When Exxon Wanted to Be the Next Apple
And why it failed.
Image: Mike Mozart/Flickr
This weekend is the anniversary of the release of the Apple IIc, the company's fourth personal computer iteration and its first attempt at creating a portable computer.
In 1981, Apple's leading competitor in the world of consumer ("novice") computer users was IBM, but the market was about to experience a deluge of also-rans and other silent partners in PC history, including the multinational descendant of Standard Oil, Exxon. The oil giant had been quietly cultivating a position in the microprocessor industry since the mid-1970s via the rogue Intel engineer usually credited with developing the very first commercial microprocessor, Federico Faggin, and his startup Zilog
Faggin had ditched Intel in 1974, after developing the 4004 four-bit CPU and its eight-bit successor, the 8008. As recounted in Datapoint: The Lost Story of the Texans Who Invented the Personal Computer, Faggin was pissed about Intel's new requirement that employees had to arrive by eight in the morning, while he usually worked nights. Soon after leaving Intel and forming Zilog, Faggin was approached by Exxon Enterprises, the investment arm of Exxon, which began funding Zilog in 1975.
None of this is mentioned on ExxonMobil's current "our history" page.
With Exxon's financing, Zilog created one of the most important microprocessors in computing history, the Z80. It was designed to be a backwards-compatible, improved version of Intel's 8080 microprocessor, which it quickly replaced as the dominant CPU for powering embedded systems (cash registers, printers) and intelligent terminals (stand-alone, hard drive-less CPUs that would be sort of analogous to an Arduino board/microcontroller). Z80s are still all over the place, providing logic controllers in industrial settings while powering credit card gas pumps, a whole bunch of classic synthesizers and video games, VeriFone terminals, and breathalyzers.
Given Exxon's patronage of Zilog and its Z80 wunderkind, why didn't the oil co. go on to become the next IBM or Apple? Or anything at all associated with computing?
Ironically, the problem may have been that Exxon wanted too much to become an IBM or Apple. As the earliest 8 and 16 bit microprocessors battled it out in an already rigged marketplace with no room for redundant hardware, and as Intel aggressively pushed its 8086 CPU—which would soon give us the x86 architecture that powers computing to this day—Exxon began buying up various tech firms in an effort to build a diversified IBM-like computing titan. Meanwhile, Zilog's follow-up Z8000 processor was fizzling, a relative flop usually blamed on the CPU's lack of backward compatibility.
In 1981, Exxon went from being Zilog's financier to its parent company. "Exxon had bought Zilog as a cog in a machine along with a host of other electronics and software company acquisitions for a grand design they hoped would rival IBM," wrote Graham Singer in a Techspot history of PCs. "This would turn into a billion dollar failure."
"R&D expenditure [at Zilog] topped 35 percent of revenue, while the wider range of development caused slippage in its own 16-bit Z8000 processor as Exxon's demands and the relative managerial inexperience of Federico Faggin became exposed," Singer wrote. The increased Exxon presence more or less doomed Zilog to failure.
"It was essential to have Exxon as an investor, given their willingness to invest in us," Faggin offered in a Computer History Museum oral history. "But then later on it became a liability, because they became a competitor in a sense. Or viewed as a competitor in the marketplace by many of our customers. Exxon had an intention, which we were not privy to, they did not tell us that in the early days. They had a master plan to create a major information technology company that was going to compete with IBM. And in fact, they started doing advertisement, presenting their company in advertisement in the '78-'79 timeframe. Basically presented themselves as a challenger to IBM."
The result was that Zilog was shut out of future IBM collaborations, which, for a designer of microcontrollers, is bad news.
"Basically toward the end of my period at Zilog as CEO, I was spending more time in New York keeping Exxon out of the way, than I was spending time with customers," Faggin recalled. "You know, having customers design with our product. So, that's how bad it got. So what was truly an asset at the beginning became a liability at the end."
Eventually, Zilog was bought back from Exxon by its management and employees, and Exxon ... well, it still sells oil. The firm's Z-series microcontrollers are still developed and sold to this day. As a major player in the embedded systems market (and embedded systems security), it's well-positioned for computing's next wave: the internet of things.
In a 1997 Forbes piece, G. Dan Hutcheson, president of VLSI Research, summed it all up: "Zilog might have been what Intel is today, if Exxon hadn't tied them down."
In 1982, Exxon released its 500 series PC, a desktop machine running on the Z80 CPU. It was just what the oil giant had wanted, and it sank. Today, the ExxonMobil 500 series consists of "heavy duty circulating oils for lubricating gears and bearings."