Battle for the Desktop

By Brenton R. Schlender
The Wall Street Journal

March 31, 1989

With characteristic aplomb, Steven P. Jobs has fired the first shot in a long-anticipated assault on the personal-computer industry by makers of a new breed of desktop computers.

Mr. Jobs's new company, Next Inc., announced yesterday that Businessland Inc., the premier seller of personal computers to corporate America, will sell Next's sleek, black work stations. Starting in June, the $10,000 machines, which offer superior computing power, imaginative graphics and a hardy operating system that can juggle several tasks at once, will compete for desktops now occupied by less versatile machines from International Business Machines Corp. and Apple Computer Inc., the PC pioneer that Mr. Jobs helped found.

But Next's volley is only the beginning. In two weeks, Sun Microsystems Inc., the leading maker of technical work stations, will unveil several new desktop computers that, like the Next computer, will bring dimensions of computing formerly restricted to laboratories and engineers' cubicles into the business world at prices comparable to those of the fanciest PCs. The unifying characteristic of both companies' new machines is their operating system: American Telephone & Telegraph Inc.'s Unix, a 20-year-old master-control program that until now has mainly called the signals for scientific and technical computers that work in complex networks.

"We think there's room for another major platform in the mainstream of personal computing," says Mr. Jobs, who initially pitched the Next machine just as a work station for higher education. "We're not talking about the mainstream of what I call raw Unix machines, either. This is a Unix machine for mere mortals."

Both companies' machines will give users big, crisp screens that can show, say, a full page of text, plus a financial spreadsheet, a clock, calendar and electronic mailbox that displays messages when they arrive, all working simultaneously. Existing PCs, even loaded down with extra features that boost their prices well over $10,000, can't easily do that.

Their marketing goals and machines are similar, but Next and Sun are hardly allies. In fact, they are already sniping at each other like hot competitors as they jockey to wrest part of the $30 billion-a-year PC business away from Apple, which can lay claim to having made PCs so personal, and from IBM and Microsoft Corp., whose next-generation operating system, called OS/2, is designed to give PCs many features available on Unix.

"Next is just a sideshow," contends William Joy, vice president for research and development at Sun, who calls the Next machine a "curio." While Mr. Joy allows that "at least Steve is on the right side" in the battle of the PC operating systems, "he alone isn't going to stop OS/2 or save the world from having all the innovation directed by Microsoft and IBM."

The one thing Sun and Next can agree on is that the PC industry is vulnerable. IBM and Microsoft have started selling OS/2, but not many PC users have opted for it yet, mainly because it is cumbersome and there isn't much software that can exploit its new features. And the two companies think Apple has wrung just about as much performance as it can easily get out of the aging Macintosh design.

For Unix PCs to capitalize on that opportunity, however, requires more than hotter technology. After all, technical Unix work stations have offered fancy graphics and the ability to run several programs at once for a couple of years. Instead, any inroads will depend on the rapid development of software, and on skillful marketing and distribution. Sun's and Next's approaches to these issues are as different as night and day.

The biggest problem -- one shared by IBM and Microsoft's OS/2 -- is rounding up useful general-purpose business software, such as spreadsheets, word processors and page-layout programs. And although the Next and Sun machines share a common Unix base, they are fundamentally different from a programmer's viewpoint.

What distinguishes the Next machine, and what Mr. Jobs hopes will lure software developers, is its unique and powerful user interface, which presents nearly three-dimensional images on the screen that can be manipulated to control various programs. Called NextStep, the interface also streamlines software development by giving programmers prefabricated blocks of software to create frequently used images and routine data-processing functions.

"It definitely helps a lot, but then anything is easier to develop for than OS/2," says Mitch Kapor, a co-founder of Lotus Development Corp. who now runs a Macintosh software company, On Technology. "But I wouldn't call it a definitive advantage, because this is such a new machine."

Others are more enthusiastic. "We're excited by the possibilities of shortening the development time," says Paul Brainerd, founder and head of Aldus Corp., the leading maker of page-layout programs for PCs and one of a handful of developers already working on Next programs.

Indeed, NextStep is so compelling that even IBM has licensed it for use on future work stations. That's another reason companies like Lotus, Aldus and Ashton-Tate Co., among others, have signed on with Next. There is, however, one glaring absentee: Microsoft, whose chairman and founder, Bill Gates, is a keen rival of Mr. Jobs. In all, however, Mr. Jobs hopes that by the end of the year, 100 companies will be working on Next programs.

Sun, on the other hand, is trying to take advantage of its roots in the Unix world, and has convinced makers of nearly 500 Unix programs to translate their products for use in its new Unix PCs. While some big-name software companies, such as Lotus and WordPerfect Corp., are among the developers, many are specialized programs for narrow, technical markets.

"I haven't ever even heard of most of the companies that are developing for Sun," says Mr. Jobs. "To win in the broader business market, you have to have the big names."

Many software companies won't even consider developing programs for machines that don't have the prospect of selling at least 250,000 units a year. So far, no single Sun model has sold more than 100,000 in a year, analysts say. But Next also represents a risk: Since shipments began in late December, the company has shipped only 1,000 machines.

But that's where distribution comes in. And again, Next and Sun are taking much different strategies. Next has chosen to lock itself into an exclusive distribution agreement with a single, high-profile personal-computer retailer. Businessland, eager to establish a line of business work stations to top off its PC offerings, committed to take $100 million of Next computers in the first year of the agreement.

"For Businessland, it's like being able to put a Maserati on the showroom floor," says Dan Bricklin, one of the inventors of Visicalc, the first financial spreadsheet for PCs. In return, Next gets a direct-sales force and a ready-made technical support staff to service its new customers.

Enzo Torresi, a Businessland director, adds: "What this means is that Next is now more than a niche player."

Not aligning with Businessland doesn't seem to faze Sun. "We didn't lose a competition, and Steve didn't win," Mr. Joy says. "The channel issues are more complicated than just who sells through Businessland. We have our own direct-sales force, value-added resellers selling to specific types of customers, and {we} are beginning to sell" in certain retail stores.

Besides, Sun, having its roots in the technical work-station business, wants to edge carefully into the more competitive PC field. Sun also has a reputation for selling products that need lots of support, something only dedicated resellers are able to provide. Stewart Alsop, publisher of PC Letter, for example, has had a Sun technician spend more than 30 hours fine-tuning a Sun 386i work station just so it could receive electronic mail. "Most PC users wouldn't stand for that," he says. Mr. Joy contends that Sun is correcting those problems.

Next and Sun diverge in other aspects of marketing. Next offers a single computer, while Sun sells a line costing from about $7,000 to over $100,000. Doug Michels, vice president and co-founder of Santa Cruz Operation, which sells Unix operating-system software for small-business systems, adds: "A single box offered at $10,000 a shot is fine for programmers or executives or engineers, but what does he put on the desk of a data-entry clerk?"

Meanwhile, PC makers aren't standing still. New programs tapping the power of OS/2 will begin hitting the stores about the time the Next computer shows up in Businessland, and Apple is hard at work revamping its Macintosh software so it can handle several tasks at once.

All the while, other Unix computer makers are locked in a confusing debate over how to standardize the operating system, to make it easier for software developers to write programs that will run on any company's machines. "That's a mess I'm glad to stay out of," says Mr. Torresi, the Businessland director.

Even Unix dealers say the Unix industry's fractious nature could be its Achilles' heel in attempts to break into the mainstream PC market. "I sell a lot of Unix equipment, but with all this turmoil, I'm not a Unix aficionado by any means," says Harvey Schlesinger, a computer dealer in Norwood, Mass. "In fact, Unix carries so much baggage with it that my advice to customers is to avoid it if they can."

--- The Switch to Unix

MS/DOS, used in most IBM and compatible personal computers, now holds a commanding lead over other operating systems in market share, with Apple's Macintosh a distant second. OS/2, the new, high-performance operating system for more advanced IBM PCs, and Unix, the operating system chiefly used in technical work stations, now have negligible shares. But by 1993, according to estimates from Sanford C. Bernstein & Co., Unix with be the clear leader.

         1988 1993 
MS/DOS    81%  17% 
Macintosh  9%   9% 
Unix       5%  45% 
Other      4%   4% 
OS/2       1%  25% 

Source: Sanford C. Bernstein & Co.

Copyright (c) 1989, Dow Jones & Co., Inc.