THE COMMERCIALIZATION OF RISC - STRATEGIES FOR THE CREATION OF DOMINANT DESIGNS

Reduced instruction set computers (RISC) recently have mounted a strong challenge to the complex instruction set computers (CISC) that previously dominated the computer workstation industry. This change has had a tremendous impact on systems developers, and may have far-reaching implications for the structure of the U.S. microprocessor industry. Intel and Motorola, who dominate the CISC microprocessor market, ignored or failed to respond to early evidence of the advantages of RISC architectures and have lost the initiative in this fast-growing market to Sun Microsystems and other producers of workstations who have developed RISC microprocessors. This paper discusses the development and commercialization of RISC architectures, focusing on the licensing strategies of Sun and MIPS Computer Systems, two pioneers in RISC microprocessors. Rather than an exogenous event, to which managers must adapt, the history of RISC suggests that firms can pursue strategies that aid in the establishment of their products as dominant designs. In the case of RISC, licensing has assumed particular significance because of the important complementarities between hardware and applications software, which results in network externalities. In such technologies, the innovator may gain significant advantages from a relatively permissive attitude toward ''giving away'' important intellectual property.