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NT News Analysis - 01 Nov 1998

Chili!Soft (http://www.chilisoft.com) has added IBM S/390 mainframe and RS/6000 UNIX server platforms to the list of systems it supports. This list already includes Netscape, Lotus, and Sun Microsystems server platforms.

Last year, Chili!Soft began producing Active Server Pages (ASP) runtime environments for various Windows NT-based Netscape Web servers. The company expanded its portfolio by building runtimes for Lotus Domino Go Webserver, eventually implementing a Solaris-based runtime for Netscape Servers. However, Chili!Soft's efforts have come under fire from Microsoft executives, who fear losing control of the ASP architecture.

To Microsoft, ASP is a clear competitive advantage for NT. As long as ASP is unique to the NT platform, Microsoft can leverage ASP as a building block to link applications to Windows NT Server. However, with Chili!Soft now porting ASP to competitive platforms, Microsoft might have to sacrifice NT Server sales to foster a lucrative, strategic application-developer market.

Currently, Microsoft controls ASP and still influences the semantics and implementation of the environment. However, the importance of standardization grows as third-party support for ASP expands. An anticompetitive Microsoft response could damage Chili!Soft, an outsider reverse-engineering the ASP runtime.

Enterprise developers need to consider the notion of Microsoft cracking down on the burgeoning cross-platform ASP marketplace as they embark on a non-NT-based ASP project. If history is any indicator, then ASP on a mainframe is a very risky proposition.


PCI Rift Looming Between Intel, Partners
Intel ended the bus wars of the late 1980s by introducing the 32-bit PCI bus in the mid-1990s. Currently, several major PC vendors have announced their intention to form a consortium and develop a superior implementation of the PCI architecture.

While Intel is promising a 66MHz PCI bus in the near future, IBM, HP, and Compaq are proposing a more substantial leap to fuel future workstation and server designs. They suggest driving the bus specification to 133MHz and boosting overall throughput to 1GB per second between the CPU and PCI peripherals. Current-generation PCI allows for a 33MHz bus frequency, limiting the maximum burst transfer rate to 132MB per second.

PCIx, as the new consortium is calling it, would certainly raise the bar for PC I/O performance. However, some in the industry are cynical. Sources close to the companies see PCIx as a direct attack on Dell, whose rise to the top spot in PC sales has sent competitors scrambling for a response.

PCIx could be the answer for these vendors, all of which possess considerable research and development capabilities. By introducing an independent extension of the PCI bus, these vendors can capitalize on Dell's heavy dependence on Intel for standardized commodity components.

With Intel faltering at both ends of the marketplace, it seems like the perfect time for these vendors to put their strategy into action. Intel's Celeron CPU is a flop, while continued bugs with the 450-series chipset have pushed back the introduction of critical Xeon symmetric multiprocessing (SMP) systems to the first quarter of 1999. (For more information about the delay of Xeon, see "Yet Another Xeon Delay," October 1998.)

"The time is ripe for a grassroots type of backlash," said the executive of one of the companies involved in PCIx. "We're trying to create an environment where Intel is an equal player in the technology, not the controller."

Rumblings from inside Intel indicate that the vendor might be planning to embrace PCIx rather than participate in another bus war. Sources close to the company point to the decision to support Compaq's HotPlug PCI as part of the 450NX chipset, due later this year, as an example of where Intel has shown flexibility on I/O issues.

In the end, it's the old industry formula once again at work: Take a stagnating market, add a little competitive pressure, and serious innovation occurs.

Post-NT 5.0 Landscape Takes Shape
As the initial wave of Windows NT 5.0 beta 2 testers got down to business at this summer's developer workshops, Microsoft began fleshing out its post-NT 5.0 strategy.

"NT 5.0 is not the be-all, end-all," said Microsoft senior vice president Jim Allchin during his reviewers' workshop keynote. According to Allchin, Microsoft is planning many enhancements for the first two expected post-NT 5.0 releases: Windows NT 5.1 and Windows NT 6.0.

The fundamental architecture will change from 32 to 64 bits. In the NT 5.1 timeframe (12 to 18 months after NT 5.0 ships), customers can expect to see Microsoft adding native 64-bit support for Intel's IA64 and Compaq's Alpha processor architectures.

Other key post-NT 5.0 features include better clustering, richer and more fully integrated client/server storage, and data center-class management. (For more information about clustering in post-NT 5.0 releases, see "Microsoft to Acquire Valence Research," page 32.) One area receiving considerable focus is the NT 5.0 user interface. Although NT 5.0 is initially sporting the Internet Explorer (IE) 5.0 interface, post-NT 5.0 releases will borrow additional interface intelligence from the Office 2000 suite, including adaptive menus (in which the menu choices change to reflect usage patterns) and auto-completion.

Some aspects of Microsoft's strategy leave many analysts puzzled. For example, Allchin's comment that Microsoft plans to "take NT up into the traditional mainframe arena, but also down into the embedded and realtime" seems at odds with statements by other company officials regarding Microsoft's positioning of Windows Consumer Electronics (CE).

Another issue is internal developer bandwidth. Many analysts have complained that Microsoft needs to focus less on the future and more on getting a workable NT 5.0 product out the door. "The tendency is to try to take promises of tomorrow and turn them into reality today," one analyst said. "Our fear is that these snazzy new features will catch the public's attention and put Microsoft in a position where it feels compelled to try to incorporate them into NT 5.0."

With Microsoft unable to balance even the NT 4.0 Service Pack 4 (SP4) program against NT 5.0 beta 2, most experts have lost faith in the company's ability to deliver on time.


NT Workstation, Exchange Surpass Expectations

Each month, new information seems to be available regarding the phenomenal growth of Windows NT Workstation as a client operating system (OS). According to Dataquest's latest projections, NT Workstation sales will exceed 12 million copies this year, jumping to more than 24 million in 1999 and 44 million in 2000.

A recent Information Week poll corroborates these numbers. The poll shows that almost 70 percent of the 150 IS decision makers surveyed are planning NT Workstation deployments within the next 2 years. A combination of ongoing delays in the NT 5.0 production schedule and new pricing incentives are driving customers to NT 4.0, ostensibly at the expense of Windows 95 and 98. (For more information about Microsoft's pricing incentives, see "Microsoft Drops NT Workstation Pricing Bombshell," page 34.)

According to a follow-up survey, two key factors in favor of NT are superior reliability and security. Improved device support and a greater selection of NT-aware applications also are fueling the OS's adoption. With the ongoing growth of NT Workstation, more vendors are supporting the platform directly through customized applications and native device drivers. This direct support allows NT Workstation to be adopted in new environments where once many thought it was impractical.

But NT Workstation isn't the only product generating repeat headlines. According to Electronic Mail & Messaging Systems (EMMS), a Washington, D.C.-based newsletter, Microsoft's Exchange Server outsold Lotus' Notes by a margin of only 600,000 client seats. The monthly run rate for Exchange remains at 1.2 million client seats, while Notes escalated to 1 million client seats.

Lotus spokesman Paul Davis said the second quarter was Lotus' second best ever. "We're seeing a continuing upsurge in Notes sales," said Davis. "Market analysts have indicated that this is going to continue to be a two-horse race between Microsoft and Lotus. We think competition will be fierce, but we have every confidence that we will continue to lead the market."

However, Lotus officials are feeling the heat from Microsoft. This is the second consecutive quarter that Exchange has outsold Notes.

Some analysts point to Lotus' mishandling of the cc:Mail-to-Notes conversion as the key turning point for the company. A divided product strategy coupled with the lack of a coherent messaging product to compete with Microsoft's Front Office and BackOffice left the one-time industry leader vulnerable. The result of that vulnerability is today's hotly contested messaging market.

Notes 5.0 will likely be a better product than it would have been if Microsoft had not turned up the heat with Exchange 5.5. Likewise, the next version of Exchange could become a better development platform as a result of ongoing comparisons to Notes. Either way, the customer wins.

Microsoft Internet Licensing­Too Little, Too Late
Microsoft's decision to adjust its per-seat licensing policies to better reflect Internet usage is getting a cold reception from enterprise IS planners. Microsoft requires that customers purchase a seat license for every user who connects to its product. This licensing requirement includes users who connect over the Internet (for example, to SQL Server via an Active Server Pages—ASP—Web application).

Such applications can easily attract thousands, even millions, of users. This attraction is especially prevalent when corporations deploy the applications as part of their corporate Web presence. Purchasing enough licenses to satisfy the potential for any publicly deployed application would be extremely expensive, forcing many IS shops to try to avoid the problem altogether.

To help IS shops, Microsoft offers discounted licenses for certain types of connecting users. However, even with an adjusted price point, the licensing model breaks down. For example, Windows NT Server, Terminal Server Edition requires that every connecting user possess an NT Workstation 4.0 seat license. Not surprisingly, customers have openly criticized Microsoft for imposing this licensing requirement.

"It is appalling," said Robert Edwards, manager of IS services for Avalon Bay Communities in Alexandria, Virginia. "If I can't get more than 60 users on a server at once, why should I pay for more than that?"

Determining how to economically deploy Terminal Server has become a full-time job for many IS professionals. This dilemma is apparent in the emerging Application Service Provider market. Service companies that want to deploy Microsoft applications are facing the problem of how to stay within Microsoft's licensing policies and still deliver an economically viable business model.

Many customers have been hoping to get some relief from Microsoft, but Internet licensing is simply too little, too late. Internet licensing has opened the door for Microsoft's competitors--they can now compete on price as well as technology.


Microsoft to Acquire Valence Research
In August, Microsoft announced plans to buy Valence Research, the maker of the popular third-party clustering solution, Convoy Cluster. Microsoft will rename the product suite Windows NT Load Balancing Server. Microsoft plans to make the NT Load Balancing Server an integral part of the next version of Windows NT Server, Enterprise Edition to complement its cluster-server technology, which had been limited to two node failover operations across a limited set of BackOffice (Exchange and SQL Server) applications.

"This \[product\] addresses an area that is not addressed \[in NT\]: automatic load-balancing," said Ed Muth, group product manager for enterprise marketing at Microsoft. "This technology is perfectly complementary to the things we have addressed: transaction integrity and database fail-over. These two technologies fit beautifully together. Now there is a \[Microsoft\] end-to-end solution--we load-balance end-users coming in and provide reliable application and database service on the back end."

Convoy Cluster has long been a respected load-balancing implementation, capable of creating clusters with 32 individual nodes. The primary applications for the technology have been in the Web and email (work group and Internet) areas; however, Microsoft will waste little time in adapting Convoy Cluster for use with its Exchange, SQL Server, and Proxy Server BackOffice components. Will Microsoft include the NT Load Balancing Server in the base Windows NT Server 5.0, Enterprise Edition package? Most analysts agree that such a scenario is a possibility, given Microsoft's all-encompassing strategy for NT 5.0.

Microsoft Drops NT Workstation Pricing Bombshell
Microsoft announced special pricing incentives on its Windows NT Workstation 4.0 product effective September 1 through December 31, 1998. Customers participating in the Open License program can elect to purchase NT Workstation 4.0 as part of a premium package that includes free updates for 2 years. Under the new program, which Microsoft calls Windows NT Workstation License Advantage, customers pay a $38 price premium for NT Workstation 4.0. In return, they receive all major service packs and option packs, plus major and minor point upgrades.

The biggest draw for corporate customers is the built-in upgrade to NT 5.0. By pricing the Advantage version so that the delta between it and the basic NT Workstation 4.0 license is less than the expected upgrade price for NT 5.0, Microsoft hopes to encourage customers to adopt NT 4.0 today.

The NT development team has made it clear that the migration to NT 5.0 will be smoother from an NT 4.0 base than from Windows 98. Adopting NT 4.0 today gives organizations a head start on implementing an end-to-end Windows NT environment that customers will need for full NT 5.0 functionality.

"This year, we have seen a tremendous number of companies deploying Windows NT Workstation," said Yusuf Mehdi, director of Windows marketing. "With the new Windows NT Workstation License Advantage, we now have made it even easier and \[more\] cost-effective for customers to take advantage of the robust capabilities of Windows NT Workstation on all their desktops."

Reaction has been overwhelmingly positive: "We've been doing migrations for Microsoft Windows NT Workstation for our larger customers, and now this promotion makes it easier for our small and medium-sized customers to also move to Windows NT Workstation," said Eric Jones, regional vice president of Sentinel Technologies.

One unexpected beneficiary of the program is Windows NT Server, Terminal Server Edition. The biggest complaint about Terminal Server has been that all connecting users must also possess an NT Workstation 4.0 seat license. Through the new Windows NT Workstation License Advantage program, customers can purchase the necessary seat licenses today at the premium price and then cash them in for NT 5.0 Workstation licenses. Organizations might be able to defer the client-side costs this way.

Given the built-in upgrade to NT 5.0 and the fact that the Open License program is available to firms with as few as five desktops, this pricing incentive is likely to work well for Microsoft and its customers. For more information about this incentive, go to http://www.microsoft.com/enterprise/licensing/open/open_home.htm.


SAP Embroiled in Lawsuit
SAP AG enterprise resource planning (ERP) solution vendor is in hot water over its alleged failure to live up to its billing. According to representatives of the now defunct FoxMeyer pharmaceuticals company, SAP's flagship ERP solution, R/3, fails to perform as advertised. FoxMeyer says the $65 million R/3-based order processing solution it purchased from SAP was unable to keep pace with the high volume of sales, forcing FoxMeyer into bankruptcy.

FoxMeyer introduced the SAP solution as a replacement for a system on an aging Unisys mainframe. However, company officials say that when they tried to switch to the new system, the SAP solution was incapable of handling the estimated more than 400,000 orders that the company needed to process per night.

The new system was barely capable of processing 10,000 orders in the same time period. Allegedly, FoxMeyer is suing SAP, claiming that the company misrepresented the suitability of its solution for FoxMeyer's environment.

SAP officials deny that FoxMeyer's lawsuit has any validity. The company is quick to point out that FoxMeyer has filed similar suits against other companies, including Andersen Consulting and Deloitte & Touche.

FoxMeyer's suit against Andersen Consulting alleged that the consulting firm used trainees and not experienced professionals in implementing SAP R/3 software. The suit claims that flawed implementation of the software was a large factor in FoxMeyer's subsequent liquidation. A prepared statement from Andersen Consulting calls the claims "Outlandish and totally at odds with the facts."

Even if the suit is eventually thrown out, the legal actions that FoxMeyer has taken will serve as a distraction for SAP, one that SAP would just as soon do without. No matter the outcome, FoxMeyer's suit reinforces the need for vendors and systems integrators to be careful about overpromising with their mission-critical product suites.

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