Despite the fact that Apple has yet to produce an iPhone chip based on its own design, and that IBM doesn't design smartphone chips, the judge overseeing the Mark Papermaster noncompete case views the two companies as chip competitors.
Judge Kenneth Karas of the U.S. District Court for the Southern District of New York filed his opinion Monday (click here for PDF) on why former IBM executive Papermaster should not be allowed to join Apple as head of the iPhone and iPod hardware engineering team. Karas' decision to grant a preliminary injunction preventing Papermaster from working at Apple was revealed a few weeks ago, but the reasoning behind the opinion was delayed until IBM and Apple had a chance to review the opinion to make sure it did not disclose any confidential information.
There's no dispute that Papermaster signed a noncompete agreement in 2006 that would forbid him from working at any company deemed a competitor of IBM's for a year following his departure from Big Blue. Papermaster's lawyers are attempting to argue that since the only overlapping product between Apple and IBM--servers--is one that wouldn't be part of his official duties at Apple, and since he won't be running Apple's P.A. Semi chip design team, the noncompete shouldn't apply.
Judge Karas appeared to agree that since Apple's server business is such a small portion of its business and Papermaster will have nothing to do with that group, that experience isn't really at issue. But in his opinion, IBM and Apple are competitors in the chip market because both companies produce or will soon produce chips that wind up in mobile phones--regardless of whether those chips are similar or even whether those chips were designed by company employees.
Of course, the court recognizes that IBM does not sell MP3 players or cell phones that compete with the iPod or iPhone. But, IBM does sell the microprocessor technology that provides the electronic brains for those products and competes for that business. To profit from the manufacture and sale of such products, IBM relies heavily on its "Power" architecture, and has employed Mr. Papermaster as its top expert in the development and application of that technology.
Karas leans on a declaration filed by Rodney Adkins, IBM's senior chip executive, in forming his opinion that IBM's chip group competes for design wins in products like the iPhone and iPod Touch. Adkins wrote, "Steven Jobs, Apple's CEO, told the press recently that 'P.A. Semi is going to do system-on-chips for iPhones and iPods.' IBM designs and manufactures microprocessors suitable for each of those applications." System-on-chip, or SoC, is a term used to describe a single chip that comes with all the technology needed to run a system, such as the applications processor, communications hardware, and other vital parts.
That led Karas to believe that IBM has a healthy business selling similar SoCs for mobile phones or iPods. "Apple announced its intention to have P.A. Semi develop the very type of product that IBM sells to the market generally, and would like to sell to companies like Apple," Karas wrote in his opinion, referring to Adkins' statements.
But IBM doesn't appear to have any customers for those mystery microprocessors referred to by Adkins as potential products for the smartphone market. An IBM representative was unable to provide the names of IBM-designed microprocessors or SoCs for smartphones or handheld computers.
And the Power architecture--where Papermaster's expertise lies--is not a serious player in smartphones or handheld mobile computers like the iPod Touch; the ARM architecture dominates this market. No major smartphone maker uses a Power-architecture applications processor in its phone, and as far as I can tell, none is really considering it.
Power-architecture processors are generally used in products other than modern smartphones or handheld computers.
(Credit: Power.org)Power.org, the industry organization dedicated to advancing the Power architecture, doesn't even consider mobile phones as potential applications for that architecture. Power-architecture chips these days are found in gaming consoles, telecommunications equipment, and other embedded applications, according to an IBM developer page linked from the Power.org site.
The only way IBM currently participates in the mobile phone market is by making chips for other companies that design the inner workings of the chip themselves. IBM runs a chip-manufacturing business (known as a foundry) for companies that design chips but don't have the billions of dollars required to build and maintain a modern semiconductor factory.
"We manufacture and sell customized chips to specific customers who make products that compete with the Apple iPhone. We do not 'advertise' these specific customized chips since we are dealing with a specific customer. Chips are made to the customer's specification," wrote Fred McNeese, an IBM representative, in an e-mail message.
Those chips do not appear to be the SoCs that P.A. Semi is developing; rather, they appear to be lower-level components that are needed to run modern mobile phones, such as controllers and digital television chips.
It's possible that IBM is worried about Papermaster's knowledge of IBM products or technologies that have not yet come to light. Likewise, power-management techniques that are used in the design of Power-based server processors or the components IBM manufactures could have some applications for P.A. Semi's group.
But the issue here is competition. IBM's position seems to be that even though it doesn't appear to have a single customer for the unspecified processors suitable for mobile computers, IBM is a potential SoC supplier for Apple's iPhone who could be shut out because Papermaster could improve Apple's P.A. Semi team by sharing trade secrets regarding an architecture that Apple does not appear to be planning to use.
It's a bit surprising that Apple waived its right to an evidentiary hearing that would have allowed it to challenge certain parts of the declarations filed by IBM, said John Siegal, a partner with Baker Hostetler in New York. However, that would have probably involved having to put several Apple executives on the witness stand to explain Papermaster's role and the plans of the P.A. Semi organization, and Apple is not known for its willingness to speak publicly about its future plans.
The two parties were to have discussed a schedule for "expedited discovery" and a trial at a status conference last week. It's not known what emerged from that conference; Papermaster's lawyers have declined multiple requests for comment, and IBM representatives have not commented on the conference.
Nvidia wants a piece of the exploding smartphone market, with its first major applications processor scheduled to arrive in phones next year.
The graphics chip company is showing off the fruits of its $357 million PortalPlayer acquisition with the APX 2500, its first attempt at building a true computing processor for mobile phones, said Mike Rayfield, general manager of Nvidia's mobile business unit. The APX 2500 is designed as a standalone application processor for multimedia phones where talking takes a back seat to watching videos and browsing the Web.
Nvidia's APX 2500 chip, it's first major applications processor for smart phones.
(Credit: Nvidia)The applications processor in a mobile phone is akin to the Intel or Advanced Micro Devices CPU in a PC. Once a fairly basic part, these chips are getting more and more complex as mobile phones evolve from simple call-and-text devices to small handheld computers.
Right now, the market is dominated by companies like Texas Instruments, Samsung, Freescale Semiconductor, and Marvell, which will make it hard for Nvidia to break into this area. Unlike a PC, most people have no idea what kind of chip is in their mobile phone, so any brand recognition Nvidia might have with consumers really doesn't matter when it comes to making a decision about a phone.
But the company thinks it has two major selling points to push before handset makers and carriers: it knows how to make chips that process video and graphics, and it is throwing its hat in with Microsoft's Windows Mobile development path, Rayfield said.
The 300 or so engineers that came to Nvidia from PortalPlayer had developed a chip that could power music players like SanDisk's Sansa View, but that wasn't really suitable for mobile phones and navigation devices. Nvidia added another 300 engineers of its own to the project after the acquisition closed, and came up with the APX 2500.
The chip is based on the ARM11 core, and can run at up to 750MHz. It can encode and decode 720p high-definition video, meaning you could use a phone based on the APX 2500 as both a high-definition player and camcorder. Nvidia also added some of its GeForce graphics technology that was designed for low-power devices, which allows 3D user interfaces to run on the chip, Rayfield said.
Nvidia is pushing the APX 2500 as the fastest way for handset makers to build a smartphone based on Windows Mobile. Right now, Windows Mobile appeals more to corporate smartphone users, but according to Rayfield, Microsoft is planning to make the next version of the operating system much more consumer-friendly. Nvidia designed its chip in collaboration with Microsoft, and the next version of the operating system will be able to exploit technology within Nvidia's chip, he said.
Still, this approach limits Nvidia's early prospects, as it blocks out both Symbian, the dominant smartphone operating system, and Linux, perhaps the most promising future operating system. Nvidia is a member of Google's Open Handset Alliance, but it's taking a "wait-and-see" attitude toward Android, Rayfield said.
Nvidia has some customers lined up for the APX 2500, but it's not saying who's on board. The company is playing up the mobile phone prospects for the chip, being that it's the week of MWC, but it will also try to sell the chip to companies that make portable navigation systems and personal media players.
Rayfield and his team have their work cut out for them, trying to crack a market like this where they have little to no experience. It's still early days in the smartphone market, but it does seem like there is room for a host of players right now, unlike the PC market's early consolidation around Intel and grudging acceptance of AMD as a second source.
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