From Computer Business Review’s special report – The NT Effect.
In front of 3,000 industry executives at the IDC conference in Paris, September 1996, Bill Gates is growing irritable as he fields questions about a classic Microsoft Corp product problem: the weakness of early versions of the company’s products. We’re a very patient company, he snaps back. Once we’ve identified a scenario that we want to pursue, we can afford the research and development to stick with it for at least a couple of decades. A couple of decades may seem far-fetched given the fast changing nature of the computer industry, but nothing illustrates that horizon planning better than the evolution of Microsoft’s flagship operating system, Windows
By Kenny MacIver
NT. If its birthday can be dated as 31 October 1988, the day when former Digital Equipment Corp chief software designer Dave Cutler arrived at Microsoft with the remit of building a portable 32-bit operating system, then the product is not far off the end of its first decade. And since mid-1996 when the operating system went into its fourth iteration, with version 4.0, and became a viable and powerful platform, NT has left its infancy behind and started to create the kind of impact on the information technology industry that Gates and Cutler clearly envisaged back in 1988. At this point, though, that impact is far from consistent across the whole industry. NT has still to make its mark at the high end of the server market and on the end user desktop, as many analysts predict it eventually will. But without doubt, the vanguard of NT has been in the workstation market – and its dramatic impact in that sector is providing lots of insight into how the operating system and its related products could conquer elsewhere. The sea change within the workstation area has been as rapid as it has been devastating to the Unix/RISC systems vendors that traditionally dominated the sector.
Outstripped Unix
According to researchers at IDC, during 1996 unit shipments of Intel Pentium-based NT workstations outstripped sales of Unix workstations for the first time. IDC says 831,000 NT workstations were sold, 38% more than in 1995. That compared with 721,000 Unix workstations shipped and an overall workstation market unit growth rate of 18%. In revenue terms, the picture was very different. Unix systems still accounted for three quarters of the $15.2bn workstation revenue pie, even as Unix revenues dropped 6% to $11.5bn. At the same time, NT workstation revenues rose 16% to $3.7bn. Windows NT is making inroads into selected Unix markets, such as financial services, animation and CAD, says Thomas Copeland, workstation research director at IDC. Others might add areas such as digital content creation and the use of NT as a software development platform. The reasons for such growth are quite plain. NT workstations can now offer much the same level of complex graphical computing power as some Unix systems that have traditionally cost twice the price. Inspiring that growth has been the confluence of three technologies. The first was the arrival of NT Workstation 4.0 mid-last year – previous versions of the product had lacked much of the functionality needed to handle technical applications. The second was the delivery of powerful versions of the Pentium Pro processor, especially the 166Mhz and 200Mhz chips running either standalone or in dual configurations. That put Pentium neck and neck with most RISC workstations in terms of processing power. Lastly, the take-off has been spurred by the availability of sophisticated 2D and 3D PC graphics cards. That opened the flood gates. The engineering programs that had been traditionally focused on Unix quickly started to appear on NT. At the same time, many of the major personal computer manufacturers have pounced on the opportunity to enter a new market. The compelling arguments that are winning over so many technical users to NT are becoming well documented. Above all is price. Here, the economics of the personal computer marketpla
ce apply: the use of commodity, high-volume hardware, plus the lower cost of the related software in that Wintel market, means that prices for systems come in at anything from half to two thirds lower than the equivalent Unix workstations – even with the heavy price cutting and further discounting that the success of NT has inspired in the Unix workstation market. But the volume formula of the Wintel world is not the only factor in the price delta. Unix users are used to the best of everything. In the Unix space, vendors never tend to cut corners – the products offer the best bandwidth, the best input/output systems, huge memory capacity, exceptional monitors and so on, says Andy Clark, product marketing manager at DEC UK. But he adds that most of that ‘no compromise’ technology has been proprietary and, as a result, has presented barriers to integration. As a Windows program, NT integrates well with other Microsoft desktop applications such as Word and Excel. In fact, a study of workstation cost of ownership at 113 installations by consultancy Deloitte & Touche found that 51% of Unix workstation users also had a personal computer on their desks simply to run office applications. NT is also championed for its ease of use, installation and maintenance. According Deloitte & Touche, the average cost of ownership for NT workstations running a technical application is $63,000 over three years. That is 39% cheaper than the $104,000 three-year cost of ownership of an equivalent Unix set-up. Some of that cost stems from the fragmented nature of Unix. The various flavors of Unix have been a constant source of irritation to developers and users. With Intel-based NT it is the same version everywhere.
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Cryptic environment
While Unix users are fond of the environment’s power and stability, some feel the environment is cryptic and over complicated. NT workstation users talk about ease-of use as the environment’s major strength, but still criticise its lack of peripheral drivers and software support. All these factors implies the rapid demise of Unix workstations, but the huge installed base – as well as the shortcomings that dog NT – suggests otherwise. The majority of the workstation revenue pie is still rooted in Unix. And many of the more sophisticated applications are well out of reach of NT workstations. Unix still controls the high-end where users are working with power-hungry applications. That has kept the picture of the traditional workstation market fairly stable. Copeland says; Traditional workstation vendors will continue to have a solid position in the mid-range of the technical markets during 1997, but will experience flat growth. In contrast he expects the NT workstation market to grow at a supercharged 45% in 1997. Such encroachment has had the effect of driving companies such as Sun Microsystems Inc and Silicon Graphics Inc ever higher up the workstation food chain and has also caused them to seek strength outside of the workstation area – even in the supercomputer market. What vendors agree on is that NT’s impact in the workstation area is only the product’s first wave of success. The next level is the application server level, says Manfred Wittler, head of worldwide sales at Intergraph Computer Systems Corp. On the corporate data server, it will be another three to five years until NT gets the breakthrough. Given the patience of Bill Gates the Trojan horse strategy that has already allowed the conquering of large parts of the workstation market will be extended up the corporate systems hierarchy.
