As a result of its work with these suppliers, IBM usually got the first
working units of the new equipment, ahead of those companies—such as
Intel—that had not invested in developing the new requirements and
specifications. Access to early units of new equipment was vital for semiconductor
makers to get their new processes up and running, which
could enable more advanced products and greater competitive advantage
in the market. Equipment suppliers in turn had to invest hundreds
of millions of dollars (beyond IBM’s financial contributions to them) to
develop this equipment. Only a few equipment systems were available in
any new generation of equipment, and it took substantial time to scale up
the production of these units, each of which sold for tens of millions of
dollars apiece. These high costs required the equipment makers to sell
more units than IBM or AT&T could use for their internal production
needs, in order to earn a return on investment for making the equipment.
Suppliers would ship new equipment to companies like Intel six to
nine months after the initial units were given to IBM or AT&T.
As a result of its work with these suppliers, IBM usually got the first
working units of the new equipment, ahead of those companies—such as
Intel—that had not invested in developing the new requirements and
specifications. Access to early units of new equipment was vital for semiconductor
makers to get their new processes up and running, which
could enable more advanced products and greater competitive advantage
in the market. Equipment suppliers in turn had to invest hundreds
of millions of dollars (beyond IBM’s financial contributions to them) to
develop this equipment. Only a few equipment systems were available in
any new generation of equipment, and it took substantial time to scale up
the production of these units, each of which sold for tens of millions of
dollars apiece. These high costs required the equipment makers to sell
more units than IBM or AT&T could use for their internal production
needs, in order to earn a return on investment for making the equipment.
Suppliers would ship new equipment to companies like Intel six to
nine months after the initial units were given to IBM or AT&T.
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