ANALYSIS: You have to hand it to Andy Grove.
Lost in the buzz over Apple’s mega-deal to switch to Intel chips is the clever groundwork laid by Intel’s recently retired chairman and CEO. Andy Grove stunned more than a few observers by praising the Macintosh in a 1998 interview with Time magazine when he said the Apple iMac represented the next generation of desktop computers with its built-in networking and other features.
“Sometimes what Apple is doing may have an electrifying effect on the rest of us,” Grove told Time. “It’s nothing we couldn’t have done, but Apple went ahead and did it.”
Grove’s pursuit of Apple goes back several years. Intel’s cofounder reportedly tried to convince Apple to migrate to Intel from the Motorola 680×0 processor, which was used in Macs prior to the PowerPC switch in the early 90s.
An Apple project in the 1990s successfully prototyped Apple software running on an Intel platform, but internal strife at the company and other pressing competitive issues scuttled the project.
In 2003, former Apple CEO John Sculley told a conference at the Computer History Museum: “That’s probably one of the biggest mistakes I’ve ever made, not going to the Intel platform.”
Rebuffed, Intel, under Grove, kept the lines of communication open. When you dominate an industry as Intel has for years, you can afford to be generous. Underdogs tend to be more snippy and combative like Apple, which has run ads in the past slamming the performance of Wintel PCs.
Steve Jobs himself has used Macworld Expo keynotes to trash his PC competitors’ lack of design aesthetics. Let’s give Grove credit for going out of his way to praise Apple, never losing sight of a potential high-profile customer despite the stones it threw Wintel’s way.
Grove had another motive in praising Apple — to kick PC vendors in the pants to come up with something more compelling than beige boxes. It worked a bit.
E-Machines tried copying the iMac’s design (not what Intel had in mind) but a lawsuit scuttled that idea. Intel trotted out a series of concept PCs at a press event a few years ago to show PCs can be hip looking, too. But some of the PC prototypes looked to me like they were stolen from Krups’ toaster division and, thankfully I think, never saw the light of day commercially.
Meanwhile, Apple proved it’s still the king of PC design, going beyond the iMac with ever slicker and more elegant new designs, such as the Mac mini.
Jobs has often been the poster child for how not to treat competitors. His single-mindedness is both a strength and weakness. There’s nothing wrong with beating your chest about how great your products are, and pointing out the flaws of your Brand X competitors. But when Real Networks’ CEO Rob Glaser proposed his company and Apple work together on format compatibility between Real and Apple’s iTunes software, Jobs wouldn’t even meet to discuss it.
One suspects Grove and the current management at Intel would meet with AMD, Via or any number of competitors to hear a business proposition. They might ultimately reject it, but who knows what knowledge might be gained in hearing out a proposal?
The business lesson here is to keep your options open. Now that iPod inventories are backing up, it wouldn’t surprise me if Jobs agreed to meet the next time Real’s Glaser calls.
Aligning with Intel isn’t the first time Jobs had to grit his teeth and make nice to an archrival. In 1997 he announced to a stunned crowd of Macworld Expo attendees: “The competition between Microsoft and Apple is over as far as I’m concerned.”
At the time, Microsoft’s $150 million investment in struggling Apple undoubtedly helped Jobs decide on rapprochement with its long-time rival. Still it was a sign of flexible, business savvy rarely seen in the determined “my-way-or-the-highway” CEO.
More typical was Jobs’ controversial decision to put an end to the nascent Mac-compatible business his predecessor had started, so Apple could keep as much profit, design control and revenue in-house. Widely criticized at the time, the move led to a stunning turnaround at Apple.
Which all goes to show, alliances aren’t inherently good, and, contrary to Sun’s latest ad campaign, “sharing” isn’t always the best company strategy. But Intel proved one maxim: Patience is a virtue.
Freelance contributor David Needle reports on high tech from Silicon Valley.