The PowerPC debacle

Electronic News, Nov 24, 1997

EAST FISHKILL, N.Y.--When the PowerPC was introduced in 1993, many people saw it as a sure-fire winner. For one thing, it was the product of a strategic alliance of three of the best and biggest names in the electronics industry: IBM, Motorola and Apple Computer. Analysts saw it looming as a formidable competitor to Intel's 486 family of microprocessors for PCs.

Power PC was faster than any of Intel's microprocessors in 1993, used less power and had a 2X advantage in cost because it was a RISC (Reduced Instruction Set Computer) instead of Intel's CISC (complex instruction set computer). "It had an 12 to 18-month lead on Intel," recalls Phil Pompa who headed marketing for the Power PC at Motorola when it was introduced and is now vice president of strategic planning and marketing at UMAX Computer Co., a Macintosh clone maker that uses PowerPC chips.

"Many business school case histories will be written about this failure," says Jesse Parker, marketing manager, IBM Micro. "No one of the three companies involved in PowerPC executed on their plans. IBM didn't. Motorola didn't. And Apple didn't" he adds.

* Item: Apple Computer, the only computer company to put the chip into a personal computer, used the economic advantages of PowerPC to raise its profit margins instead of cutting prices to increase volume. At the same time Apple began its slide in market share from 12 percent of the worldwide computer market to the present 3 percent. In addition, the many shifts in direction, plans and politics at Apple made a coherent strategy impossible to execute.

* Item: Motorola did not have the wafer fab capacity to build the chip and failed to put it in the computers it did build. Not until June 1995 did Motorola introduce a workstation with a PowerPC microprocessor. This year Motorola announced it would no longer put PowerPC microprocessors in its computers.

But the biggest and most numerous failures were at IBM. Six separate divisions had part of the PowerPC strategy. With its new management under Chairman Louis Gerstner concentrating on fixing the mainframe business, IBM's biggest moneymaker, no executive attempted to coordinate the PowerPC strategy. As a result, IBM did not write the operating system software, nor provide the drivers with applications. Since Apple had refused to license its OS--the only one that could run PowerPC--no other PC makers bought the chip.

Internecine warfare broke out between the IBM division that was making PCs with Intel's chips and the group that was to make PCs with Power PC microprocessors over what chip would power IBM personal computers. The Intel group won. IBM did not put PowerPC into a computer until 1995 when it introduced a work station that used the chip.

Because IBM Micro was so new at the time, it did not have the organization or people to mount the aggressive sales and marketing job required. That led to the absurd situation of Motorola, which could not make the chip, as the only organization aggressively selling and marketing it.

While the three developers of PowerPC were failing to meet their commitments to the chip, Intel played catch-up, stepping up its schedule for improving its microprocessors, accelerating the introduction of the Pentium and quickly adding new versions with higher speeds.

Looking back, Mr. Pompa blames the Power PC failure on a lack of leadership from the top of the three alliance partners. He points out that the project was conceived by three men who pushed through the first chip design ahead of schedule and under budget in a Texas facility, quixotely named Camelot. They were John Sculley, president and CEO of Apple; Jack Keeler, vice chairman of IBM, and James Noble, president of Motorola Semiconductor.

But about the time PowerPC came to market, Mr. Sculley was pushed out of Apple; Mr. Keeler retired, and Mr. Noble was transferred to a new position in Europe. Their replacements did not have the same enthusiasm for, or interest in, the PowerPC project and did not give it the executive attention it needed. "With inadequate direction from the top, the alliance began to come apart," says Mr. Pompa.

Ironically, today the PowerPC products in the marketplace are better than they have ever been, with higher speeds and lower power consumption than the competition. IBM Micro now uses it as its technology driver. Still PowerPC's developers lost the best chance anyone had in the decade of the nineties to challenge Intel's domination of the microprocessor market.