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The commercialization of risc

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Strategic Management of Technology and operations Presentation PPT

Strategic Management of Technology and operations Presentation PPT

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  • 1. Department of Business Administration College of Management 授課老師:郭瑞祥教授台灣大學商學研究所科技與作業策略課程報告 Jonathan Khazam and David Mowery Unilversity of California, Berkeley, CA Y4720, USA 09 March 2012 商研博一 D00741002 林玠恆2012/3/13 1NTU 2012 Strategic Management of Technology and operations
  • 2. Department of Business Administration College of Management 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.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.Method Case study by Sun, MIPS, Motorola, IBM. 2012/3/13 2Paper page 89 NTU 2012 Strategic Management of Technology and operations
  • 3. Department of Business Administration College of ManagementOutline Introduction About RISC and CISC Commercialization strategies in RISC RISC, entry barriers, and user-supplier relation in the microprocessor industry Evaluating commercialization strategies Embedded system Conclusion 2012/3/13 3 NTU 2012 Strategic Management of Technology and operations
  • 4. Department of Business Administration College of Management IntroductionAbout Case • 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 paper find • 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. Network Externality and Bandwagon Effect 2012/3/13 4Paper page 89-90 NTU 2012 Strategic Management of Technology and operations
  • 5. Department of Business Administration College of Management About RISC and CISCThe creation of RISC • 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.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. 2012/3/13 5Paper page 90-92 NTU 2012 Strategic Management of Technology and operations
  • 6. Commercialization Department of Business Administration College of Management Strategies in RISC (1/3)Commercialization strategies in RISC • 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 2012/3/13 6Paper page 92 NTU 2012 Strategic Management of Technology and operations
  • 7. Commercialization Department of Business Administration College of Management Strategies in RISC (2/3) Sun Microsystems MIPS Computer Systems Intel Corporation Motorola• Exploiting the greater • Licensing strategy, allowed • Intel Corporation initially did • As was noted earlier, RISC- simplicity of RISC the firm to focus on not respond to the new based workstations designs, Sun developed microprocessor design and RISC designs entering the threatened Motorola even SPARC, that was avoid the expense of market. more than Intel, because of competitive with those of manufacturing its own chips. • However, RISC’s growing Motorola’s strong position in Motorola and Intel. • Unlike Sun, however, MIPS acceptance in system this market.• University research and retained control over the chip designs and the • The internal power struggle researchers played an design, delivering only proliferation of RISC complicated the firm’s important role in the masks to its semiconductor architectures could no marketing strategy (conflict applied technology licensees. longer be ignored. Intel between executives). development work. • Working with its abandoned its earlier • Customer confusion was• Rather than integrating licensees, MIPS attempted position and introduced a heightened (License for backward into the to use a “hybrid” alliance RISC microprocessor in SPARC or license for the production (as opposed to strategy, in contrast to the early 1989. The i860, Intel’s MIPS architecture.) the design and market-based approach of first RISC design. development) of Sun, to establish its • Nonetheless, Intel components, Sun licensed architecture as a dominant continues to focus its efforts other firms to produce it. design. in microprocessors on improving the performance of its CISC-based 80 X 86 architecture. 2012/3/13 7Paper page 92-94 NTU 2012 Strategic Management of Technology and operations
  • 8. Commercialization Department of Business Administration College of Management Strategies in RISC (3/3)Different approach to RISC • 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.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. 2012/3/13 8Paper page 95 NTU 2012 Strategic Management of Technology and operations
  • 9. Department of Business Administration College of Management 2012/3/13 9Paper page 96-97 NTU 2012 Strategic Management of Technology and operations
  • 10. RISC, Entry Barriers, And User-supplier Relations In The Department of Business Administration College of Management 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. 10 2012/3/13Paper page 97 NTU 2012 Strategic Management of Technology and operations
  • 11. Evaluating Commercialization Department of Business Administration College of Management StrategiesThe advantages of decisions by Sun and MIPS to license • 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. 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. 11 2012/3/13Paper page 98 NTU 2012 Strategic Management of Technology and operations
  • 12. Department of Business Administration College of Management 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. 12 2012/3/13Paper page 99 NTU 2012 Strategic Management of Technology and operations
  • 13. Department of Business Administration College of Management 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. 13 2012/3/13Paper page 100 NTU 2012 Strategic Management of Technology and operations
  • 14. Thanks For Your Listening The End 14 2012/3/13 NTU 2012 Strategic Management of Technology and operations