Wintel squabbles - from today's WSJ..
September 25, 1998
Intel and Microsoft Remain Allies
Despite Many Minor Squabbles
By DEAN TAKAHASHI
Staff Reporter of THE WALL STREET JOURNAL
Intel Corp. and Microsoft Corp. have long shared some of their
most intimate corporate secrets. But Intel didn't tell Microsoft
about a team it assembled in December 1994 to exploit a radical
new software technology.
When Microsoft executives 11 months later learned of Intel's work
on Java, a Sun Microsystems Inc. technology considered a threat
to the software giant, they "hit the roof" and mounted a long
lobbying campaign against the effort, say people familiar with the
matter. Intel didn't give in, but later dropped a key multimedia
product that was a focus of the development group.
So it goes inside Wintel, the alliance that
built an industry around personal
computers that use Intel's microchips
and Microsoft's software. Though the
companies are still inextricably linked in
the PC business, a series of back-room
squabbles has come to light lately that
shows how the partners routinely feud over technology and
strategy. Indeed, the chip and software giants have recently
hedged their bets quite openly.
Intel's View
Andrew Grove, Intel's chairman, describes the relationship as
committed and productive, but contentious. "We didn't go to the
altar, never swore allegiance or anything like that," he said in an
interview earlier this month. Microsoft "always courted other
microprocessors and we worked with and still work with other
software producers all along."
Microsoft, for example, has been tailoring its software for
non-Intel chips in hand-held computers and this summer agreed
to build links to its software to support a graphics technology
being promoted by Advanced Micro Devices Inc., a fierce Intel
competitor. Last week, Intel licensed video streaming technology
to Real Networks Inc., a company that is locked in a battle with
Microsoft over technology for viewing video on the Internet. Intel
also has quietly supported past efforts by some of Microsoft's
rivals to get a single standard version of the Unix operating
system to run on Intel microprocessors, an alternative to
Microsoft's Windows NT system.
There is little chance the alliance will split, as both companies'
interests are tightly aligned in encouraging the growth of the PC
market. But Microsoft also wants to sell products for existing
machines, while Intel tends to be more keen on persuading
existing users to upgrade their hardware. "It's a key difference in
our focus and how we look at technology," said Mark Murray, a
Microsoft spokesman.
Researcher Is Subpoenaed
The Justice Department's antitrust investigation has helped to put
such intramural issues into a fishbowl. The agency, seeking to
prove that Microsoft has bullied other companies in ways that
have hurt industry innovation, has subpoenaed Intel researcher
Steven McGeady to testify in a trial scheduled to begin Oct. 15.
He and other Intel officials generally decline to discuss many
details of their disputes with Microsoft, citing the agency's
investigation.
Microsoft insists, however, that it doesn't bully Intel or other
partners -- it simply expresses honest opinions on technology
issues. A classic case of the gray area is an Intel software
initiative called "native signal processing," which Intel's Oregon
laboratory developed in 1995 as a way to make it easier for its
Pentium microprocessor to process multimedia data without the
need for costly specialized add-on hardware. Intel tried to
persuade PC makers to embrace what it called NSP, with the
thought it would eventually become part of Microsoft's operating
systems.
The squabbling between the companies began almost
immediately, people familiar with the matter say. NSP would tend
to hurt Intel's chip competitors and makers of accessory graphics
boards. But Microsoft engineers doubted Intel's Pentium could
handle video, graphics and sound as well as accessory chips.
They also argued that Intel's layer of software would make its
operating systems unstable, and specifically feared
incompatibilities between NSP and the Windows 95 program
being rolled out in August 1995.
Claims of Threat
Richard Doherty, an analyst at the Envisioneering Group in
Seaford, N.Y., who was then closely tracking the issue, says four
computer makers told him that Microsoft threatened to withhold
Windows 95 from them if they supported NSP on Intel. A
Microsoft spokesman said it is "absolutely untrue" that Microsoft
made such a threat.
In June 1995, however, Microsoft acknowledges that it did warn
computer makers that it hadn't properly tested Intel's software and
suggested there was a "support risk" to using it with Microsoft's
Windows 95 operating system. PC makers soon backed off,
forcing Intel to negotiate with Microsoft. NSP and other issues
were hashed over in meetings involving top Microsoft and Intel
executives, including Mr. Grove and Microsoft CEO Bill Gates,
and Intel ultimately decided to drop the NSP effort.
At the time, many observers looked at the NSP dispute as both
an example of Intel's subservience to Microsoft, and a simple
disagreement over standards for the PC, said Michael Slater,
editorial director at market researcher at Micro Design
Resources Inc. in Sebastopol, Calif. Mr. Grove said recently that
many of the technologies in NSP filtered into the marketplace a
couple of years later, just not as quickly as Intel had hoped -- "for
a variety of reasons, some of which were our own doing."
"The notion that either Microsoft or Intel pushes the other around
is simply not accurate," Mr. Murray said. "Both companies make
decisions based on what is best for technology and consumers."
Source of Friction
But Intel's Hillsboro, Ore., research division, the Intel Architecture
Labs, has remained a continuing source of friction. The
laboratory has 600 researchers, many of them programmers,
who have focused on making sure technological advances are
introduced quickly so that the PC market keeps growing and
attracting new users and new applications. It was also the site of
Intel's work on Java, which was an example of the kind of hot
Internet technologies that Intel wanted to make sure its chips
support. Java was considered a threat to Microsoft because it
was designed to make software that works on many types of
operating systems, not just Microsoft's Windows.
Rifts in the Wintel World
Hand-held computers: Microsoft has supported small
computers with non-Intel chips.
Servers: Intel has supported Unix software on large
computers in addition to Microsoft's Windows NT.
Set-top boxes: Microsoft has supported TV devices that
don't use Intel chips.
Java: Intel has supported this technology from Microsoft
rival Sun Microsystems
Graphics: Microsoft has supported graphics technology
from Intel rival Advanced Micro Devices.
Web video: Intel has cut a deal to supply video technology
to Real Networks, a Microsoft rival.
Among other things, Intel engineers worked with Sun on a
technology called the JMedia Player, which made multimedia
applications written in Java run particularly well on Intel chips. The
company continued with the project despite vociferous objections
from Microsoft officials, people familiar with the effort say.
"They didn't succeed, but they tried to influence" Intel's strategy,
said one person familiar with the matter. Microsoft was opposing
Intel "at every turn," he said.
Microsoft doesn't dispute making its views known. "At the time,
we didn't see Java as necessarily good for Intel or Microsoft or
the overall PC industry," Mr. Murray said. "We had some
technical meetings, but neither side did anything different as a
result. Intel is still working on Java-related projects today."
Project Is Dropped
As it turns out, Intel decided to drop the JMedia Player project in
July. But that was more out of concern for Java's momentum than
Microsoft's arguments, people familiar with the matter say. An
Intel spokesman declined to comment on the issue.
The Justice Department has cited Microsoft's campaign against
Java as an example of anticompetitive tactics, and has
questioned Intel executives about related issues. Intel's efforts to
work with Java have also come up in a Sun Microsystems' suit
against Microsoft, which alleges that Microsoft violated terms of a
licensing pact between the companies. Microsoft denies the
allegation.
Despite all the recent attention on Microsoft's market power, Intel
also faces its own antitrust suit by the Federal Trade
Commission. Some of the chip maker's rivals say they are glad
that Microsoft is there to provide a counter-balance to the
hardware giant, which otherwise could create standards that
would lock PC makers into buying its chips.
"We like it because Microsoft gives us a shield for innovation,"
says Dana Krelle, a vice president of marketing at Intel's
archrival, alternative chip maker Advanced Micro Devices.
"Without Microsoft, we'd be doomed to follow behind Intel." |
