Written by David Tebbutt, PC Dealer 08/88 item 02 - scanned

Sugar's US bid holds key to PS/2 mystery

By David Tebbutt

Maybe IBM was right to keep quiet all those years. Now it's introduced the Western version of Glasnost, you can hardly open a paper without seeing a letter from some IBM worthy or another. And what do the letters say? 'There is no such thing as a licence for the Micro Channel'.

Then you've got this Sugar bloke. He seems to be at the centre of the flurry of letters, if not the cause of them. What he's been saying is that he's entered into an agreement with IBM and that his company has 'paid nothing for it. Sources close to IBM suggest that Amstrad's Alan Sugar has, in fact, paid 'a substantial sum of money'.

Industry observers are convinced that the agreement must be in connection with the Micro Channel Architecture. IBM's letters to the press talk of 'patents available for licences' and say that 'a patent agreement does not guarantee that a licensee will be able to build any product, because of copyright, trademark rights and so on'.

As if anyone in their right mind would sign and (maybe) pay for a licence which still prevents them producing whatever it is they want to produce.

Stepping back from this nitpicking the fact remains that IBM, having abandoned the PC standard which it established, is watching its market share evaporate. Despite lots of brave talk, the company have been hit hard by turning off the PC taps while things were going well. IBM could hardly bring out a brand new machine, say 'this is the way of the future', whilst still pumping out the old kit.

IBM's change of tack gave a tremendous boost to Amstrad's sale of PC clones.

Not only Amstrad, but everyone from Compaq to Dell, from Olivetti to Tandy, made capital out of IBM's desertion of the standard. Now, of course, there maybe a price to pay. IBM has started getting sniffy about entering into patent licensing agreements on the new technology unless these companies are prepared to cough up large sums of money. Unless, of course, they already have technology exchange agreements, like the one Olivetti is not allowed to admit to.

But what IBM really needs right now is for someone with a lot of clout to launch PS/2 clone. If it was Compaq, I suspect all the major manufactures would haul their PS/2s out of the cupboard and the standard would be established over night. Some major companies have PS/2 clones ready but are still dithering over shipping dates. Maybe they're all waiting for the memory-gobbling Presentation Manager. Or maybe they're wondering where they'll get enough chips. Or maybe they're just waiting for someone to make the first move.

Amstrad's deal with IBM could theoretically land it with huge back royalties if it wants to use the new technology. But perhaps IBM is prepared to waive these royalties, providing Sugar breaks with his normal trading methods and brings out a leading edge product. This would at least make the PS/2 more viable in the UK.

It would also explain the 'He's paid'/'I haven't' confusion mentioned earlier.

But, and it's a big 'but', why should Sugar want to clone the PS/2 anyway?

Perhaps the clue lies in Sugar's US ambitions. As yet another PC cloner, he's probably finding it tough going over there. Maybe IBM convinced him that, by getting into the US early with a decent PS/2 clone, Amstrad could stand a real chance of making its name over there. IBM may have offered Compaq's success as an example of what could happen to Amstrad if Sugar played his cards right.

At least this scenario explains all the unusual aspects of the IBM/Amstrad agreement. It explains why Sugar would want it in the first place. It explains why he can claim not to have paid anything. And it explains why IBM is admitting, indirectly, a 'substantial sum' was involved.

I rest my case.