocessor servers that rival mainframes. Now, Intel is jumping in. In November, it brought out a circuit board containing four Pentium Pro chips that can be used to build cheap servers. Just as Intel-made motherboards helped establish some PC makers, the server board could put lots of companies in the server business and drive down profit margins. "It's the new commodity," says J. Thomas West, the top engineer at computer maker Data General Corp., which has chosen Pentium Pro over the PowerPC for a new line of servers.

Things might have been different if the next-generation PowerPC 620 had stayed on schedule. Capable of crunching 64 bits of data at a time instead of the 32 bits of current PowerPCs, it was supposed to debut last April. Since only IBM has a compelling need for the 620--Apple never committed to use it, and Motorola is focusing on such high-volume opportunities as PCs and automotive controllers--the new chip fell behind schedule. The 620 won't be out for another year. Meanwhile, Sun and Digital Equipment Corp. already are selling 64-bit chips.

IBM can't afford not to have a good 64-bit chip. So it's quietly developing its own at a Rochester (Minn.) lab. The chip will be used in AS/400 midrange computers, and IBM has given the go-ahead to use a version of that chip, dubbed Apache, in the RS/6000 workstations rather than the 620. IBM is expected to have systems out with the Apache chip next year. It's also designing a new PowerPC chip, the 630, for its popular SP2 parallel computer, a mainframe-class machine. IBM had planned to use the 620 but decided not to wait.

IBM and its partners insist their diverging plans don't signal a problem. "We are in this thing for the long haul," says Nicholas M. Donofrio, an IBM senior vice-president. "There's no turning back." He says Big Blue still plans to use the 620--as soon as the part is ready. He says IBM isn't being stingy with its technology: He's talking to Motorola and Bull about using Apache. So far, those companies say they aren't interested.

For now, the PowerPC partners say they have refocused Somerset to work on delivering speedier 32-bit chips for its volume customer, Apple. Somerset is aggressively boosting the speed of the 604 series. But the faster chips won't arrive before Intel starts flooding the market with Pentium Pros--moving the goalpost again.

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