Browse Books

Reviewer: Brad D. Reid

Ferguson is described as holding “a doctorate from MIT,” and both authors are involved in consulting. This book is one of many that dissect the problems that are typified by IBM's struggle. The book is written in three parts. Part 1 covers IBM's rise and decline, Part 2 discusses “winning the computer wars without IBM,” and Part 3 is concerned with “the policy implications.” It is written in a nontechnical, journalistic style for a general audience but does contain a selected list of further readings at the end. It is a fascinating tale. IBM's success caused it to be attacked by the US government (for antitrust violations) and the Japanese (by theft and industrial espionage). By 1984, IBM's after-tax profits were 15 percent of sales, but this year was also the turning point. Future Systems “was IBM's own quiet Vietnam.” “The psychological watershed came in 1986, when IBM passed up Intel's very fast 386 processor in favor of sticking with the 286.” Special attention is given to Bill Gates. “In Gates, they faced a partner—and now more often an opponent—whose knowledge of his field was matchless and whose commitment was extreme.” Part 1 concludes that “there is a reasonable question whether IBM is on the brink of a colossal Wang-like implosion.” “It suffers from a management trained for a different era, who have done almost everything wrong for at least fifteen years.” In Part 2 the authors state that “the computer wars of the 1990s will have three main classes of contenders”: big companies, integrated Japanese electronics companies, and “Third Force” companies: “smaller companies, virtually all of the American, many of them clustered in California's Silicon Valley.” “The secret to the success of the best Third Force companies is that they have managed to establish some form of proprietary control over a critical and fast-moving competitive space, typically one that is software-dominated or that speeds the transition to low-cost, microprocessor-based decentralized systems.” “For many years, computer users and even industry experts have argued that nonproprietary standards are in the best interest of users. That is emphatically not true.” “Since proprietary architectures…are constantly under competitive attack…[they generate] a very rapid pace of technological improvement….” “It is the decentralized, mass-produced, software-intensive, turbulent low end of the industry, in short, that will be the strategic high ground of the 1990s.” Three primary ways to win standards are consistent price/performance, an extensive supporting infrastructure, and strong intellectual property positions. Life cycle strategies and management strategies are carefully discussed. The new management paradigm is the Silicon Valley model in which “the fundamental organizational node…is the core design and development group.” “The unwillingness to invest [in research] highlights the generational issue that is now facing many successful Silicon Valley firms,” however. To stay technologically fresh, companies should separate old and new business, match managers and models, create internal cannibalization mechanisms, use external sources, and create a technologically informed management. Part 2 is important reading for computer company managers. In Part 3, the authors state that they “expect a pitched battle for the business operating system standard between Microsoft's NT and the two main versions of UNIX, the Sun/AT&T standard and that of the Open Software Foundation, led by IBM, DEC, and Hewlett-Packard.” “There will also be an intense struggle for control of the business data base standard.…” The high-definition television (HDTV) issue is “whether there will be a market for digital, interactive, multimedia computer technologies in the home.” The authors also provide a short summary of the positions of the American computer companies with brief data tables. For various reasons, Microsoft, Intel, Apple, Sun , and Adobe are the leaders. The book concludes with a call for an American technology policy including a pro-technology policy agenda, basic research, technological pump priming, and anticartel insurance. The authors conclude that “with sound strategies, good execution, continued investment, and wise public policy, [the computer wars are]…a battle that America can win.” Overall, the book is an appropriate length with some good insights. It is a thought-provoking book, but runs the risk of being just another voice crying in the wilderness of ideas.