A Historical Look at the VAX: Microprocessor Economics

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An Overview of Systems Companies

There are two major approaches to system and CPU design, the proprietary approach:

  • We’re designing these chips for our systems, running our OSes and compilers. We might sell chips to a few close partners for strategic reasons.

and the merchant approach:

  • We expect to use these chips in our systems, but we expect that large numbers will be used in other systems, with other software. We will include features that will never be used in our own systems. We will invest in design documentation, appropriate technical support, sampling support, debugging support, software licensing, etc. to enable others to be successful.

IBM still has fabs, but of course IBM Microelectronics does foundry work for others to amortize the fab cost.  POWER was really geared to RS/6000; PPC made various changes to allow wider external use, and IBM really pushed to achieve high volumes.

Sun never had a fab and did a lot of industry campaigning to spread SPARC. However, outside of a few close partners, most of the sales of SPARC chips went to Sun.

HP has sold PA-RISC chips to a few close partners, but in general, never was set up in the business of selling microprocessors.

MIPS started to do chips, but had enough work to do on systems that it needed to build systems. Going back to the volume issues addressed earlier, MIPS needed systems revenue, since there was not enough volume to make money on chips alone.  This is a classic example of how a systems business can work at low volumes, whereas the chip business does not.

DEC was somewhat naturally positioned as a systems vendor, based on its original business (modules). DEC never really had a merchant chip mindset, although the Alpha, of course, was forced to try to do that to achieve sustainable volume. Somebody suggested they should have been selling VAX chips, and that may be so; however it is really hard to make that sort of thing happen. It requires serious investment to enable other customers to be successful, it requires the right mindset, and it is really hard to make that work in a big systems company.

As a hypothetical example to illustrate the stark difference between the two business models, suppose I am DEC and I sell VAX chips to a third party. What OS will they run? VMS; OK we will license that.  What sort of systems do they want to build? Lower-cost minicomputers to sell to the VAX/VMS installed base…actually, it looks like we’re out of VAX chips this quarter, sorry.

Just in case you don’t think this a realistic example, consider this example from the real world. At one point, Sun convinced Solbourne to use SPARC, and Solbourne designed their own CPUs and built SMPs. If a Sun account wanted an SMP and somebody like SGI was knocking at the door, Sun would point at Solbourne to keep SPARC in place. But if Solbourne was infringing on a Sun sale, it was not so friendly – I once got a copy of a Sun memo to the sales force about how to clobber Solbourne.

It is very difficult for big systems vendors to sell their proprietary CPUs. The only option that makes business sense is to find other, non-competitive or complementary vendors that would be interested in using such CPUs for their own systems. The most successful example of this sort of partnership is Apple’s usage of IBM’s PPC architecture. Probably the most interesting case for the Alpha was its use in the Cray T3 systems, fine supercomputers, but not exactly high-volume.

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