|
|
|
MIPS' 64-bit men: Bourgoin, Eichler set IP agenda Mountain View, calif.-A start-up at age 12, MIPS Technologies charts its own course in the IP business-turbulent, but promise-laden straits. As chairman/CEO John Bourgoin likes to point out, there has "never been an IP company around for 12 years." Publicly traded on the Nasdaq National Market under the symbol MIPS, MIPS remains closely held by its parent Silicon Graphics Inc. (SGI), which owns an 85 percent stake in the fledgling IP provider. At the Thursday, Oct. 22 close, MIPS traded at $23. The company has steadily tracked up from $13.188 on July 1, 1998. In April 1998, SGI's then new CEO Richard Belluzzo decided to make the workstation SGI's core focus, transitioning from MIPS to Merced and Windows NT. With the new focus, SGI split its MIPS team into two businesses with one internally maintained at SGI. This team continues to advance the R10,000. MIPS Technologies, the company, was formed nine months ago to leverage the MIPS architecture for the embedded systems market, both digital and consumer. With the demand for specialized products , Mr. Bourgoin considers now "the ideal time" for MIPS as an IP provider, to enter the market despite seeing numerous companies struggle to make any sort of a business in the IP field. The IP market is anything but forgiving with a multitude of companies vying for big dollars and no established business model for achieving the financial windfall. Although MIPS has a 12-year tenure as an IP company, this is a relatively new market, meaning it has yet to be proven as a viable business. This makes it a hard sell to a lot of OEMs and system-on-a-chip companies. A 30-year veteran of the semiconductor industry, Mr. Bourgoin joined MIPS two years ago after 20 years at AMD where he directed the chipmaker's programmable logic, datacom and most recently microprocessor efforts. He prides himself on people management. And based on his experiences, Mr. Bourgoin feels confident in his understanding of technology and its direction. "If you hang around 30 years, you pick up things," says Mr. Bourgoin. Mr. Eichler, who joined MIPS earlier this year, made his start as a financial consultant before joining a small Redmond Wash.-based IPO called Microsoft in the late 1980s. Mr. Eichler has a fascination for software, a major theme lacing together the different stops in his career path. After Microsoft, Mr. Eichler joined NeXt Software, the brainchild of Steven P. Jobs later sold to Apple Computer. In his most recent post, Mr. Eichler helped take Visigenics public, something he helped make happen upon joining the MIPS management team. Messrs. Bourgoin and Eichler stress volume, value and protection as the three keys to the IP business. They point out that MIPS has the only 64-bit architecture in volume production today. In terms of value, the executives point out that the MIPS architecture, while evolving, covers a wide range of performance levels with a good deal of credibility. The concept for the architecture was "very well thought out to last over time," says Mr. Bourgoin. MIPS 1 can still run on MIPS 5. Perhaps most importantly, MIPS claims 51 patents with 20 pending as evidence that it can protect its assets in the cut-throat competition between IP providers. With the primary source of revenues being licensing and royalty income, fending off competitors in the legal arena is no small order. What the fledgling company must prove is that it can go from being an internal unit of SGI to a market driven self-sustaining enterprise. This will be the acid test for MIPS to see if it can carry itself without the backing of SGI, where many industry observers believe MIPS may not be so well established in the market without the help of the large workstation manufacturer. "We need to prove that we can redirect a very talented team and deliver," says Mr. Bourgoin, who adds, "and I think we have." Both executives remark that MIPs is cash flow positive and profitable today. On August 12, MIPS landed a contract with Broadcom that the company would like to serve as the model of more business to come. Broadcom was "not shopping for a processor, they were shopping for an alliance," says Casey Eichler, MIPS CFO. In MIPS' favor is a level playing field. "Competitors tend to be the same size as we are, so we're all on equal footing," says Mr. Bourgoin. For several reasons, he does not feel threatened by Intel's plans to get serious about this business. Intel has made it known that the top chipmaker plans to push the StrongARM architecture acquired in its settlement agreement with Digital. The business carries lower margins. Intel does not control the instruction set. And it is up for debate whether Intel would undermine its x86 base. Therefore, they "have to compete on equal footing, no knowledge base like the x86, nor patent portfolio to keep competitors out." |