DEC Buys Into Mips, RISC

Marianne Kolbasuk McGee
Computer System News

September 26, 1988

MAYNARD, MASS. - Digital Equipment Corp. ended months of speculation last week, saying it had acquired a 5 percent equity interest in Mips Computer Systems Inc.

DEC also revealed plans to use Mips' RISC technology in workstations running Ultrix-DEC's version of Unix. The minicomputer maker may incorporate Mips technology in other computers, including larger systems, but vice president of product strategy and architecture William Strecker declined to be more specific.

RISC-based Ultrix workstations, as well as other future DEC systems using Mips' technology, will be part of a product line that runs in "parallel" with VAX systems offering Ultrix and VMS, according to Strecker.

DEC turned to Mips, Sunnyvale, Calif., after investing an estimated several million dollars on its own in-house RISC project, which it killed this summer (CSN, July 18).

"Basically, the company has admitted that it screwed up with its own work and is instead using someone else's technology," said analyst John Logan of Aberdeen Group Inc., Boston.

DEC discontinued its RISC technology work, code-named Prism, in a facility based in Bellevue, Wash., several months ago. A DEC spokeswoman confirmed last week that DEC senior corporate engineer David Cutler, who had been overseeing development of Prism, resigned quietly about six weeks ago to start his own business. She said she didn't know where he was or what biz he's starting.

Cutler has been replaced by DEC senior corporate consultant for software systems Roger Heinen. Other DEC employees who had been working on the company's RISC projects have been reassigned to work on the Mips-based products, Strecker said.

"We have put our own RISC work on the back burner," Strecker said. "In the future, there is the possibility that we may reallocate our RISC technology into other products, including peripherals," he said.

Threefold Agreement

The agreement reached between DEC and Mips is threefold, said DEC vice president of semiconductor operations Robert Palmer.

First, DEC has full access to all Mips' RISC technology, including use of Mips' emitter-coupled logic (ECL) technology in the future.

DEC also has the right to purchase any of Mips' CPUs and support devices such as floating-point devices and to use Mips' operating systems, RISC compilers and all future updates of those products, Palmer said.

"The RISC compilers are key because that will help our third-party developers in porting applications," Palmer said.

Finally, DEC has purchased a 5 percent equity interest in privately held Mips, with the option to buy up to 20 percent, said Mips president Robert Miller. DEC may also appoint a member to the Mips board of directors, although Strecker said DEC has no immediate plans to do so.

Although Miller declined to put a value on the 5 percent investment, analysts estimated that the funding is worth between $20 million and $24 million. "That comes to only about a couple million dollars a month for DEC, which is really nothing for DEC to spend on technology as important as this," said International Data Corp. analyst Vicki Brown.

Another major Mips investor is Kubota Ltd. of Japan, which holds a 20 percent equity interest in the company.

Although DEC has the rights to use other Mips products such as its operating system, the company only plans to use the RISC chip technology for its workstations, Palmer said. "The operating system {that will be used on the RISC-based systems} will explicitly be Ultrix," he added.

DEC plans to purchase the RISC chips from the vendors that are licensed to manufacture Mips' products, Palmer said. However, the agreement also allows DEC to manufacture its own Mips-based chips if it chooses to do so.

Mips' RISComponentsstet are manufactured by three semiconductor companies, Integrated Device Technology Inc., Santa Clara, Calif.; LSI Logic Corp., Milpitas, Calif.; and Performance Semiconductor Inc., Sunnyvale.

Miller and DEC officials declined to say whether Mips will receive royalties on the sale of DEC's RISC systems.

The agreement is "non-exclusive and non-proprietary" to both parties, Miller said. That is, DEC is not handcuffed to using Mips' technology and Mips' technology is "clearly open to the industry," he said.

The deal is a coup for Mips, analysts said.

"Not only is this deal wonderful for Mips financially, Mips gains a lot of market credibility by signing DEC," Logan said. "I expect that a lot of other companies, especially European vendors, will look at Mips for its RISC products."

Palmer said the DEC-Mips agreement, which is an investment and OEM deal, more closely parallels a similar technology/investment agreement between IBM and Intel Corp. than an AT&T and Sun Microsystems Inc. pact, signed earlier this year, which involved technology codevelopment as well as an infusion of cash for Sun.

The announcement of the DEC-Mips partnership was felt across the country as Scott McNealy, president and chief executive of Sun, found himself defending his SPARC RISC architecture during an industry gathering in California.

Speaking at a Dataquest Inc. PC conference last week, McNealy responded to a question about why DEC did not choose Sun's SPARC RISC architecture, saying, "You'll have to ask DEC that.

"We don't sell SPARC," he said, adding that his semiconductor vendors are the ones working on design wins.

Briefly casting himself in the role of DEC, he said, "`Why should I endorse our major competitor unless we have to?"