Silicon Cowboys Page #8

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It was the death

star of our era.

Something designed

to destroy all

The competition on the planet.

Ibm has developed in the shape

that will set the standard

For the next five

years that the others

Will have to play against.

Mike swavely:
We had our

first psii inside compaq

Within three hours

of the announcement

And started tearing

those suckers apart.

We were very confused

about this microchannel.

Announcer:
The drawback is

that, for the most part,

The new microchannel

system is not

Compatible with

the existing system

Most personal computer companies

now use that ibm developed.

Announcer:
It was faster than

the computer it replaced,

But it made useless $12

billion worth of software

Already bought by business.

Will it hurt the consumer?

Well, it is a problem for

a company who has a lot

Of existing pcs installed.

Announcer:
Like

metropolitan life

Insurance company,

where they have more

Than 8,000 personal computers.

More than half of them ibm, but

while metropolitan continues

To buy pcs, none of them has the

new ibm microchannel standard.

Bill aulet:
The

cat's out of the bag.

The customers now realize

you can buy something that's

Not ibm, and not get fired.

And in fact, it works

better sometimes.

The ground underneath us

is starting to come apart,

But we're making that

last ditch effort.

It's kind of like the two minute

drive at the end of the game

To try to get this back under

control, but it's not working.

: The psii was the

biggest mistake they made.

Roger mcnamee:
They handed

us the keys to the pc city

And we took them.

Announcer:
Now, the

question is, did ibm make

A mistake that's irreversible?

One that may lead

to even more erosion

In its share of the

personal computer market.

Ibm just screwed

all new customers.

They walked away

from compatibility,

And you're going

to pay the price.

If we could take that

message and isolate ibm,

Then it became a much

stronger message.

There is a revolt of

the clones this morning.

The nine personal

computer companies

Whose business has always

followed ibm's design lead.

It's a case of ibm versus the

rest of the personal computer

Industry.

Announcer:
Let's call them

the gang of nine, a who's who

Of heavyweights in

the computer industry.

Gunning for the increasingly

disputed champion, ibm.

The little guys got together

and said, that's enough.

The first one we

went to was microsoft.

Bill thought it was a great

idea, but he also feared ibm.

Mike swavely:
Ibm was

still his largest customer,

And he just invested a

whole bunch with ibm.

Chris garcia:
Microsoft knows

it has a market with ibm,

But they recognized,

relatively early on,

That all of their capabilities

were going to be providing

To the largest number of users.

Rod canion:
He was

looking for opportunities.

He would have jumped

at any opportunity

To do something

for microsoft that

Would build their business.

If I was bill gates, I would

see the compatible market

As the reason why

I am eventually

Going to be a multi-billionaire,

and one of the most successful

People on the planet.

Roger mcnamee:
The way you were

supposed to deal with ibm was

That a smile and a

hand shake in one hand,

And a knife to stab them in

the back with the other hand.

Bill murto:
Bill said,

yep, I'll contact

All the other

manufacturers and give

You a inroad to their ceos.

Announcer:
Compaq,

tandy, hewlett-packard,

Olivetti, and nec.

Announcer:
It reads

like a who's who

Of the high tech world with

the notable exception of ibm.

Now it's not only

compact, but you've

Got a whole group of people

that they've got with them, too.

You're thinking,

wow, maybe this thing

Is bigger than we thought.

Roger mcnamee:
Can you

get all the little guys

Together and beat goliath?

That wasn't like a sure thing,

it was not a sure thing.

Rod got a call from lowe the

day before we announced it.

Rod canion:
There was no way

I wasn't going to go forward,

And there wasn't any way

I was going to indicate

Any weakness to him.

And he said, I

think you're making

A big mistake by doing this.

I said, well, we'll see.

Led by compaq

computer, ibm rivals

Will unveil the new

machines at a major news

Conference in new york.

Announcer:
They decided to

develop their own computer

Standards, called extended

industry standard architecture.

Announcer:
Or eisa for short.

Announcer:
Challenging

the very standard

Ibm is pushing with

its highly touted

Personal system ii computers.

They're not afraid of ibm.

They are taking on ibm, and the

tide is starting to turn now.

And the microchannel

has a real threat to it.

Announcer:
All of the companies

that gathered at the industry

Forum endorsed eisa because

it maintains capability

With the almost 20

million computers

That exist in the world today.

Therefore, it protects the

investment of today's millions

Of pc users worldwide.

Announcer:
While offering

just as much speed and memory

As microchannel, and armed

with a host of heavy support.

It is important that

we provide system

Software products which fully

support eisa based machines.

This event exemplifies the

industry's determination

To create and to

expand standards.

The industry together stood

up against ibm and prevailed.

Announcer:
Letting the world

know that big blue isn't

Calling the shots anymore.

Their ability to change

the market in directions

That don't make

to a lot of people

Is just simply

not there anymore.

Announcer:
Some analysts think

it was a day that left big

Blue looking black and blue.

Roger mcnamee:
The genius

of intel and microsoft

Was that they both decided

to take a chance on compaq.

Because essentially,

compaq became

The canary in the coal

mine for the strategy

Of divorcing from ibm.

And their willingness

to place their future

In the hands of this

group from houston

Was pretty brave, and in

retrospect, brilliant.

One final question, and

kind of a personal one,

Are there some mountains out

there still for rod canion

To climb?

I think my biggest challenge

for the foreseeable future

Is to keep compaq together.

Keep the culture,

keep it rolling,

And reach whatever

potential's there.

Nobody really knows how fast and

how far a computer company can

Go, and I'd like to see that.

Compaq computer is one

of the fastest growing

Personal computer makers.

There's a company whose sales

have grown from $111 million

In 1983 to more than

$2 billion last year.

So what's to worry about?

It was a very

different company.

How do you manage 17,000

people in the same way

That you manage a hundred--

it's not possible.

Jim harris:
Every time you

hire you end up, potentially,

Starting to dilute,

and then over time you

End up with an

organization that isn't

The same as the organization

you started with.

Has the fun gone out

of it now that you've

Built this successful company?

Will you stay with it?

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