NetNews Usenet Archive 1992 #31/NN_1992_31.iso/spool/comp/sys/ibm/pc/misc/16197

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Subject: Microsoft, Intel - Prepare technologies to move beyond PC conquests.
Date: Tue, 29 Dec 92 07:13:32 PST
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    [The Wall Street Journal, 21-Dec-92, p. A1]

   While IBM searches for its role in a changed computing universe, these
 aggressive successors are preparing to introduce new technologies that are
 likely to set the industry pace for years to come.  Intel early next year will
 ship a new microprocessor, called the Pentium chip, that can run typical
 programs twice as fast as Intel chips currently on the market.  At about the
 same time, Microsoft, plans to introduce a new operating system, called
 Windows NT, that builds on the runaway success of its current Windows program.
 Each technology is expected to consolidate its developer's hegemony in the
 personal computer market.  And the new products, together or separately, will
 give Intel, Microsoft and the companies that build computers around these
 technologies powerful new weapons to extend their dominance in the
 high-technology marketplace.  "The economic energy that Microsoft and Intel
 have going is just tremendous," says Scott Robertson, a senior systems
 specialist at DuPont Co.  "Like a collapsing star, they continue to suck more
 and more dollars into their areas."  By now, IBM and other computer makers
 have become, in essence, "just channels of distribution for Intel and
 Microsoft" in the PC market, says Casey Powell, president of Sequent Computer
 Systems Inc.  Intel and Microsoft are hoping to repeat this pattern in every
 other sector of the computer market.  Windows NT  will offer everything in the
 widely used Windows operating system and add a multitude of other features,
 such as the ability to run many programs simultaneously, to safeguard against
 unauthorized use, to use huge amounts of memory and to run on multiprocessing
 systems that link many chips together.  Intel's Pentium chip is its first
 64-bit processor.  It contains over three million transistors, compared to the
 486's 1.2 million.  Besides offering great speed, the chip contains circuits
 to help computer makers build it into the multiprocessor machines that are
 increasingly popular.  The trends unleashed by Intel and Microsoft could
 stand at least one popular theory ion its head.  It has often been suggested
 that workstations would become ever cheaper and begin to erode the market
 share of PCs.  But with Pentium and Windows NT, increasingly powerful PCs are
 likely instead to eat into markets traditionally served by workstations.  PC
 makers such as Compaq hope to compete with entrenched leaders in workstations,
 such as Sun Microsystems and Hewlett-Packard, and with makers of
 minicomputers, like Digital Equipment.  At the other end of the computing
 spectrum, makers of mainframes hope to use groups of the Intel chips linked
 together to challenge the custom-designed machines sold by IBM, Amdahl and
 others.  Windows NT, for its part, will threaten the hold that Unix has in
 workstations as well as Novell's dominance in networking software.
 Competitors of Intel and Microsoft are preparing their counterattacks.  The
 leading potential rival is IBM and Apple Computer's joint venture to create
 new chips and software for desktop computers.  And HP, Sun, Digital and others
 are churning out a steady stream of new chips and workstations.  Intel and
 Microsoft also could be tripped up by delays in design or manufacturing, which
 are critical in the computer business.  And both companies are operating under
 the cloud of possible antitrust rulings.  Intel president and chief executive
 Andrew Grow says the company will price the Pentium chip "more aggressively"
 than past new chips.  Some analysts expect the first Pentiums to sell for as
 little as $650, a third less than Intel's first 486 chip and under half what
 Digital and others charge for leading-edge chips.  Prices of Pentium-based
 desktop computers, which corporate buyers say will be about $5,000 next year,
 are expected to fall to as little as $2,000 within three years as Intel lowers
 its prices further and PC makers trade price-slashing salvos.  NCR, a unit of
 AT&T, plans to exploit the same economies of scale by designing the Pentium
 into mainframes that it says will cost an average of $5,000 per unit of
 computing power, compared with $30,000 to $50,000 per unit that its current
 mainframe line costs.  Moreover, the new chips and software offered by Intel
 and Microsoft are compatible with tens of thousands of different programs that
 run on and estimated 100 million PCs around the world.  Another powerful sales
 pitch by Intel and Microsoft is so-called scalability, the ability to build
 the same chip or software into anything from a small palm-top PC to a big
 multimillion-dollar mainframe.  Networking of desktops has become something of
 a mantra for corporate computer managers, who are installing webs of smaller
 machines to move some existing tasks off mainframes and minicomputers and to
 handle newly computerized tasks that once would have required the purchase of
 new "big iron."  Intel's new processor and Microsoft's new operating system
 are likely to accelerate the trend, further threatening the old-line businesses
 of Digital and IBM. An important attribute of these products is that they are
 usable on both sides of a typical computer network - in the "clients," which
 are PCs or workstations, and in the "servers," the more powerful machines that
 do computing tasks for multiple clients.  "If you can have an operating system
 that supports the client as well as the server, that's very powerful," says
 James Hansel, VP at UBS Asset Management (New York).  UBS expects
 Pentium-based machines next year to make up all its new purchases of the
 desktop workstations that it uses to evaluate bond portfolios.  The financial
 industry often does such tasks on RISC-based workstations from such companies
 as Sun and HP.  But the Pentium chip's features - including high-speed
 circuitry that helps in certain technical calculations - match many of those
 that make RISC chips attractive, and Pentium machines will run the Windows
 software that UBS already uses, says Mr. Hansel.  The encroachment won't stop
 at the desktop, if PC makers have their way.  Smarting from a profit-busting
 price war, they see Pentium and Windows NT as ticket to the market for bigger
 machines that makers of low-priced PC clones can't build.  Compaq and PC maker
 AST Research have designed machines that combine up to four Pentium
 processors.  With the Pentium, PC makers can "head-on address the traditional
 mini and mainframe marketplace," says Gary Stimack, general manager of
 Compaq's systems division.  Many computer buyers agree.  Baxter Healthcare,
 for instance, is considering moving to a "just-in-time" order-delivery system
 called ValueLink that would restock a hospital's supplies in small lots in
 less than four hours instead of by truckloads as seldom as once a week.  To do
 that, Baxter would move much of its order-processing software off its IBM
 mainframes and onto a network of smaller machines installed in 20 of its
 warehouses.  After considering machines from Digital and IBM, Baxter computer
 specialist David Koptik says he is recommending Intel-based machines from
 Compaq running Windows NT software.  The Intel-based machines, which would
 eventually include Pentium-based computers, could be installed for as little
 as two-thirds the cost of an IBM or Digital system and would benefit from an
 abundant after-market of optional components, he says.  And Mr. Koptik expects
 software running on Windows NT to cost as little as a tenth the price of
 similar programs for the IBM and Digital machines.  Kmart Corp., likewise, is
 leaning toward Pentium machines to replace the IBM minicomputers at its 2,350
 stores that process tasks such as accounting and shipping.  Its likely choice:
 multiprocessor Pentium machines from Unisys.  Unisys has designed a line of
 machines that combine up to five Pentium processors and plans to sell another
 line, built by Sequent, that chains together up to 30 Pentium chips.  Sequent
 also plans to offer Windows NT with its own multiprocessor machines.  NCR
 plans to base all its computers - from palm-top PCs to mainframes - on Intel
 chips.  It expects to sell next year a mainframe-class computer using 256
 Pentium processors and is designing a massively parallel mainframe using
 thousands of Pentium chips.  If anyone can mount a counterattack in the PC
 market, it will be the IBM/Apple joint venture, which is designing a new RISC
 chip called the PowerPC and a new operating system.  Still, the joint venture
 is a year or two behind Intel and Microsoft, and RISC machines that outperform
 Pentium ones are likely to be substantially more expensive.  Intel and
 Microsoft's biggest barrier isn't cost, but the entrenchment of its rivals in
 corporate computing.  A Potlach Corp. computer director, for example, says the
 company is happy with its Sun machines and has no reason to switch to
 Pentium-based computers.  At Aetna Life & Casualty Corp., "We have a very
 large installed base of Novell servers and have been very successful with
 them," says the insurer's chief technology officer, Lyle Anderson.  "Why
 change?  Novell is a proven commodity and NT isn't."  Top break the ice, Intel
 and Microsoft are borrowing a stratagem from rivals such as IBM: direct
 proselytizing.  Not happy to merely ship their products to distributors or
 computer makers and let them worry about selling, both companies have begun
 taking their pitch directly to computer managers of big companies they must
 convert.  Intel has assembled a team of 100 "architecture managers," marketing
 officials who aren't allowed to sell anything, but whose job is to visit
 corporations and convince them that Intel computers can fulfill almost any
 need, not just on the desktop.  Microsoft has set up "evangelist teams" to woo
 computer users in fields such as finance, government and health care.  But
 some customers don't need convincing.  Dell Computer Corp. has already asked
 for an increased consignment of the chips because of strong demand from
 potential buyers of its PCs, says senior VP Glenn Henry.  The Pentium, he
 says, "will sell itself."