Electronic Design

Partnering On Intellectual Property Key To Bottom Line At IBM

In the not too distant past, IBM was the sole designer and manufacturer of everything that bore its name. Today, the company is as much focused on developing strategic partnerships based on existing intellectual property (IP) as it is on new technology itself.

"In 1993, when IBM almost died, \[former CEO Louis V.\] Gerstner said, 'We are going to allow other people, even competitors, into our fab line.' So we started fabbing processor chips for direct competitors to IBM products," says Darryl Solie, Distinguished Engineer and Chief System Architect with IBM's Systems & Technology Group. "That was the first opening up of IBM in terms of letting outside companies get at our crown jewels."

Over the next decade, IBM made some monumental changes in the way the company approached the market. In March 2006, IBM's Systems and Technology Group announced a new organization intended to put IBM at the center of the fast-growing "collaborative innovation" market opportunity.

The new unit, Global Engineering Solutions, combined the company's Microelectronics, Technology Development and Manufacturing, Intellectual Property, and Engineering & Technology Services departments. This integration was designed to take advantage of major shifts in the market, namely the critical nature of R&D to business growth and the need for companies to collaborate to drive innovation.

"What we are finding is that you really can't compete without some IP involved," Solie says. "Most of our customers want IBM to have some investment to get in the game. It's almost becoming the ticket to get in."

The real question, Solie says, is how a company can afford the IP development because it is typically developed by IBM and with IBM's money. The company spent between $400 million and $500 million with Sony and Toshiba developing the Cell processor chip that is the basis of Sony's PlayStation 3 gaming console. With IBM's old business model, that investment would have ended with the PS3.

But today, engineers with the company's Global Engineering Services department are working every day with potential clients to take advantage of the Cell's technology. Mercury Computer, for example, is investigating ways to use the Cell processor to power a computer it is looking to put in the back of a Humvee.

"Mercury is leveraging a half a billion dollar investment \[IBM made\] that they basically get for free," Solie says. "The strength is in IBM's $5 billion \[overall 2006\] R&D investment."

So what does this mean for the IBM designer? A lot.

"I have a closet full of gray shirts and white shirts, and I can't remember the last time I wore one," says Solie, who is preparing to transition from full- to part-time work -- now a fairly common offering for many of IBM's employees. "Twenty years ago \[IBM\] was a group of white Caucasian males sitting around developing tech who, relatively speaking, rarely depended on other IBM locations. Now there is mostly casual dress -- lots of blue jeans and T-shirts, and multisite work as well."

Multisite work, as well as an increasing level of direct contact between IBM engineers and prospective clients, means that potential employees are increasingly being scrutinized for their people skills. Twenty years ago, engineers at IBM may never have had to communicate with anyone outside their design team. Today, those employees may be asked to accompany salespeople on business trips to determine if a potential partner can leverage IBM's IP or interface with a team in Korea that is working to adapt another technology to improve another client?s product.

Starting with IP and wrapping services around it was something that IBM never saw before, but the market may be seeing a lot of it in the future. Allocating $6 billion to R&D was an easier proposition in 2006 than in previous years in large part because the company was already seeing the benefits that collaborating with other companies -- even competitors -- would have not only on its bottom line, but on the advancement of technology as well.

TAGS: Intel
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