The Coterie of OEMs

Companies Take New Corners in NC Battle

By John Makulowich
Senior Writer

Market forces are breaking apart the weak bonds that held together partners of convenience working on network computers, as a canny crop of smaller companies plays all sides in the rivalry to win a dominant share of the market.

Take IBM, which is distancing itself from Sun and Oracle, taking Microsoft head-on and cutting deals with Intel.

"We have always said that you have to work with and accommodate the user of today. That differs from what Sun and Oracle are doing," said Jude Winkley, program manager of government industry in IBM Corp.'s Network Computer Division, Somers, N.Y. "They took a very aggressive and confrontational approach to the market with their rollout. They were really taking on Microsoft."

She said IBM found out through work with its customers that they were "looking for a solution that has dumb terminals and PCs doing transactions entries."

At bottom, the government user wants functionality and access to intranets, which are growing by leaps and bounds, as well as the Internet, allowing staff to work with vendors and constituents, she said. The user basically wants access to different types of servers and the mission-critical information, regardless of the processor.

Entrants in the NC space include thin clients ranging from the low-end Windows-based terminal, where all processing is done on the server, to the other extreme, where machines store the Java virtual machine on board and access the server to download the programs needed to perform specific tasks.

In one corner stands the giant, Microsoft Corp. of Redmond, Wash., touting its Windows-based terminal and a new product, Windows Terminal Server, formerly code-named Hydra, that adds "Unix-like" multi-user support for the terminal to the Windows NT Server 4.0 operating system.

In another sits IBM Corp. of Armonk, N.Y., distancing itself from everyone, even former cohorts, and claiming in the grand tradition of Big Blue bravado that its Network Station makes a better Windows-based terminal than Microsoft itself.

In yet a third corner is Sun Microsystems Inc. of Palo Alto Calif., asking willing listeners to suspend disbelief and consider today the starting point for the era of its Java O/S thin client.

Not to be outdone, Intel Corp. of Santa Clara, Calif., has weighed in with its own category of Slim Jim computing, the so-called Lean Client Guidelines, in a deal with IBM. It covers the JavaOS for Business product for NCs based on Intel processors. That NC from IBM is expected in the first half of 1999.

Billed as one of the industry's most efficient ways to run cross-platform Java applications, the JavaOS for Business product results from collaboration between Sun Microsystems and IBM.

The effort's goal was to attract original equipment manufacturers (OEMs), hardware device suppliers, independent software vendors and enterprise customers with an industry-standard operating system designed from the ground up to run Java applications in an NC environment.

Targeted users include insurance adjusters, bank tellers and call center employees.

In the middle of all this market maneuvering are lesser known players, some of whom have been wrestling in this arena for many years as OEMs for the major competitors. They are successful software upstarts with names like Network Computing Devices Inc. of Mountain View, Calif., Tektronix Inc. of Wilsonville, Ore., and Citrix Systems Inc., Fort Lauderdale, Fla.

Why all the commotion in the NC space? According to a recently released report, "Real Cost of Ownership of Network Computer Devices," by META Group Inc., Stamford, Conn., not only is there money to be made and markets to be managed, but there are advantages to be gained.

For example, the research firm calculates that the real cost of ownership for a pure network computer environment can be 23 percent less than the combined hardware purchase, training, support, maintenance, and operational costs of the typical unmanaged PC LAN environment found in many Global 2000 companies.

It also found that 87 percent of respondent organizations intend to implement NCs within three to five years.

In another recent NC survey, International Data Corp., Framingham, Mass., stated that 73 percent of organizations that implemented NCs replaced PCs when rolling them out.

Finally, the Gartner Group of Stamford, Conn., predicted that 40 percent of all enterprises will deploy network computers by 1999 and 60 percent will deploy them by 2001.

For Winkley, IBM's approach clearly differs from the rest of the crowd. The IBM Network Station will comply with both the Intel Architecture Lean Client Guideline and the Network Computer Reference Platform.

"Our approach to the market with the Network Station is not just Java and not just Windows. We are really glad that Microsoft is coming to the party. It gives more credibility to the NC market," Winkley noted. "In fact, we think we are a better Windows-based terminal than the Microsoft product because we support whatever the user wants, whether Java applets, browsers or native emulators and from a multi-user or single user approach."

For Microsoft's part, according to Chris Ohlandt, architectural engineer, Microsoft Federal District, supporting the IBM claim requires two machines, an IBM server and a Windows NT Server.

He said their standard NC runs applications on the local CPU and requires significant amounts of RAM. Further, he said their X-windows interface and Navio Web browser, a sub-set of Netscape Navigator 3.01 for Unix, does not support all the latest World Wide Web technologies like DHTML.

"To provide access to Windows applications, IBM bundles Citrix's WinFrame 1.6, which is based on Windows NT Server 3.51. To operate in this environment, you need both an IBM server to provide boot information for the NetStations [Network Stations] and a Windows NT Server to provide the Windows apps," Ohlandt said.

Among the advantages in the government market that IBM touts for its thin client, features which seem to apply to most of their competitors as well, the company cites:

Sun Microsystems, another key player, was the subject of a critical article in the Wall Street Journal last month, where it was taken to task for losing a key customer and disappointing an expectant market.

Ted Murguia, group manager for Sun Microsystems' Java Hardware, admitted fault.

"Yes, you are right, we are late," he said.

But the conclusion in the newspaper article that the network computer business is not happening is a bit too hasty, he added.

"From our standpoint, it's too early to call it. There is a large base that bought off on the Java computing model and still believes in the Java computing solution on the PC and Windows-based terminals," said Murguia.

Among its advantages, he cited a computer language that lets programmers develop applications faster, an open platform that allows faster deployment, security over the public infrastructure and onto platforms owned by most, if not all, of the key players and their customers, and a lower total cost of ownership.

"While it is our fault that Java is not deployed on NCs, there was nothing to buy until now. We just announced our thin client about three to four weeks ago. The IBM solutions are X-terminals, not designed specifically to run Java. The network computer is shipping, and we are here. Now is the time to start counting for NCs," Murguia said.

Clearly, his eye is on the government market, especially with the attention paid to the year 2000 problem.

He feels that many government customers will be making decisions about how to handle the problem on their legacy systems and will opt for thin clients. The popularity of the World Wide Web, the demand for corporate access and the advent of the Web-based economy also will drive the market to NCs, he said.

"Java computing is about using the platform over the Net in the coming Web-based economy. Everyone will have a Net connection and will demand a way of running anything on any platform. We see the NC taking multiple forms," Murguia said. n

The Coterie of OEMs

The dizzying array of companies competing in the NC space includes a coterie of original equipment manufacturers, many of which are producing thin clients for competing customers, like NCD and Tektronix, or software solutions that provide a transition strategy, like Citrix.

Lorraine Hariton, senior vice president of marketing and business development for Network Computing Devices Inc. (NCD), does not find the position uncomfortable. Her company makes NCD-branded thin clients, serves as OEM for IBM's Network Station and partners with Citrix, Intel and Microsoft to make Windows-based terminals using the Windows CE operating system.


Lorraine Hariton
Started in 1988, NCD has a line of products that include the so-called Explora family of thin clients, WinCenter multi-user Windows NT server software and PC-Xware software for PC access to Unix and multi-user Windows NT. The firm claims that more than 500,000 NCD thin clients are installed with over 2 billion hours of operation.

In fact, NCD was identified as the top manufacturer of thin clients by both IntelliQuest Information Group Inc.'s subsidiary, Zona Research, Redwood City, Calif., and International Data Corp.

According to Zona, NCD was the market leader in 1997, shipping more than 40 percent of the thin clients sold when sales of the IBM Network Station are included. IDC research also noted that when NCD and IBM unit shipments are combined, NCD shipped more than 140,000 units in 1997, more than a third of all thin clients sold. For comparison, Tektronix, a leading competitor, shipped just over 37,000 units, or about 11 percent.

Hariton defines the thin client as a desktop device that displays applications processed on servers located elsewhere on a network. The client types range along the spectrum from thinner to fatter and go from the Windows-based Terminal through the X Terminal, the Network Terminal and Java Network Computer, all the way to the PC or Unix box with thin client software.

Given her technology vision, armed with a thin client, a user can access any applications at once, whether served from Windows NT, Unix, a mainframe or mini and include legacy systems, ASCII, video and Java and Web browsers.

"NCD plays across the range of the market. For simplicity, we divide the market into two key areas. One is Java-based products that are optimized for Java performance. That includes IBM, Sun and Oracle. The other is focused on access to applications, what we see as the access or terminal part of the market. That includes Microsoft, Citrix and X Terminal, where the presentation layer is separate from the application layer. The important news for us is that Microsoft is now a player," Hariton explained.

According to Hariton, almost all customers fall in the access model since there are not a lot of production Java applications available. Part of the reason is that to run Java locally is fairly CPU intensive.

Asked about her competitive advantage, Hariton said NCD is ahead of the market on technology. "We are quite a ways ahead on the Microsoft platform. As a company, we know how to take immature technology and move it. That world we understand well," Hariton said. "We also benefit from partnerships that are strong. We just signed a three-year joint development agreement with Intel for their Lean Client initiative, are working with Microsoft on their CE operating system and delivering product with the Java OS."

One of Hariton's competitors that is also making thin clients for a number of competing companies is Tektronix, among whose strengths is multimedia.

The company produces a Windows-based Terminal and an NC with Java. In fact, Tektronix was one of the first vendors to introduce products into both the NC and Windows-based terminal camps. According to marketing literature, the company has been in the thin client business for the last 25 years and has features found only on their systems, such as full-motion video-on-demand and proven remote administration tools.

David Pinckard, vice president and general manager of Network Displays, sees the government market as strong. "After thin clients are deployed, they should have a life span of five to seven years. That's part and parcel of the whole total cost of ownership issue," Pinckard said.

One advantage he sees in NCs is the ability to monitor activity for specific transactions and to have all the power on the server when users are performing queries. For example, in banking, he believes there are a lot of transaction costs that users do not process accurately. NCs are one way of correcting this through careful monitoring.

-John Makulowich


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