Apple Reference & Presen…rary 8 (Internal Edition)/Apple R&P Lib Internal v8.0.iso/3-Presentations/Apple Computer Inc./Industry Competition/ROMs/Software/Windows Role to Grow

Text File | 1990-06-24 | 10KB | 217 lines

Sub:    Windows role to grow (4 pgs.)

Confidential / Need to know
From:  Dave Garr, Competitive Analysis


WINDOWS ROLE TO GROW


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SUMMARY

An article appearing in the Wall Street Journal on January 28 stated that
Microsoft would be stopping its OS/2 development and marketing, and that the
next generation operating system from Microsoft (referred to as "NT") would be
built around Windows.  However, in response to that article, Microsoft issued a
press release stating that it "denied that it was dropping plans to market
future products under the OS/2 name."  Microsoft's rhetoric nonwithstanding, we
continue to believe what we published last year:  that Microsoft's future
development and marketing will be focused on Windows, and not on OS/2.

On January 29, Microsoft will issue statements regarding its future operating
system directions.  Even if Microsoft claims that it is fully committed to
OS/2, we believe that Microsoft's long term direction is toward Windows and
away from OS/2.  When we have more information, we will do further analysis.

The implications continue to be as follows:

• Microsoft will develop and market Windows more aggressively.
• Windows' increasing success and long term direction should further delay if
not kill OS/2’s adoption on the desktop.

Apple's Marketing Message:

Apple should emphasize the following points:

• Microsoft's emphasis on Windows creates more customer confusion, since it is
unclear which operating system will become the next standard--Windows or OS/2.
While the operating system growth path in the PC world is very confused and
difficult, the Macintosh operating system growth path is clear.
• System 7.0, the next generation Macintosh operating system, will be available
years before Microsoft's next generation operating system (NT).


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WHAT HAPPENED?

Wall Street Journal article

The Wall Street Journal claimed that Microsoft was dropping OS/2.  In its
place, Microsoft would develop an operating system based on Windows which would
run on various hardware architectures.  This new operating system is known
within Microsoft as "NT Win 32."  "NT" for New Technology, "32" since it takes
advantage of the 32-bit flat-memory model of 386, 486 and RISC chips.
Previously, Microsoft had claimed that its next generation operating system
would be OS/2 3.0, a version of OS/2 that would be portable to various hardware
architectures.

In summary, the Journal article claimed that Microsoft was walking away from
OS/2, and instead developing and marketing its future operating system as an
advanced version of Windows.

Microsoft Press Release

Microsoft immediately issued a press release denying the Wall Street Journal
article.  The press release stated the following:

"Microsoft and IBM are continuing the joint development of OS/2...'The
operating system market has multiple segments with varied requirements,' said
Bill Gates, CEO at Microsoft.  'For customers needing high-end capabilities,
deploying OS/2 applications or pursuing IBM's SAA direction, we market and
support OS/2.  We will continue to enhance it in the future and enable it to
run Windows applications.'"


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WHAT DOES IT MEAN?

Microsoft will hold a seminar on January 29 where it will outline its plans for
OS/2 and Windows.  In the meantime, here’s our current thinking about what
these articles mean to Microsoft, IBM, developers, and Apple.  We are linking
this to you today so that you can be prepared to discuss this with the outside
world tomorrow.

In our opinion, virtually nothing has changed from what we wrote last year
(after IBM and Microsoft announced their realignment of OS/2 responsibilities).
We still believe that Microsoft is focused almost exclusively on Windows, and
that despite IBM's best efforts, OS/2's popularity will continue to wane.


IMPORTANCE TO MICROSOFT:

NT WIN 32 IS TOP PRIORITY.  Microsoft is working on an advanced operating
system that is known internally as "NT" or "Win32" or "NT Win 32."  It will
have many of OS/2's advanced capabilities, such as preemptive multitasking with
protection, multithreading, named pipes, and improved graphics support.  Not
only will it have the Windows 3.0 look and feel, but it will run current
Windows applications in native mode.  It is written in C++, and it will be
ported to various hardware architectures.  Besides running on Intel-based
machines (and perhaps the 68000), we think that NT will likely be ported to the
following RISC platforms:  Intel i860/960, IBM's POWER processor (used in the
RS/6000), SPARC, and MIPS.

We guess that NT will go to beta in the second half of this year, and will be
released to customers in late '92 or early '93.

MICROSOFT HAS MORE FREEDOM TO DEVELOP AND MARKET WINDOWS.  The more detached
Microsoft is from OS/2, the more robust operating system features it can add to
NT without worrying about it encroaching on OS/2 features.  Also, Microsoft now
has more freedom in how aggressively it can promote Windows.

MICROSOFT AND IBM ARE COMPETING MORE THAN EVER.  Microsoft is betting that it
can develop and sell an advanced operating environment with the Windows GUI
before IBM can make OS/2 succeed.  We suspect that Microsoft is right, and that
only true blue corporations will commit to OS/2.  However, in the process
Microsoft and Windows 3.0 might suffer in large corporations if IBM begins to
actively market against Windows.


IMPORTANCE TO IBM:

OS/2 IS NEARLY DEAD.  IBM’s OS/2 goals are to release version 2.0 (written for
80386-based machines), encourage software developers to not abandon OS/2, and
thereby increase OS/2's sales.  We believe that it will be difficult for IBM to
make OS/2 popular anywhere but on the server.

PATRIOT PARTNERS MAY PLAY AN IMPORTANT ROLE.  Patriot Partners (the company
formed by IBM and Metaphor) is creating a combination graphical user interface
and an object-oriented development environment.  This environment will
eventually allow developers to recompile an application for various
architectures.  Assuming that Microsoft tells developers to write programs for
Windows since Windows will be on multiple architectures, IBM might respond by
telling developers to write for the Patriot Partners' environment and
recompile.


IMPORTANCE TO SOFTWARE DEVELOPERS:

OS/2 DEVELOPERS ARE HOSED.  OS/2 developers must be frustrated.  They've
invested a lot of resources developing for an environment that (we believe)
will not succeed.  Therefore, companies like Lotus and WordPerfect probably
feel generally abused right now.  This could make them more receptive to
evangelism from Apple.

DEVELOPMENT FOR WINDOWS WILL INCREASE.  The pitch that we believe Microsoft
will make to developers--that their Windows applications will eventually be
able to run on multiple architectures--should be successful.  Although we
believe that developers will actually have to rewrite part of their code to
reap the promise of the 32-bit release, we do think the strong commitment that
developers have made to Windows 3.0 will only get stronger.


IMPORTANCE TO PC COMPATIBLE MANUFACTURERS:

IBM MIGHT MANIPULATE OS/2 TO ITS ADVANTAGE.  In the past, Microsoft and IBM
codeveloped OS/2.  When a version was finished, IBM could immediately sell it
to its customers, while Microsoft would begin to tailor it for PC compatible
vendors' hardware.  Most PC compatible vendors have not been shipping OS/2 for
their machines until six months or more after IBM's version has been available
for its machines.  If Microsoft lessens their commitment to OS/2, PC compatible
companies may have even more trouble getting new versions of OS/2 promptly.
Therefore, we think it is unlikely that the PC compatible vendors will heavily
promote OS/2.  Instead, they will probably increase their commitment to
Windows.


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MARKETING IMPLICATIONS TO APPLE:

In light of the fact that Microsoft will issue statements tomorrow regarding
its future operating system directions, we think that Apple's message to the
outside world should be about the confusion in the PC market and System 7.0
becoming available years before Microsoft's NT.

MORE CONFUSION IN THE PC MARKET.  We think that Microsoft's emphasis on Windows
makes it increasingly clear that Windows is competing against OS/2 more than
ever.  Apple's message to the outside world should be that the growth path in
the PC world is very confused and difficult.  The fact that the Macintosh
operating system runs on the complete Macintosh product line and that Macintosh
provides an excellent software migration path could be used to sway frustrated
customers and developers into looking at Macintosh systems.

Along these lines, Apple should remind people of Microsoft's previous lofty
statements about the future of OS/2.  For example, at Fall/COMDEX 1989,
Microsoft stated that OS/2 and the Presentation Manager were the "platform for
the '90s."  How can customers be sure that Microsoft won't change its mind
again?

SYSTEM 7.0 AVAILABLE YEARS BEFORE NT.  Apple could compare System 7.0 with NT,
and thereby show that the Macintosh will have an advanced operating system
years before Microsoft.

DIRECTION NEEDED FOR FUTURE APPLE SYSTEM SOFTWARE.  We suspect that Microsoft
may begin implying that NT leapfrogs System 7.0 technologically.  Apple should
be ready to discuss its future system software plans and how they are better
than Microsoft's.  More important, Apple should not let the press and analysts
focus on system software as the only important part of a personal computer.
Hardware, networking, and peripherals all play a role in the functionality of a
system, and Apple is an innovator in those areas as well.


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TECHNICAL IMPLICATIONS TO APPLE:

FASTER INNOVATION FROM MICROSOFT.  As Microsoft is more free to develop and
market Windows, we expect that Windows' innovation will become speedier.  Apple
will be challenged to innovate faster than it has in the past.



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We welcome your feedback.  Please link us at COMPETITION.