The consequences of these IBM decisions not only spawned the PC era, but also led to the creation of a new and highly profitable PC software segment. To help complementary hardware designers and software publishers create expansion hardware and software applications, IBM published the essential BIOS code for the PC. The BIOS remained copyrighted by IBM since they intended to use it to prevent unlicensed cloning of the IBM PC. Unfortunately for IBM the BIOS was soon reverse engineered by Compaq and others using a “clean room” process that avoided legal liability for copyright infringement. This gave low-cost makers of PC clones the last technology piece they needed to deliver inexpensive PCs. The resulting explosive growth of PC clone sales and adoption ultimately changed all aspects of computing, creating a wealth of new companies like Microsoft, Intel, Compaq, Dell, and subsequently drove acceptance of the PC architecture into more demanding server applications at the enterprise level.

Within 25 years over a billion PCs were sold. Still the leading computing architecture, the second billionth PC will be shipped sometime in 2008. How could such enormous consequences arise from a few relatively modest engineering decisions? The answer seems simple. Open architectures are vastly more efficient to extend, allowing many more individuals and companies to contribute and participate in accelerating the design, application, low-cost manufacturing and distribution of a product. IBM didn’t intend to create an open platform with the IBM PC. It just didn’t foresee that the BIOS code would be reverse engineered. In an attempt to regain control, IBM created a new proprietary system bus called the MCA and licensed it for hundreds of dollars. While this approach would prevent others from cloning new IBM PCs without a license, the MCA bus was adopted by virtually no one outside of IBM. Instead, the clone makers created their own standard ISA bus which was soon followed by an even faster EISA bus.

A similarly important milestone in the history of the PC was the introduction by Intel of the Peripheral Component Interface or “PCI” standard. Intel realized they should create a standard bus and support it with low-cost Intel chips. Intel designed the PCI bus to be fast, inexpensive to build, and royalty-free.  With Intel behind it, the jockeying between IBM and the clone makers about board compatibility ended. The enormously successful PCI specification and its successors since 1992 are still the dominant local bus system within PCs and servers. Today PCI versions continue to receive wide support from all PC manufacturers globally. The PCI bus from Intel was wildly successful in simplifying integration, further driving down the PC system costs, and vastly improving PC reliability for all consumers and businesses.

CEO Jerry Yang as much as anyone, is responsible for the difficult circumstances at Yahoo. His first mistake was to allow the company to get into bad product shape under previous CEO, and Yang selection, Terry Semel. His second mistake was the amount of time he waited before making significant personnel and product changes once Yang himself became CEO. Now the changes are coming a little faster, but there are still too many employees at Yahoo without the ability to make technical contributions. This illustrates Yang’s weakness. For Internet companies like Yahoo or Google, success is all about the people you employ and the innovations they create. Yang seems to be holding onto some pleasant fantasy.

Yet, when faced with a complex problem, Yang demonstrated he has a lot of smarts. The bid by Microsoft was such a challenge. In a clear grudge match, the PhD against the MBA, Yang crushed Ballmer embarrassingly. Looking objectively at the situation, Yahoo was about $18 per share before the Microsoft offer, and is still over $26 per share. Don’t try to tell anyone Yang didn’t come out ahead.

Is Icahn going to be more successful in his bid for control of Yahoo? He’s going to have a lot of shareholders on his side, although co-founders Yang and Filo also control substantial shares opposing Icahn. The director slate proposed by Icahn is unremarkable except for the enigma, Mark Cuban, who unloaded Broadcast.com on Yahoo for $5.7 billion at the height of the Internet bubble. Icahn’s inability to propose a compelling board simply demonstrates his lack of insight and inability to evaluate the business itself. Nothing in the letter from Icahn suggests ways to improve Yahoo’s business and his conclusions are no more than grade school arithmetic.

Microsoft appears to have moved beyond Yahoo. Yahoo has scheduled its annual shareholder meeting on July 3. Shareholders like Icahn will want so see some early fireworks. But that’s not likely to happen.