Subject: [NEXTEL-1] UPDATE - IBM opens its microchip technology to outsiders

From: Marcelrf <[email-masked]>
Date: Thu, 01 Apr 2004 00:07:02 -0500

http://biz.yahoo.com/rc/040331/tech_ibm_3.html

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Reuters

UPDATE - IBM opens its microchip technology to outsiders
Wednesday March 31, 4:25 pm ET

By Caroline Humer

(Adds company comment)
NEW YORK, March 31 (Reuters) - International Business
Machines Corp. (NYSE:IBM - News) on Wednesday unveiled a strategy to
encourage other companies to design new products based on its
microchips by making it easier to customize them.

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The move is aimed at broadening IBM's chip business, which
has been losing money and was recently folded into its broader
computer division, into new areas such as consumer electronics
like handheld computers and games.
IBM is trying to foster innovation in hardware by making it
easier for companies like Sony Corp. (Tokyo:6758.T - News) and defense
electronics maker L-3 Communications Holdings Inc. (NYSE:LLL - News) to
collaborate on new chip design.
The strategy is similar to IBM's push in its software
business to advocate the use of the open source Linux operating
system, which allows users to customize the source code by
tinkering with the underlying code.
The company, which competes against No. 1 microprocessor
maker Intel Corp. (NasdaqNM:INTC - News), has spent billions in recent years
on manufacturing advances for chips even as it expanded its
services and software divisions through acquisitions.
The microchip investment, which coincided with a sharp
decline in corporate spending on technology, has been slow to
pay off, but the company credits market share gains in its
server division to its chip advances.
Working with other companies on technology outside of the
chip's core structure, such as adding a graphics component,
will enable IBM to share the expense and speed development,
said William Zeitler, who co-heads the company's systems and
technology group.
"There are limits to how much you can accelerate
innovation, even for a company our size. If you can collaborate
broadly there are almost no limits to how much you can
accelerate innovation, " Zeitler said.
The move will enable electronics companies to push new
products out quickly as information on how to modify the chip
for a certain function is widely shared, said Richard Doherty,
research director at Envisioneering.
"Even kitchen appliances and air conditioners have Power
architecture in them," Doherty said. "You're going to see
people be able to get to market faster."
It could give IBM a leg up against Intel in that typically,
customizing an Intel chip for such a process has meant waiting
months for Microsoft Corp. (NasdaqNM:MSFT - News) to write the needed code,
he said.
IBM, which will launch the next version of its Power line
of microchips later this year, called Power 5, said that it
would make design tools available for use by outside
developers.
The company, based in Armonk, New York, said the move would
also make it easier for other companies, such as the Asian
contract chip makers like Chartered Semiconductor Manufacturing
Inc. (NasdaqNM:CHRT - News) to make its chips.
Among U.S. companies, Motorola Inc. (NYSE:MOT - News), the world's
second-largest cell-phone maker, already makes chips based on
IBM's Power designs. IBM said that Sony had agreed to license
the Power architecture from IBM for use in consumer devices.
That arrangement is separate from an earlier agreement in which
the companies are collaborating on gaming chips.
IBM makes server computers based on its Power microchips,
which it manufactures in its own facilities, including a new
plant in East Fishkill, New York. It also makes chips for
companies such as Apple Computer Inc. (NasdaqNM:AAPL - News) and Nintendo Co.
Ltd (7974.OS).
IBM shares fell 48 cents, or 0.5 percent, to $91.84 on the
New York Stock Exchange (News - Websites) .

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