It's rare to hear the words "innovation" and "big company" in the same sentence. During the 1980s, IBM (NYSE:IBM) was a visionary in the PC revolution -- but gave away the profits to upstarts like Microsoft (NASDAQ:MSFT) and Intel (NASDAQ:INTC).
Interestingly enough, the then-upstarts now look more like the IBM of the 1980s. Look at Microsoft. The company is fending off the onslaught of Linux. In fact, IBM is one of the biggest proponents of this operating system, having invested in companies like Novell (NASDAQ:NOVL).
Then, yesterday, IBM announced the development of a prototype for a new chip called the Cell (that's the code word, anyway). It is the result of an extensive partnership with Sony (NYSE:SNE) and Toshiba.
The Cell is a speed freak, with the capacity to compute 16 trillion floating point calculations per second -- supercomputer territory. In light of this, it should be no surprise that IBM calls this a "quantum leap."
Such computing power is useful for things like building missiles. But, IBM thinks the Cell will be perfect for the data-intensive needs for digital entertainment, such as high-definition televisions and next-generation PlayStations.
And the timing is right. After all, it appears that the big sellers for this Christmas are digital entertainment products.
True, Microsoft and Intel won the PC wars. But the bigger prize may be home entertainment. And, so far, the once-beaten Big Blue may just be the next big thing.
Fool contributor Tom Taulli does not own shares in the companies mentioned in this article.
