New iPod chief: Apple and IBM were competitors (update)

I don’t think a judge can deny someone the right to work for a year. Given such a nebulous definition of competition in this industry, any electronics company Papermaster goes to will have some sort of overlap. This is not a suit against Apple; it’s against one guy trying to build his career.

Also wonder if the move toward processor manufacturing represents a portion of the gross margin decline that has been mentioned by Oppenheimer during the earnings calls. The asset intensive aluminum machining process could be part of the margin hit as well, but I suspect that it is less so due to the likelihood of a more cellular manufacturing process that can economically produce MacBook housings in relatively small batches. Now, with chip fabrication, I believe that the changeover times and setup times for production are so large that it forces a manufacturer to produce large batches to be economical. Apple could be taking a hit on margin if it had its own chip fabrication, but the overall flexibility and speed to develop new chips could outweigh the margin concerns.

Jobs skates to where the puck is going to be so we’ll just need to wait and see.

Someone I knew worked at the IBM Burlington (Vermont) chip fab and that division strove to break even. I’m not sure if they’re even open anymore. The point is, IBM generally has shed manufacturing assets to focus on consulting services and the like. I don’t know enough about semiconductors to know whether IBM still has a big share, but I would just guess that it is not increasing if their overall strategy is any guide.

Processors are at the heart of everything that Apple does, so they have probably tired of just taking whatever chips they can buy on the open market, or of designing chips under the constraints of other companies’ manufacturing facilities. I can also imagine that if you don’t hold the assets that the cycle times are much longer and therefore become the new product development bottleneck.

I could buy the handheld gaming angle. I also see a lot of value spread across Apple’s entire range. This is a great development and I think that they will get their way, even if Papermaster is out of the picture for a while.

PS You should read Fake Steve’s take on IBM and their ‘agility’. It’s very funny and probably quite accurate.

Ah, thanks. I thought that it referred to your initials but I saw a post at MacRumors forum that used “ex ped” in it so I thought that maybe it had another meaning…or could it be an impostor?

Check out post #9

http://forums.macrumors.com/showthread.php?t=333893

OK, I’ve seen it many times on this blog and a few other places… just what does “ex ped” stand for?

ex ped: It means “from Philip Elmer-DeWitt.” It’s a piece of old Time Inc. telegraphese that dates from the days when trans-Atlantic cables were billed by the word. When you have a name as long as mine, and type as badly as I do, every keystroke counts.

non-compete agreements are typically interpreted narrowly. if papermaster wasn’t working in an IBM business unit that competed with Apple products, then he is okay. it is not enough to say that somewhere IBM has something that competes with Apple, it has to be relevant to papermaster’s work.

Well, Apple did acquire P.A Semi so they could try to make their own embedded processors for their iPhones, iPods and other devices. IBM also makes embedded processors that other manufacturers use. So that’s at least one possible conflict.

Who cares if he said 25 years, think about the bigger question more relevant question. Why does Apple want him and why is IBM raising hell? A couple of points:

–Apple just bought a highly talented CPU design team (PA Semi)

–They want top CPU/system design talent (BTW: It isn’t because he can pick out cool colors for iphones and ipods)

–There is only so much innovation you can add to a cellphone with your own processor - the economics don’t add up.

–IBM is pissed over loosing this guy. No way they could non-compete clauses if their definition is as wide as it appears on the surface

–IBM’s fabs are filled with CPUs for game consoles

Bottom line, I bet Apple is aiming towards its own game console - likely handheld.

http://news.cnet.com/8301-13579_3-9965854-37.html?tag=mncol;txt

Apple did acquire P.A. Semi which happens to develop embedded processors. IBM also makes embedded processors. That’s one direct conflict.

Evidence of competition in the old rivaly cult war of Mac vs PC is the new Mac commercial of MS Vista. They are THE 2 computer choices for the mass market. Of course they are competitors.

I don’t even want to know what an IBMPod is for.

IBM competes because it makes… an OS for consumers? No. Because they make cell phones? No. Because they make mp3 players? Run a music and video store? No. Because they make laptops? Well… they used to… Look at the IBM US website. They list over 10 groups they can do something for from Industries to government to businesses. Is the word consumer or student even on the site? No. Their education offerings don’t seem to involve putting machines in students’ hands…

Is there SOME overlap? Maybe in the server market. But no major focus on the same customer as far as I can see.

A cursory look suggests that Papermaster may have pegged it.

Greg Bates, Monroe Maine

ex ped: Not so fast. Papermaster’s statement covered IBM’s activities over a period of 25 years, not just its activities today.

This is pathetic. Since IBM hardware is essentially used to store data, isn’t Weyerhauser (paper), Bic (pens/pencils), and Top Flight (notebooks) also technically competitors.

It may in fact accurately reflect IBM’s perspective! It certainly seems weird to call them competitors today…. or in recent years.

Just pointing out a couple of things. You are picking on Papermaster’s quote of IBM not competing with Apple for 25 years and then pull out a commercial from, what, 25 years ago?

Number two, IBM sold its PC division in 2005, by your article. They don’t make computers anymore. Do they have IBMTunes? Do they sell IBMPods? Ummm, IBMPhones? This is too easy; I have to stop. Please write another article and tell me just what IBM DOES do. I really don’t know.