For companies entering the client/server marketplace, price has been one of the AS/400's most significant hurdles. But International Data Corporation (IDC)'s white paper entitled Server Life Cycle Ownership Costs: Support Costs' Relationship to Operating Environment Integration compares Windows NT, HP-UX, and OS/400 and finds that the AS/400 was 6 to 9 percent less expensive to support over a three-year period. This report -available at http://www.as400.ibm.com-should create some racket in the server wars, because the pervasive myth has always been that the AS/400 was an expensive server solution. Not so, says IDC, pointing to its Life Cycle Costs statistics as proof.

IDC surveyed nearly 250 commercial sites that have more than $500 million (U.S.) in company revenues and approximately 1,000 users. They modeled "real-world" computing costs in hardware, software, operations staff, and applications development staff. The three server environments were HP 9000 RISC running HP-UX, Intel-based hardware running Microsoft Windows NT Server, and IBM AS/400 RISC with OS/400. For cost calculations, all clients were PCs running Windows 95, even though the survey data indicated that roughly 12 percent and 16 percent of the HP and AS/400 sites contained terminals.

Though the AS/400's hardware cost per user is roughly 17 percent higher than an Intel-NT server ($1,300 versus $1,100 per user), the cost per user for server software was nearly identical ($373 for OS/400 versus $359 for Windows NT Server). However, hardware and software costs represented only about 20 percent of the total dollars that a company can look forward to spending over a three-year period. The real cost of client/server technology is hidden in the support and application development salaries of personnel hired to make the platforms successful. Combined, these two costs range from 76 to 81 percent of the total cost a company will spend. From this perspective, IBM AS/400 sites spend about $600 dollars less per user than similar NT sites. This figure includes all areas of IT planning, management, purchasing, and installation. Only in the area of office application development (where NT sites relied on the purchase of Microsoft's Back Office products for integration) did the AS/400 lose ground to NT. So what's the bottom line in cost-effectiveness? When IDC retallied all the costs over a five-year

server life cycle, it found that AS/400 server sites cost $500 dollars less per user than similarly configured NT server sites.

What the IDC report does not discuss is why AS/400 client/server development is still so expensive, and this becomes increasingly important to AS/400 shops as they start to examine IBM's push of the AS/400 as an e-commerce server. For the AS/400 to reduce software development costs, it must increase the number of client/server applications available and make them more cost-effective. Key to that strategy has been IBM's reliance on Sun Microsystems' Java Technology.

IBM has been betting that the Java language will be the preferred application development language for the next generation of client/server software applications. Java is unique because it allows a software developer to write an application that will run on any Java-enabled computing platform. This in turn should widen the market for any Java product, enabling software developers to lower the price of their products. With this market dynamic in mind, IBM has invested millions of dollars to make the AS/400 Java compliant, and a preview version of the AS/400 Java Virtual Machine has been available for some time.

However, Microsoft has taken off in its own direction with Java and has been hauled into court by Sun Microsystems for breaking Sun's licensing agreement. Sun's lawsuit is aimed at forcing Microsoft to remove the Java trademark from its Internet Explorer 4.0 browser, because, according to Sun, the browser doesn't pass the standard Java compliance tests. Microsoft has countered that Java is not a standard at all, but merely a programming language, and it's clear that the Redmond giant intends to enhance the language in its own image. This, of course, places IBM's AS/400 software strategy in jeopardy, for if Microsoft controls Java technology by virtue of its superior market position, the AS/400 will always fall behind in implementing its server technology. Fewer client/server applications will be written for the Sun Microsystems Java Virtual Machine, and more will be written to Microsoft's popular NT server. Suddenly, the issue of whether Java is an international technology standard or merely another programming language has taken on vital importance to the AS/400 community.

Sun Microsystems began lobbying the International Organization for Standardization (ISO) last spring to make Java an international standard. For Sun, Microsoft's market dominance and the resulting implications mean a life or death struggle.

To understand how this industry drama has unfolded, it's important that you understand Microsoft's successful software development strategy called "Embrace and Extend." Using this strategy, Microsoft developers examine the functions of a software technology and implement its key elements so that a competitor's files and data streams can be processed-or "embraced"-by the Microsoft products. However, files and data streams created by Microsoft's own products are designed-or "extended"-so that their full functionality cannot be activated by the competitor's offerings, making these products superficially appear superior in the marketplace. What looks like an enhancement to the consumer, however, soon turns evolving software technologies into a quagmire of competing and conflicting standards, fragmenting the efforts of software developers. Ultimately, because of Microsoft's premier market position, competitors are driven out of business or forced to accede to Microsoft's control. For this reason, many software companies have called the Embrace and Extend strategy "Crush and Consume." And it seemed last year that Sun Microsystems' trademarked Java Virtual Machine technology was headed for exactly this

same fate-pulling IBM's AS/400 software strategy along with it-when it made a unique application to the ISO.

What was so unique about Sun's application? Sun Microsystems wanted the ISO to make Java an international standard, yet Sun wanted to retain control of the licensing and development of the technology as a profit-making organization. For the ISO, such an arrangement was unheard of. The organization is composed of members from each participating country who are empowered to keep standards open and free for the benefit of all participants. To make a corporation the sole arbiter of an ISO standard-deciding who was in compliance and who was not-struck many members as an obvious conflict of interest. And yet, Sun's case for a Java standard had many compelling elements: If Java was truly a cross-platform technology, someone obviously needed to act as the arbiter of disputes. Who better than Sun Microsystems? Microsoft? And if the ISO refused the petition, what would happen to Sun and Java in an industry that was being cannibalized by Microsoft's superior market presence?

Over the course of the summer, Sun was allowed three attempts to win approval by a simple majority of ISO membership. Sun failed twice, with European nations generally favoring, and
U.S. representatives opposed. Finally, on the final vote, on November 20, 1997-following Sun's lawsuit and the Department of Justice's antitrust action against Microsoft-the ISO officially made Java an international standard under the licensing control of Sun Microsystems. To industry observers, this was indeed the most significant industry event of the year. Sun Microsystems' daring end-run into the protecting arms of the ISO has been seen by many in the industry as a brilliant strategy that may have blunted the teeth of Microsoft. Microsoft now can't extend Java without Sun's compliance, and this in turn will enable Sun's licensees-including the AS/400 team at IBM-to continue developing a true cross-platform computing technology. In fact, it's perhaps the first time that Microsoft's Extend and Embrace software development strategy has been thwarted and outwitted.

For the AS/400 community, which is used to watching the larger events of the computing community from a rather isolated platform, the survival of Java and the fortunes of Sun Microsystems have been viewed with a certain disdain. After all, when will the real benefits of Java really start to be seen on the AS/400? The answer to that question seems to be "now."

In an apparent act of faith, IBM's Lotus Development group began releasing its first suite of Java office applications the week before the ISO's final vote. Called eSuite, the applications are 100 percent Java-compliant (pure) and provide a combination of traditional office applications that run on any Java-compliant platform. The suite includes a word processing applet, an address book, a spreadsheet module, a graphics presentation module, and a terminal emulator, all to be served by any Hypertext Transfer Protocol (HTTP) Web server, including the AS/400's own free HTTP server. From the server, the desktop user loads a browser-like program called the eSuite WorkPlace to coordinate and manipulate the various Java applets. The initial marketing of eSuite is aimed at the Network Station-IBM's Internet-ready desktop terminal that operates without the traditional PC operating system. However, initial reports indicate that eSuite applets can run inside of any Web browser, enabling the centralized distribution of office software from the server.

Of course, having Java applets accessible from the AS/400 raises all sorts of questions about security. Because IBM supports the Java-based net-centric model of computing to fill the hole in

application software, it has found a need to provide some comprehensive administrative support tools.

One of these key tools is the Network Station Manager, a product that IBM has been offering free with the purchase of its Network Station terminals. It's a software package that lets administrators construct user privileges on the server as well as manage all user applications from that server. This centrally controlled model of software support should cut the number of hours personnel spend in the field. IBM has announced that it has joined forces with other vendors to make this same level of software support available to other net-centric computers. First in the queue is Neoware Systems, Inc. and its NeoStation 200. To support the NeoStation, IBM will rename its software product Network Client Manager. This product will run on the AS/400, Windows NT Servers, and the RS6000, making it a standard tool comparable in function to Hewlett-Packard's OpenView. If the net-centric model holds and network stations proliferate to replace standard nonprogrammable green-screen terminals, we can expect to see more offerings of this kind of management tool in the future to handle the security issues posed by Lotus eSuite applets and other Java applications.

In conjunction with the need for larger, faster network computers to handle Lotus eSuite applications, IBM has also announced the new Network Station Series 1000. IBM says the new Network Station Series 1000 will come with a 200 MHz PowerPC 603e processor and 32 MB of memory in order to take advantage of Java programs. Previous IBM NC models could run smaller Java programs, but they had much less powerful processors. The PowerPC 603e processor is already used in Apple Macintosh desktop computers. Overall, the new Network Station is an example of how hardware differences between NCs and PCs are shrinking-both can require powerful processors at the client computer, and both will be available at the sub-$1,000 mark in the corporate market.

Of course, Lotus designed eSuite with its Domino HTTP server in mind, making it the first commercially available Java office suite that can run directly from the AS/400. The Domino server currently runs on the AS/400's Integrated PC Server (IPCS)-an Intel-based expansion card that fits into the card cage of the AS/400-and uses the AS/400's DASD as a storage facility. The AS/400 community has given Domino high marks as the email engine that brings OS/400 into the mainstream of high-availability electronic messaging. Indeed, recent industry figures show that Lotus Notes/Domino sites represent the largest market share (30 percent) of the groupware and workflow email servers across all heterogeneous computing platforms. Domino will run as a native application within OS/400 starting with V4R2-slated for release in February of 1998- allowing AS/400 users unprecedented access to the power of this workflow and email server.

However, many AS/400 sites are still trying to understand the role Domino will play on the AS/400. In fact, the entire concept of email workflow is still a foreign idea that seems to bear little or no relevance to their more traditional data processing needs. Worse still, many of these sites still conceive of email on the AS/400 in light of IBM's aging proprietary Office Vision/400 product. When the time comes to invest in email technology, these sites tend to shy away from Big Blue and head to the nearest store to purchase Microsoft NT Server and Microsoft Exchange Server. Once again, IBM's attempts to put the AS/400 on the map as a viable server technology seem to be running into resistance, this time from within its own ranks of satisfied users.

In fact, the number of installations using Microsoft's Exchange Server is rising rapidly, and

demand for Exchange Server is currently outpacing demand for Microsoft's NT Server itself. Microsoft's new Exchange Server release 5.5 will undoubtedly continue this trend, though the figures that Microsoft has released are misleading. Since its release two years ago, Exchange Server has rapidly gained share in the marketplace, now serving 27 percent of the total email seats in large corporations. This places Exchange neck and neck with Domino server. But the market momentum may be overstated if-as Bill Gates contends-Exchange Server is outselling NT. After all, Domino runs on multiple operating systems-everything from Novell to (soon) OS/400. By comparison, Exchange is limited to running as a part of Windows NT Server. The question is, how can Exchange be selling faster than the NT platform itself? The answer may be that NT administrators are finally adding Exchange to their NT servers or converting MS Mail Server sites. Or NT administrators may be dumping NT-based Domino and cc:Mail servers for the Microsoft product. In any event, these are dire implications for Domino/Notes aficionados, and it may be an indication that Exchange has finally garnered the support it needs to overwhelm the Lotus-based email platform.

So how is IBM's marketing and development strategy really working against Microsoft? If IBM's planned restructuring is any indication, not too well. IBM announced that-in light of its consolidation of the RS/6000 and the AS/400 sales teams-it will be doing away with its marketing geographic structure and combining sales and distribution between product and customer groups within IBM North America.

John Thompson, general manager of IBM North America, has called the current structure "too slow and difficult to do business with." How this new structure works for IBM's customers is still unclear. Nevertheless, this is a certain reflection that IBM's overall marketing strategy for the AS/400 isn't taking off as anticipated, even though the technology seems to be arriving close to schedule. This may be an indication that the industry is in turmoil about the future of the AS/400, or it may be the normal cyclical contraction of IBM's persona in the marketplace. Long- time IBM watchers have seen the cycle before: IBM contracts to focus on core "high-volume" business, while the market parses out the real players in the low end of the industry. That's precisely the area where Microsoft is poised to strike with SNA Server 3.0, allowing it to embrace the technology of IBM's traditional customers, while extending the functionality of applications to the Windows desktop clients.

Odd though it may seem, Bill Gates has managed to alienate even consumer advocate Ralph Nader. Nader held a two-day conference in November to discuss Microsoft's industry impact. According to Nader, Microsoft was invited to attend, but the company refused to participate so that it could downplay the conference as "one-sided."

The focus of the conference revolved around the fact that Microsoft's market dominance destroys the resilience of the software industry, strikes fear in the hearts of software developers, and corrupts the free-market system. But what seemed to be most on Nader's mind was Microsoft's larger agenda to control industries beyond the traditional software niche. In an interview with News.Com, Nader called Microsoft "uniquely ruthless" and said he believed the corporation is using its clout to create software dependencies in the banking and media services that would enable Microsoft to dominate and control large areas of the economy:

"They are allying themselves-whenever they can-with the larger, more concentrated companies in the industry they're entering into. They're not working with tiny banks; they're working with

big banks. First, to learn the business, to partner with them. Then, if they don't play ball, to push them away in one sector after another." Nader went on to say, "They will leave increasingly the lower margin, value-added industries to the rest of the industry. Why should they bother? This is a company that experiences a 90 percent growth margin, and it's interested in very high profit margins, so it's going to carve out the choke points. It's going to carve out where it can get the most return for the least amount of effort, just because it moved into a control position."

Paranoia? Perhaps! But what has become increasingly clear is that Microsoft's pristine image in the industry is rapidly deteriorating. At the time we're going to press, reports have just arrived that IBM is dismantling its development team for the desktop OS/2 system. The Personal Software Products division-IBM's Austin, Texas, group responsible for all aspects of OS/2-no longer exists, according to some IBM executives. IBM will continue to support Warp Server, but Workspace on Demand will be the preferred client. A new version of Warp Server is on target for delivery at the end of 1998, according to my source. However, most developers from the group are being absorbed into IBM's Java initiative.

OS/2 was the last real competitor of Windows 3.1 and 95 on the Intel desktop, and the death of this operating system may spur on the critics who are calling for antitrust action. Meanwhile, the Department of Justice's current legal action against Microsoft is about to be adjudicated. If the DOJ is allowed to move forward with its actions, Microsoft will be fined a million dollars a day until it pulls Internet Explorer from the shelves or alters its current marketing practices. But, realistically, in this multibillion-dollar industry-with growing connections into every sector of the economy-is $365 million a year enough to deter Microsoft's predatory appetite? Worse yet, what will happen to our companies' investments in technology if Microsoft wins? Most importantly, considering the recent disclosures of these marketing practices, how can our companies-with our dependencies on both the AS/400 and the Microsoft desktop-learn to chart the wisest course for our organization's information resources?

IBM seems to be delivering the technology we need, on a schedule that closely maps to its stated goals. Microsoft too is delivering the goods, but its future is starting to look extremely murky. How the company resolves its public and private image may ultimately have more importance than the quality of its products. The concern that must be arising in the minds of IS managers is the quality of their business relationships with the Redmond giant. Bill Gates may be pleased that every part of his house can be controlled by his PC. But will our companies allow him that same control over our own resources?

Thomas M. Stockwell is a technical editor for Midrange Computing. Email him comments and questions at stockwell@ midrangecomputing.com.

Thomas M. Stockwell is an independent IT analyst and writer. He is the former Editor in Chief of MC Press Online and Midrange Computing magazine and has over 20 years of experience as a programmer, systems engineer, IT director, industry analyst, author, speaker, consultant, and editor.  

 

Tom works from his home in the Napa Valley in California. He can be reached at ITincendiary.com.

 

 

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