the commercialization of risc

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Department of Business AdministrationCollege of Management

The Commercialization Of RISC: Strategies For The Creation Of Dominant Designs

台灣大學商學研究所科技與作業策略課程報告

NTU 2012 Strategic Management of Technology and operations

商研博一 D00741002 林玠恆

授課老師：郭瑞祥教授

09 March 2012

Jonathan Khazam and David MoweryUnilversity of California, Berkeley, CA Y4720, USA


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AbstractBackground

Reduced instruction set computers (RISC) recently have mounted a strong challenge to the complex instruction set computers (CISC) that previously dominated the computer workstation industry.

Purpose

This paper discusses the development and commercialization of RISC architectures, focusing on the licensing strategies of Sun and MIPS Computer Systems, two pioneers in RISC microprocessors.

Method

Case study by Sun, MIPS, Motorola, IBM.

Result

Licensing has assumed particular significance because of the important complementarities between hardware and applications software, which results in network externalities. In such technologies, the innovator may gain significant advantages from a relatively permissive attitude toward “giving away” important intellectual property.

Paper page 89


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Introduction

About RISC and CISC

RISC, entry barriers, and user-supplier relation in the microprocessor industry

Evaluating commercialization strategies

Embedded system

Conclusion

Commercialization strategies in RISC

Outline


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Introduction

• IBM, which pioneered RISC architecture, failed to translate its early lead into commercial dominance.

• Intel and Motorola ignored or failed to respond to early evidence of the advantages of RISC architectures and lost the initiative in this fast-growing market to Sun Microsystems and MIPS Computer Systems.

• Rather than an exogenous event, the emergence of a “dominant design” in this technology was a conscious objective of the strategies of both Sun and MIPS.

• This analysis suggests that there are important tradeoffs between the protection of one’s intellectual property and commercial success in technologies characterized by tight complementarities.

• But, The complementarity between software and hardware that underpins the Sun and MIPS strategies may now be weakening, however, a development that could threaten the long-run success of Sun’s commercialization strategy.

About Case

This paper find

Network Externality and Bandwagon EffectPaper page 89-90


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About RISC and CISC

• Reduced instruction set computing was born in IBM’s Thomas J. Watson Research Center in the mid-1970s.

• Although Their prototype RISC machines supported this theory, running some programs twice as fast as comparable IBM machines already on the market.

• But IBM chose not to introduce RISC-based machines for almost 10 years after its pioneering research, presumably to avoid cannibalizing its existing product lines.

The creation of RISC

RISC vs. CISC

• Simpler designs translate into shorter design and development cycles, an important competitive factor in an industry characterized by shrinking product cycles.

• Future CISC components will incorporate features and design concepts presently associated with RISC architectures, even as the firms that dominate CISC microprocessors exploit their historic advantages in design and fabrication, pursuing higher levels of integration and performance in both CISC and RISC designs.

Paper page 90-92


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Commercialization Strategies in RISC (1/3)

• This user-based innovation has been facilitated by the diffusion of the basic principles of microprocessor design and fabrication associated with less complex architectures like RISC, and means that the design and fabrication capabilities of Intel and Motorola no longer provide an impregnable strategic advantage.

• This source of advantage is likely to be much more compelling for Intel, because of its strong position in PCs, than for Motorola, which faces more rapid erosion of its CISC components’ share of the workstation market

Commercialization strategies in RISC

Paper page 92


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• Exploiting the greater simplicity of RISC designs, Sun developed SPARC, that was competitive with those of Motorola and Intel.

• University research and researchers played an important role in the applied technology development work.

• Rather than integrating backward into the production (as opposed to the design and development) of components, Sun licensed other firms to produce it.

Sun Microsystems

• Licensing strategy, allowed the firm to focus on microprocessor design and avoid the expense of manufacturing its own chips.

• Unlike Sun, however, MIPS retained control over the chip design, delivering only masks to its semiconductor licensees.

• Working with its licensees, MIPS attempted to use a “hybrid” alliance strategy, in contrast to the market-based approach of Sun, to establish its architecture as a dominant design.

MIPS Computer Systems

• Intel Corporation initially did not respond to the new RISC designs entering the market.

• However, RISC’s growing acceptance in system designs and the proliferation of RISC architectures could no longer be ignored. Intel abandoned its earlier position and introduced a RISC microprocessor in early 1989. The i860, Intel’s first RISC design.

• Nonetheless, Intel continues to focus its efforts in microprocessors on improving the performance of its CISC-based 80 X 86 architecture.

Intel Corporation

• As was noted earlier, RISC-based workstations threatened Motorola even more than Intel, because of Motorola’s strong position in this market.

• The internal power struggle complicated the firm’s marketing strategy (conflict between executives).

• Customer confusion was heightened (License for SPARC or license for the MIPS architecture.)

Motorola

Paper page 92-94


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• Intel and Motorola, however, exhibited the classic reluctance of the incumbent, dominant firm, moving slowly to avoid cannibalizing their established product lines.

• Sun adopted a liberal licensing policy, effectively conceding control over its intellectual property in order to reap the returns to RISC through sales of its workstation.

• MIPS adopted a licensing strategy that followed the prescription of Teece, seeking to gain access to “complementary” assets by licensing its technology under tighter controls to firms manufacturing workstations.

Different approach to RISC

IBM, Hewlett-Packard. and Digital Equipment Corporation

• IBM’s subsequent decision to license its RISC design to Motorola, broadening the market for this architecture, was motivated in part by IBM’s desire to attract independent software vendors to develop applications for this platform.

• HP is alone in providing a RISC product line specifically designed for business applications, offering compiler and language support not provided by other vendors.

• DEC, like other entrants into the RISC competition, now is seeking licensees for the production of its Alpha chip.

Paper page 95


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RISC, Entry Barriers, And User-supplier Relations In The Microprocessor Industry

• The diffusion of RISC components has undercut the competitive advantages associated with vertical integration between component and systems production.

• By lowering the barriers to entry in the microprocessor market, RISC has reduced the power of the dominant microprocessor suppliers, and has threatened Motorola in particular.

• User-supplier relations in another area, operating systems software, are also being modified by forces unrelated to RISC.

About Unix

• Successful modification of Solaris might strengthen Sun’s UNIX-based operating system as the “dominant design” in software, but this modification in the Solaris operating system effectively pits Sun’s hardware division against its software division, since customers no longer will require Sun hardware to run its operating system.

Paper page 97


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Evaluating Commercialization Strategies

• First, licensing enabled these firms to avoid the tremendous investment in complementary assets required to manufacture and reap the returns to their innovations.

• Second, the relatively low technological barriers to entry into RISC design and fabrication meant that a more restrictive approach to dissemination of their technologies might have invited additional entry and competition.

• Finally, licensing SPARC and MIPS components established multiple production sources for their microprocessors, reducing costs and risks, and attracting independent software developers to create applications programs for them.

The advantages of decisions by Sun and MIPS to license

In contrast to Sun’s focus on establishing dominance in workstations, MIPS sought to establish its RISC architecture as a dominant component design, and controlled its licensees more closely.

Paper page 98


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Embedded Systems

Much larger market for microprocessors is in “embedded systems.” This market includes microprocessor applications in automobiles, home appliances, telephone switching systems, etc.

• Penetration of the embedded systems market by RISC therefore does not depend on the availability of a large standardized applications software library. Network externalities and “bandwagon effects” are far less important here.

• Since Sun does not reap large returns from its licensees and does not manufacture the SPARC component

• The more restrictive licensing strategy of MIPS, on the other hand, made it very difficult for its licensees to adapt MIPS’s RISC components to embedded systems applications for which MIPS did not provide design solutions.

• Reflecting the fact that this market will reward more conventional commercialization strategy that exploits control of “downstream” assets, Intel and Motorola have moved aggressively to serve embedded systems designers, drawing on their many years of experience and close ties with customers in this market.

Paper page 99


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Conclusion

• The paper suggests that firms need not treat the emergence of a dominant design as an exogenous event. Firm strategies can position a new design or technology more favorably in the early-stage competition that produces a dominant design.

• This paper has explored strategies for the creation of dominant designs in one class of technologies, characterized by competition among architectures, high levels of interdependence among technologies produced by independent firms, and very rapid change.

• In this context, the tradeoff between stringent protection and more liberal dissemination of intellectual property emerges as a central issue in technology strategy.

• Beginning with a recognition of the ways in which management strategies can affect the eventual dominance of one or another competing design, research on these strategies in different classes of technologies should prove fruitful.

Paper page 100

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The End

Thanks For Your Listening