Saturday, May 9, 2009

The Dollar Deal that Almost Killed FireWire

In the Fall of 1998, HP was very upset.  They had been negotiating with Apple Computer to license their FireWire IP.  HP had plans to introduce a new line of mid-to-high end scanners and printers, all of them with FireWire.  The problem was, Steve Jobs had just returned to a cash strapped Apple and had tasked his attorneys to review all their IP for cash generating potential.  FireWire was gaining momentum and looked like a nice cash cow, however, it had been several years since Jobs was updated on FireWire.  Things had changed.

When Jobs left Apple, FireWire was an Apple technology.  During his time in exile, the industry had enhanced the original Apple vision into a full industry standard which was only slightly indebted to Apple for its creation.  By 1998, FireWire included IP from dozens of companies; not just Apple.

Lacking this knowledge, general licensing fees for FireWire were being discussed inside Apple.  In an unguarded moment, the amount of “one dollar per FireWire port” was mention in earshot of the HP attorneys.  Hysteria ensued and HP called on industry leaders to talk sense to Apple.  Texas Instruments was approached immediately as they were the undisputed leaders in FireWire silicon and seemed to have the most to lose by a punitive licensing fee from Apple.

Unfortunately, Texas Instruments was not willing to go to Apple and talk sense to Mr. Jobs.  TI had an early, water tight FireWire license with Apple which precluded additional licensing fees on them or their customers.  TI felt that this situation would only benefit them and hurt their competitors .  Equally unfortunate, HP was now on the war path. 

A number of second tier  industry insiders  approached  Mr. Jobs but he remained intractable.  That is, until he received a visit from Japanese VPs from Sony.  Sony was the most prolific developer of FireWire end products at the time and Sony camcorders where the favorite FireWire devices.  Sony informed Mr. Jobs that Sony had much more IP in the FireWire standard than Apple did and that the next generation of FireWire (1394b) was being developed under the leadership of Compaq Computer.  All Apple IP was being vigorously written out.  Unless Apple talked turkey and dropped the rumors of "one dollar per port" they would be licensing their own technology from all their competitors.  Jobs saw the reason in their logic.

 All this took two months.  Unfortunately, that was about one month too long for HP.  HP went to Intel and said they wanted a new high speed serial bus.  They didn’t care what it was as long as it was not FireWire.  The USB community had been hungering for an opportunity to upgrade USB which had long out grown it’s paltry 12 Megabits-per-second.  Six months later, in an enormous IDF auditorium, Pat Gelsinger announced the start of USB 2.0.  Echoing through the cavernous hall, exactly one person applauded.

To this day, rumors of one dollar per port continue to linger.

1 comment:

  1. Sigh. Development of 1394b was NOT being developed under the leadership of Compaq ... the chair was indeed from Compaq (I recruited him for the job to replace me ... I was too busy keeping my startup alive), but the technical leadership was spread among a number of *individuals* from Zayante (my company), Intel (yes!), HP (from the UK, NOT the US), TI, Lucent, and even IBM.