Bill Gates to MIS: Windows the answer

Bill Gates to MIS: Windows the answer

Application development from Microsoft features GUI on client, many packages

John Desmond
Software Magazine

September 1, 1991

Executives at Microsoft Corp. are convinced they offer a better way for MIS professionals to answer their growing software development backlog problems, and Microsoft is beginning an effort to convince those professionals.

The Microsoft solution centers on the role of the graphical user interface (GUI), and the use of standard packaged applications that exploit it. Windows 3.0 is the safe bet for the future, argues Microsoft, and today Bill Gates' firm has the number to make a very strong case.

In the first year of its availability, Microsoft says it shipped four million copies of Windows 3.0 and 50,000 developers' kits. Microsoft reports that more than 200,000 people will attend Windows-related conferences and trade shows in 1991. International Data Corp. (IDC), the Framingham, Mass.-based market research firm, has projected that Windows sales for the fiscal year ending next June will total 7.8 million units. To put it mildly, Windows is hot.

So what's the message for MIS? When Microsoft founder and Chairman Gates was invited to speak to a meeting of the IBM user group Guide in July 1990, he had a perfect opportunity to deliver a message tailored to the MIS professional audience. At the keynote address, Gates enthusiastically spoke about Windows 3.0. Is that the main message?

"I wouldn't say Windows 3.0 as a single product goes, but the overall Windows strategy is a key message. We see the GUI as allowing people to get a lot more organization value out of PCs," said Gates at an interview in his Redmond, Wash., office in June.

The Guide speech followed the May 1990 rollout of Windows. At that point, "The majority of MIS people knew what Windows was and were factoring it into their plans," Gates said.

The issue of how sensitive Microsoft is to the needs of MIS professionals grows more relevant the bigger Microsoft gets. As mainframe hardware sales have stabilizied, the percentage of corporate information system assets as represented in desktop software sold by Microsoft and other PC software suppliers has grown. To the extent an MIS department is responsible for its organization's entire information system, the standard software on the desktop hardware--especially the operating system--grows in importance.

Thus, Microsoft is finding its customer constituency growing well beyond the PC software buyer. Now, mid- and high-level MIS management wants to know what to expect in the future from Microsoft. Most importantly, these executives want to ensure that their investment in new software (not to mention the hardware to drive it) is protected well into the future.

Gates said, "It's our job to make large PC networks easy for the end user, easy for the network and database administrators, and easy for the MIS/DP-type developers, who in the past have built applications in Cobol and report generation languages. We have to think of each of those constituencies. There is a dramatic change.

"In this phase of computing, where the PC is so much in the center, the role of Microsoft in setting standards and providing tools is much broader than it used to be."

RIFT WITH IBM A DILEMMA

The fissure between Microsoft and IBM, which in late July was widened into a chasm, is causing a dilemma for some MIS managers who would prefer that either choice woult constitute a safe bet. However, it is far from clear who the guardians of MIS purchasing power will side with if forced to choose.

In its choice of Michael R. Hallman as president just over a year ago, Microsoft appeared to be sending message to MIS. Hallman, founder head of Boeing Computer Services and a 20-year veteran of IBM, brought MIS perspective to the young PC software firm.

Asked what thinking went into his choice of Hallman, Gates said, "The president of Microsoft is a business job. It mainly requires someone who is excited about our vision and who is a very good businessman. It was also very nice that with his IBM and BCS background, [Hallman] could help us work with a constituency that is increasingly important as PC technology and PC applications become so central to the information infrastructure of businesses."

To help Microsoft identify with the problems of customers in large organizations, Hallman said his background can be valuable. "Microsoft's role was simple a few years ago. We sold operating systems to OEMs who resold them to hardware-makers, and we sold applications to end users," Hallman said. "We didn't have much contact with the end user.

"The integration of PC technology into the overall information strategy is an enormous undertaking. It's easy to say Windows ought to become a standard in the company. The question is, How do I install on 5,000 PCs so that tomorrow the user can do what he did yesterday?

"So when you start thinking about the corporate customers, there is a need to be thought about and built into both the product and support structure."

ORGANIZATION RESPONSE

Hallman has been spending some time on these issues. "We are growing rapidly the number of direct sales, support and systems engineering resources to deal with a selected number of corporate accounts directly. I don't envision buildings an IBM- or Digital-sized sales force." Hallman said about 300 corporate accounts will be served by the field organization of systems engineers.

"We are bringing together all of the focal point to think exclusively about the corporate customer. We will continue to improve our ability to listen to and respond to the corporate customer," Hallman said.

Several months ago, Microsoft combined several separate divisions into Corporate Account Marketing. This group averages 70 customer visits per month today, according to Microsoft.

Microsoft moved Russell S. Werner, former general manager of MS-DOS and Windows 3.0 development, into the position of general manager, Corporate Accounting Marketing. "We're finding our customers want a more coherent interface with the organization," Werner said. "The mandate in my group is to package these things up. In the future, Microsoft will be more of a services company as well as a software products company."

For example, a "transition support" service is intended to help large organization enable the 70 million installed base of single MS-DOS applications for the GUI environment. "Now that Windows has shipped several million units, there is a large demand for that type of service," Werner said.

A year ago March, Microsoft hired Robert L. McDowell, a gray-haired (unusual for Microsoft) veteran of Ernst & Young, to engage in a sort of "corporate outreach" program. His title is vice president, Education and Consulting Services. To aid McDowell's consulting services effort, Microsoft plans to hired 60 people in the U.S. by the end of 1991, expanding to 120 in the U.S. by the end of 1992. In Europe, the plan is to have up to 60 people by the end of 1992, McDowell said. The intent is to run consulting services as a profitable business unit.

McDowell spent much of his early months talking to corporate customers about what they wanted. "There is a demand for help building customer applications on the client/server model. Companies are trying to build serious business applications on this model of computing. Corporations are taking this vision of computing seriously," he said.

Logically, Microsoft is in a position to exploit this demand for services. Finding the skilled people to deliver the services is not easy. "The demand exceeds the supply," McDowell said.

The four basic services of the consulting group are: planning, equivalent to downsizing planning; backlog prioritizing; design work; and implementation support. "Corporate accounts want a level of service from a strategic partner that is consistent," he said. The intent is not to hire an army of programmers, and compete with the Big 6 for systems integration work, he said. "But we will train programmers for the client companies," he said.

For all the enthusiams at Microsoft over the early success of Windows, McDowell offered some sobering perspectives. "We're still at the early stages of this. We have early adopters. There are questions about the impact on the MIS organization.

DESKTOP OS INSTALLED BASE

Installed Base

Windows 3.0 4.0M

MS-DOS 70.0M

Macintosh 5.0M

UNIX 1.8M

OS/2 .6M

SOURCE: SOFTWARE PUBLISHING ASSOC. AND IDC

We're still at a stage where there are costs that are undefined."

Microsoft showcases a few accounts, where presumably the company has focused a lot of attention. They include: Arco Oil & Gas, which built a refinery-monitoring system on Windows, SQL Server from Microsoft and NetWare from Novell, Inc., Provo, Utah; and Chevron Canada, which downsized a sales and marketing information system from a mainframe to PCs using LAN Manager, SQL Server, Windows and associated applications.

One corporate account not receiving as much attention from Microsoft is Equitable Real Estate Investment Management, Inc., headquartered in Atlanta. The firm recently made a commitment to roll out Windows 3.0 to 750 PCs in wide-area networks nationwide. The firm has found itself on its own when it comes to resolving technical difficulties.

"Microsoft here in Atlanta was not too concerned with us because we did not go with their word processor," said Pam Watson, director of end-user computing for Equitable. "They were trying to sell us Word for Windows and when we didn't pick that, they lost interest in us pretty quick."

Instead, Equitable chose the Ami word processing package when it was offered by Symantec, Cupertino, Calif. Since then, Symantec has been acquired by Lotus Development Corp., Cambridge, Mass.

Equitable began to widely install Windows 3.0 two months after the product shipped. The "unrecoverable application erro" message that Windows users have learned to recognize was a frequent problem. When this error occurs, the screen usually freezes or goes blank and the PC must be rebooted, causing whatever work is not saved to be lost. "It was a killer when we first got started," Watson said.

Since then, Equitable has hiked the memory of its 286-based PCs, and put later versions of the Novell drives in high memory, to try to free more main memory for Windows. "A lot of the banking and freezing was due to memory constraints, on either Windows or the Windows applications," she said. Windows 3.0A and Ami 1.2B helped resolve some problems.

As for Equitable's visibility with Microsoft, Watson said, "They don't know that we are a customer that's totally committed to Windows."

A source at IBM who did not wish to be quoted spoke on possible causes of the UAE problems. In Windows 3.0, applications share a common address space. Because they have addressability to each other's memory, they can corrupt each other's memory, intentionally or not. In a multi-tasking system, applications need to be protected from each other and the system needs to be protected from the applications.

To protect the system from applications, a supervisor is used. It validates parameters when they come from the less-trusted applications. The Windows API, according to the IBM source, lacks adequate parameter checking and validation.

And Windows, when it runs DOS applications, is more prone to crashing as a result of ill-behaved DOS applications than OS/2. This is due to different DOS compatibility implementations. IBM's version better exploits the protection features of the chip, the source said.

Microsoft is sensitive about the UAE and says progress is being made. According to a presentation that Steven Ballmer, Microsoft's senior vice president of systems software, gave to analysts in late July, the UAE errors are less than 2% of calls coming into support.

For Windows 3.1, Microsoft is promising improved usability and performance. In early August, 1,000 beta testers had the product, and expansion to several thousand was planned. The product is scheduled to ship by year-end.

Two corporate accounts that bought Microsoft applications reported satisfaction with the firm. "Their support in the past was a reason we've chosen some of their packages," specifically Word and Excel, said Skip Senneka, lead research analyst, information systems, with Honeywell Homes and Building, Inc., Golden Valley, Minn. The company has 3,000 PC's in the facilities, and runs Ethernet; Novell's NetWare; PC NFS from Sun Microsystems, Mountain View, Calif.; and 3Com from 3Com Crop., Santa Clara, Calif. Microsoft support comes from the Minneapolis office.

About 25 percent of the PCs are running Windows 3.0. "The biggest problem we have is the 286s out there that don't have the right configuration to run Windows adequately," Senneka said.

"The UAE problem has not been severe," but the firm is looking forward to version 3.1 of Windows. The firm evaluated OS/2, but Senneka noted a lot of "political opposition" to it, especially from those in the company with a Unix bias.

Commenting on Microsoft, Senneka said, "What differentiates them is that they have a strong vision of where they think computing should be going, and they are actively pushing that. That's been impressive."

Another satisfied customer is Robert Cohen, systems manager in the Renal Division of Baxter Healthcare Corp., Deerfield, Ill. "Microsoft is pushing a working relationship with Baxter. They have pursued strong incentives for Baxter to use their product, in terms of pricing strategy," Cohen said. Virtually all of the firm's 300 PCs run Windows. The firm started with Windows 2.0 several years ago. He said, "If you've gotten 2.x to work, 3.0 is easier."

At that time, "Microsoft had no training materials," so Cohen and a coworker wrote and taught a class. Microsoft's Chicago office took an interest. Most recently, Microsoft flew Cohen to Redmond to appear in an Excel 3.0 promotion video.

As a two-generation experienced Windows user, Cohen suggested that many Windows problems are a result of user inexperience. He suggested, "It helps to have someone very experienced technically. I have someone on staff that is a Windows nut. Microsoft has acknowledged the UAE and parameter passing problems, but we don't get blown out of the water very often," he said.

The only negative Cohen cited was that the documentation is not targeted to end users. "You must go to the secondary market for that," he said. Reminded that Microsoft is also in the book business, he said, "I'd rather they bundle the books with the documentation."

The competition between Windows and OS/2 for desktop operating systems market share is so far a lopsided affair. However, OS/2 2.0, now in beta test, is a true 32-bit operating system, while Windows 3.0 relies on the 16-bit MS-DOS operating system. The Windows New Technology (NT) future version of Windows will not require MS-DOS and will be 32-bit, Microsoft promises.

According to data from Software Publishing Association, Washington, D.C., and IDC, the OS/2 installed base is about 600,000, versus 4 million for Windows. However, the MS-DOS installed base is about 70 million. So while the game is still on, Microsoft sees itself as the winner.

"All software developers have as a number one priority to get to Windows. From our point of view, the market has voted," said Werner.

One committed software company is PeopleSoft of Walnut Creek, Calif. The company offers a packaged HRMS system built on a client/server model. "A year ago, we had active R&D on Presentation Manager and we shut it down," said Mike Kaiser, vice president, financial systems, for PeopleSoft. "The operating system is irrelevant to us, because we're working through Windows."

BATTLE OVER DESKTOP OS HEATING UP

IBM in late May fired a volley in an attempt to slow Microsoft's momentum, with the announcement that its OS/2 2.0 would support Windows applications. The 32-bit Version 2.0 potentially has more appeal to a corporate audience. IBM's window of opportunity is the difference between the Version 2.0 ship date, expected by year-end 1991, and Windows NT ship date, expected in 1992. IBM's 2.0 announcement was met with high interest in the software industry, and it appeared to put Microsoft on the defensive.

"We think IBM's announcement was a good move," said Lou Mazzucchelli, Jr., vice president and chief technology officer of Cadre Technologies, Inc., Providence, R.I. "It means you can have a true 32-bit operating system for $150. To the average systems manager, OS/2 looks pretty attractive. I think there will be a big fight for the MIS desktop operating system market."

James Andersen, president of Digitalk, Inc., Los Angeles, said, "IBM did a great job of selling the benefits of OS/2. And IBM does have an advantage in getting 32-bit OS/2 to market sooner than 32-bit Windows."

IBM then announced an alliance with Apple Computer, Cupertino, Calif., to form a new development venture called Patriot Partners. While the specific plans were not defined, industry observers have speculated that Patriot intends to produce a new desktop operating system.

Microsoft fired back in late July, with the announcement that it was changing the definition of Windows 3.0. Microsoft announced that it will ship its Windows NT product first, and only later add support for OS/2 and Presentation Manager. As of mid-August, IBM's next move is unclear. IBM could adopt the Windows NT kernel, essentially ceding that territory to Microsoft, or IBM could decide to battle it out with options including Patriot Partners, AIX, OS/2, or one or more of all of them.

Analysts at the Meta Group, Inc., Westport, Conn., stated in a mid-July "MetaFlash" that an IBM/Microsoft OS/2 3.0 is likely to be "stillborn" and that IBM is likely to develop future OS/2 versions.

Asked in early August if Microsoft's constantly changing plans worked against the planning efforts of large organizations, Hallman said, "We're committed to the whole marketplace, including the current OS/2 activities of the MIS constituency. Our long-term strategy has been consistently focused on Windows."

About the latest developments, he said, "We have not been able to reach consensus with IBM on OS/2 NT. We will provide a subsystem in NT to support OS/2 applications. It will be a migration path to Windows NT."

Asked if the change did not conflict with past statements from Microsoft expressing support for OS/2 3.0, Hallman said, "When we talked about OS/2 3.0 in the past, the timetable was not precise. We were going to release it in pieces."

He put the onus back on IBM. "IBM's operating system strategy is becoming less clear. It's very hard for us to commit to support the future of OS/2 beyond 3.0 until IBM is far more clear what their follow-on strategy is in light of the Apple agreement. Until IBM becomes more clear, it's impossible to commit support beyond a subsystem on NT."

Microsoft is skeptical of IBM's ability to support Windows applications in OS/2 2.0. As of early August, such support was not available in beta versions of 2.0. "Our experience is that beta testing is critical. With DOS 5.0, we had 7,000 beta testers over a period of nine months," Hallman said. "It's very difficult to develop the kind of operating system they're describing."

Microsoft's substantial investment in NT is evidenced by the hiring of David Cutler, the key architect of VMS for Digital Equipment Corp., to be the director of Windows NT.

This investment in an operating system that adds more network capability, greater portability, greater security and greater fault tolerance represents Microsofts move up the chain of operating systems.

"Our strategy is to design, test and build the operating systems with full networking capability," Gates said.

Hallman said, "Our task is to ensure that our products act as a universal client to the heterogeneous world that's out there, whether it be Unix servers, or access to mainframes or VAXes."

The evolution of Windows appears to put users of Microsoft's LAN Manager on unsure footing. Windows NT is expected to usurp many networking capabilities now offered as LAN Manager. In June, Microsoft executives referred to this as a "packaging" issue. Jonathan Lazarus, general manager of systems marketing for Microsoft, said, "We have not yet decided how LAN Manager will relate to NT. That's a packaging decision."

Gates said, "The next major release of LAN Manager is being designed and built as part of the NT kernel effort. The packaging will stay the way it's been at the server level. At the client level, we take some of the pieces you had to get separately, and build those in." LAN Manager for Windows NT is scheduled for release in 1992.

Gates acknowledges the strength of Novell in the server operating system market. "They are by far the number one player. We have to try harder. But we have the advantage of integrating networking into the desktop operating system that all the applications are written for," he said.

One software industry executive skeptical of LAN Man's chances is Max Watson, president and CEO of BMC Software, Inc., Sugar Land, Texas. "If Microsoft is going to continue to serve corporate America, they have to learn how to tie to the mainframe," he said. "They have not thought that through with LAN Manager." Version 2.1 for OS/2, the next major release of LAN Manager scheduled for 1991 delivery, is promising reporting to NetView, IBM's strategic mainframe network management package.

The LAN Manager and SQL Server customers will be protected, said Hallman. "We will migrate those people and we remain committed to LAN Manager on VMS, Unix and the NT manifestation," he said.

The tendency of Microsoft to change strategy at a moment's notice in response to developments in the market may be at odds with the needs of MIS professionals to protect their software investments based on accurate information about Microsoft's long-term direction.

"The all-out battle [between Microsoft and IBM] will be an impetus for corporate America to move to OS/2," opined Diane LaTour, president and CE of DB Access, Santa Clara, Calif., a reconstituted startup firm that will be rolling out "data delivery" software by year-end. (The software consolidates data from different IBM mainframe databases and file formats for delivery to a desktop machine.) LaTour sees Microsoft as reacting to the alliance of IBM and Apple Computer, Inc. to form Patriot Partners. "The Apple/IBM deal was aimed directly at Bill Gates," she said.

Gates said, "I think the reason IBM paid us tens of millions of dollars to license OS/2 3.0 is they see it as the next step in OS/2. But they could decide to go in a proprietary direction."

About the Patriot Partners effort, Gates said, "For those of your readers who want more operating systems, this would be an excellent opportunity for them to learn another one and rewrite their applications."

Asked if the IBM-Microsoft battle for the desktop does not create uncertainty for MIS, Hallman said, "The buyer is going to bet on applications. If I were looking for noncontroversial things to buy, it would be Windows applications."

However, as the Meta Group analysts noted, a software firm not tied to the operating system war may be a better risk than Microsoft as an applications supplier, given that Microsoft may decide in the future not to support OS/2 with its applications.

And the ongoing battle for the desktop operating system market will continue to spread the resources of software developers. "It's no fun being in this platform war," said Anderson of Digitalk.