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An article at Forbes.com, entitled "Why Strategic Alliances Don't Work", uses Apple's Taligent venture with IBM in the early 1990s as a case study. Taligent was the Apple-IBM attempt to create an object-oriented OS which would succeed OS 7 for Apple, and provide a killer OS for x86 hardware for IBM. As Jim Carlton noted in his book on Apple, "What do you get when you put Apple and IBM together? Apple." Taligent was only one joint venture for Apple which wound up at a dead end. Others included the 'Star Trek' project (Mac OS 7.0 on Intel - Roger Heinen, who project managed that one, joined a tech venture capital firm as MD about two weeks' ago); PowerPC (Apple/IBM/Motorola); and PhotoCD (Apple-Kodak). All of these deals were brokered under the stewardship of 'Chief Technology Officer', John Sculley, long-time CEO of Apple. Do strategic alliances work? asks the Forbes article. Maybe. There should be little argument that the Apple-Microsoft pact has worked for both firms. And, on a transaction cost basis, it has been far more beneficial to Apple. Of course, in a sense, IBM has been far less successful than Apple at choosing its partners. The early IBM-Microsoft alliance ended with MS as king. And Intel was virtually handed the chip market on a plate by IBM decreeing the x86 would power its PCs, thereby handing the keys to the instruction kit to Intel CEO Andy Grove. We disagree with Forbes' analysis of Apple/IBM, however. Bill Robinson claims that, from the outset, the two firms did not trust each other, evidenced by the outstanding law suits the two were fighting. But this was not unique to Apple/IBM. Despite the years of outstanding patent disputes between Apple and Microsoft, Apple could still knife long-time Mac developer Adobe over PostScript and hand Microsoft a technology that would make or break Windows: TrueType. Robinson argues that it was - maybe still is - vogue-ish to have VPs in charge of strategy, strategic alliances and so on. And then he points an accusing finger at the AOL-Time Warner merger. Mergers are very different from strategic alliances of course. But both serve the same purpose: they assume there is a dominant/dependent relationship. But even the dominant player may need something the more vulnerable player may have. So it was with TrueType. With Apple/IBM, these were two declining giants at the time, facing the dual threat of Microsoft/Intel. So it is with HP-Compaq. A merger, yes, but born of necessity. HP doesn't really 'need' Compaq, except for the talented people (are there any?), so it can cherry-pick human resources and assets. That gives HP a lot of scale so it can price-match Dell and IBM. The former is a tough competitor on the desktop (and less of a problem in server markets) and IBM (an eservices behemoth). Analysis: If you ever find yourself a VP of Strategic Alliances, just ask one question when faced with a potential partner: Who wins? Who loses? (n.b., this works with wives/husbands/girlfriends/boyfriends/in-laws as well).
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