Paul and thread, InfoWorld article re. Merced:
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February 9, 1998
Special News Report
Going, going ...With much of the industry hawking Wintel wares, some users see their long-term choices eroding
By Ed Scannell and Bob Trott
Having secured an iron grip on the desktop market, proponents of the Wintel architecture are battling for dominance in the next-generation server market -- and corporate IT managers who value choice are concerned.
The performance gains expected from Windows NT on Intel could put pressure on Unix vendors, prompting an industry consolidation that will set firmer standards but could also reduce platform options, analysts and users say.
By the end of 1999, Intel will have delivered its first 64-bit chip, code-name Merced, a processor capable of running both Windows- and Unix-compatible applications. Also by then, Microsoft will have a version of Windows NT for Merced that promises a raft of long-awaited enterprise-level capabilities.
Although still more than a year from reality, this combination threatens to batter down the fortress doors of Unix and even lower-end IBM host-based systems -- significantly altering long-term IT strategies.
Evidence for such preoccupation is mounting.
Compaq's $9.6 billion acquisition of Digital in January brings together two of Microsoft's and Intel's biggest industry supporters that figure to aggressively support the Merced-NT platforms.
A recent report by International Data Corp. (IDC) shows that shipments of NT-based workstations (1.3 million) surpassed shipments of Unix-based workstations (660,000) for the first time in 1997, which represents an increasingly larger installed base for Merced-NT.
That IDC report also showed that Hewlett-Packard, once reluctant to support NT in favor of its proprietary Unix products, rose to the top spot for sales of workstations in 1997, thanks mostly to its NT-based systems.
Digital fallout
Although it is clear that the Compaq-Digital combination will pitch Windows NT hard in enterprise deals, whether the duo will continue to support Digital's Unix expertise and user base is unclear.
"It would be awful if [Compaq-Digital was] to just concentrate on the Microsoft-Intel platforms and not exploit Alpha and [Digital] Unix," says Ron Calabrese, an IT executive at The Travelers, an insurance company in Hartford, Conn. "Everyone feels having just Microsoft is not a good thing, but a lot of people are learning to live with it."
Few industry observers or IT managers predict that Merced-NT will gun down all existing server competitors, but a clear majority say it is a force they must seriously evaluate during the coming years.
"It is becoming increasingly hard to justify going with a non-Wintel solution," says Dwight Davis, an analyst at Summit Strategies, in Seattle. "It may reduce choice, but that is not necessarily a bad thing. Having fewer choices makes life easier for IT professionals who are faced with so many choices in this Internet-time period. That, of course, is a cynical perspective."
Some users agree.
"If Merced does succeed, in several years it could conceivably lead to a single chip solution for office desktop needs to terabyte database servers," says Brian Jaffe, director of network and client services at Bantam Doubleday Dell Publishing, in New York.
Choice has always been an important factor in successfully running corporate shops. In general, IT procurement experts say companies always must be in a position to buy each IT architecture layer from two or more vendors, or they lose the ability to manage risk and negotiate good prices.
"Our corporate philosophy is that we always make sure we have a couple of suppliers in play," says Kathleen Martin, North America commodity manager at SmithKline Beecham, in Philadelphia. "You get the best deal that way."
Users point to Microsoft's sharp price increase on the initial license of SQL Server 6.5, compared with previous versions, as well as the restructuring of its Corporate Licensing Program for concurrent user accounts, which some feel makes it easy to raise prices.
"They look at the recent price increases on SQL Server, which were way beyond what people expected, and think this is what the future could be like," says Bill Cornfield, president of the Windows Users Support Group, in New York.
Unfortunately, corporate IT managers can be such a loyal group that they ignore the risk of relying on a single vendor. At SmithKline Beecham, when product specialists become enamored with a product or technology, Martin coaches them to hide their excitement.
"Don't come to me to make a deal after you've let the supplier know that they're the best thing on the face of the earth," Martin says she warns her IT managers.
Fatal attraction
IT directors acknowledge that in an ideal world, they would have several viable server architectures. But adoption of the Wintel platform introduces a familiar standard into the mix.
"This means reducing total cost of ownership for managing today's hardware/software environment," says Greg Kinman, enterprise information manager at John Deere Insurance Group, in Moline, Ill. "Standardizing hardware and software is one of the first steps toward this goal; therefore, more corporations are reducing their choices voluntarily, with Wintel being the obvious migration path."
And as standardization takes hold in the ISV community, end-users can play application providers off each other. In Toronto, the Royal Bank of Canada offsets the single-provider risk by signing contracts that fix prices for as many as five years and includes an escalation clause so when the contract ends, vendors cannot increase prices more than a fixed amount.
"NT is the de facto operating system, and the third-party software providers are writing to it," says Marty Lippert, CIO at Royal Bank. "So you have a lot more options with respect to off-the-shelf applications."
Some users are counting on Java and widespread Merced support to ensure their ability to run applications across many operating systems.
"Choice is good, but better than that is portability," says Jeffry Borror, director of IT at Daiwa Securities of America, in New York. "The choice of operating system is 'de-coupled' from the hardware, and you can port your application software to match your needs -- like a remote office may only need an Intel server with NT."
Recognized lead
Unix vendors expect that a continued performance lead over the Wintel platform will ensure sufficient competition. This performance lead, particularly for transaction-intensive applications, dictates decisions now.
"There is a long-term concern about Microsoft and its intentions, but right now it doesn't seem that NT is up to the task of mission-critical, high-transaction applications," says Brad Smith, electronic grants project manager at the U.S. Department of Transportation, in Washington. "If it is at some point only one choice, then we're in trouble; we lose competition and innovation and the whole bit."
According to Smith, the department, which is obliged to have several companies bid on a project, manages to do so by having several resellers involved.
One end-user company that appreciates having a choice now other than Microsoft is SpeedServe.com, a fast-growing Net-based retailer that offers electronic storefronts for hundreds of thousands of books, videos, and soon, games. Founded in 1995 by brothers David and Michael Mason, SpeedServe launched its operation anchored by an NT 3.51 server.
But as business grew exponentially -- adding 1,000 customers per day -- the Masons' Windows NT Server caved under heavy transaction demands. The company switched to an IBM S/390 mainframe with IBM's DB2 database and other Internet-commerce software from Big Blue, and have consequently grown their business in a multidimensional fashion.
"With the IBM products, we could load significantly more product that allowed us to go from one storefront [BookServe.com] to three [VideoServe.com and Game Serve.com]," David Mason says. "We made several attempts to load that much product using NT but weren't able to do it."
Ingrained competition
Some note that Wintel rivals, particularly Unix competitors, have helped dig their own hole by not being more competitive on price or performance.
"The Unix guys refuse to let go of those huge profits they have artificially maintained for years," says Tim McAllister, technical consultant at a railroad company, in Chicago. "Some Unix customers now going to Wintel see this as payback time."
Some analysts agree.
"There are Unix guys out there who wouldn't switch out a Unix box for an NT box unless you gave it to them for free and threw in a Mustang convertible," says Mike Drips, a consultant to Fortune 500 accounts, in Overland Park, Kan.
Microsoft, in particular, blames old-fashioned resentment for much of its criticism. Some observers say there is an element of that in the server market competition as well.
"People in America feel they have to have choices even if they never use them," says Frank Petersmark, assistant vice president of information technologies at Amerisure & Companies, in Farmington Hills, Mich. "We also like to build people up and then knock them down. Ten years ago most of us cheered for Microsoft to get bigger and take on IBM. Now we are looking for someone to knock Microsoft down."
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Ibexx
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