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The IBM Apple?
A couple years back, IBM invested $3 billion US into building an advanced chip fabrication facility in Fishkill, NY to make their line of award-winning PowerPC chips. The capacity of this plant fax exceeded the needs of Apple Computer’s G5 and IBM’s own server offerings. Indeed, IBM’s plan, as revealed in recent moves indicates that IBM intends for the PowerPC to become the next mass-marketing platform.
While everyone expected the PowerPC 970 chip to become the G5 processor for Apple, no one suspected that IBM was also hard at work wooing Sony and Microsoft to form the heart of their next generation game consoles, beating out Intel’s bid. While Intel may brush this off as making chips for toys, this is not an insignificant win. Thousands of developers will have to code for PowerPC based gaming consoles rather than Intel. Some of them, including Microsoft, may do that on Apple’s G5 computers, as Microsoft is apparently doing, although with a highly modified NT kernel rather than Mac OS X.
But what about laptops and desktop computers? Is there an opportunity for IBM for the chip beyond high end servers, toys, and Macs? The signs say yes. A leaked internal IBM memo revealed that there is a significant initiative to encourage IBM staff to consider running Open Source alternatives for their office productivity software and operating system.
Some interpreted this as another volley into the ongoing battle between Microsoft and IBM. IBM has long disdained the lock and control that Microsoft has had on the operating systems market, since Windows was a deadly arrow into the heart of IBM’s homegrown OS/2 operating system. But the memo didn’t mention Microsoft at all. IBM has, in the last ten years, taken a more open approach to the market. They will sell and support what the market demands.
But what would happen if IBM, a huge enterprise organization, could successfully wean their users off of Windows and other Microsoft products and use Linux alternatives? What would happen if IBM released computers based on their own PowerPC chip that could run Linux and all those same applications?
IBM, in one fell swoop, could eliminate costly Microsoft licensing and increase demand for their own PowerPC chips as the alternative platform to Intel. At the same time, IBM can invest a few million of their war chest into enhanced versions of Linux to run on their systems. They already have versions of Lotus Dominoes/Notes than run on Linux desktops and servers and could do the same with SmartSuite, their own office productivity tool.
While making PowerPC based desktop/laptop computers may be a risky gambit, it’s one that IBM should attempt. What was once a cost of purchasing OS’s and processors becomes a revenue stream for IBM branded boxes as well as any licensed arrangements.
Or, what if IBM reached an agreement with Apple to supply IBM branded systems running Mac OS X? Certainly, Mac OS X is easier to use than Linux and already has access to thousands of commercially available software as well as open source software. Such an arrangement allows IBM to enter the arena with a polished operating system and they can leverage their investment in PC assembly technology and infrastructure.
As part of the deal, IBM puts an icon of iTunes on every desktop and Apple offers a OS X version of Lotus SmartSuite at the Apple Store. IBM would license other technologies such as FireWire and iLife for delivery with every system and provide unique and powerful solutions that a Microsoft/Intel combination could not match.
IBM’s support of the desktop PowerPC platform will give it credibility in the business market and also provide a revenue incentive for major software vendors to support the platform. Imagine IBM offering a 64 bit PC that is price competitive with 32 bit offerings, running the latest software, yet free from viruses and providing a more productive user experience in the process. Forget about making chips, IBM will be making money!
I liken the move to a small city that goes from one hardware store to two. While some sales might be lost from the original store in the beginning. The presence of two stores keeps the residents in town and not shopping out of town, increasing sales for both overall.
Apple continues to struggle with market share numbers and such a partnership could make the PowerPC platform the next big thing in the desktop market, grabbing double digit share. Use an IBM at work and an Apple at home, yet they both work the same. No where have we heard a similar argument before?
What do you think?
Kevin Ledgister is an analyst for an enterprise technology company in Wisconsin and a frequent freelance analyst on the computer industry as it relates to Apple technologies and products.
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