MICROSOFT LICENSING UNDER FIRE—AGAIN
Microsoft's enterprise agreements, which are targeted at customers with 1000 or more desktops, have some people criticizing the company for anticompetitive licensing practices. Under the enterprise agreements, if customers agree to purchase a set number of additional desktop licenses over a 3-year period, Microsoft will include some of its popular software titles as part of a specially priced BackOffice bundle.
The Software Publishing Association (SPA) and the Project to Promote
Competition & Innovation in the Digital Age (ProComp) claim that Microsoft is unfairly leveraging its position as the dominant supplier of OS platforms to squeeze its Office and BackOffice competitors out of the market. SPA disregards the fact that the program is applicable only to about 5 percent of Microsoft's customer base. If customers purchase the bundle, they gain a substantial discount on a variety of applications, from Windows 95/9x to Microsoft Office. Microsoft officials say they're not doing anything unethical and stress that the policy is both procustomer and procompetition.
ANALYSIS
Microsoft has fought for the ability to offer end-to-end bundling arrangements for its products. By taking issue with Microsoft's program, SPA, champion of the independent software vendor (ISV) community, points to the laziness of the competition. Instead of competing on technical merit and justifying the corresponding price delta, ISVs and the organizations that represent them have resorted to public criticism and litigation as a means to competitive advantage.
This latest attack on Microsoft is a sign to customers that the company's multipronged commoditization strategy of lower prices and bundled solutions is beginning to drive the industry in a proconsumer direction. In the end, Microsoft's efforts will place advanced technology within the average user's reach and force the real innovators to rise to the occasion.
—Randall C. Kennedy
ALPHA ON THE COMEBACK TRAIL
Digital Alpha customers who have agonized over their decisions to purchase Alpha technology can rest easy. Digital Equipment's new parent company, Compaq Computer, recently made announcements that put the finishing touches on the RISC processor architecture's comeback.
Digital's inept marketing once had customers wondering whether the Alpha platform would last on the market. But the Alpha gained new life as a high-end server CPU in Compaq's emerging Departmental Server, Enterprise Server, and Global Server product lines. With several new designs on the table, including a 14-processor GS140 system running at 500MHz (the new EV6 architecture), Compaq seems committed to leveraging its newfound silicon leadership despite the potential for souring Compaq's relationship with Intel.
In fact, Intel's delayed release of its 64-bit CPU (code name Merced) is driving Compaq to embrace the Alpha. Compaq officials say they can't wait for Intel to deliver a viable 64-bit platform. Compaq's strategy is to leverage its CPU architecture against Intel's and differentiate Compaq servers in the crowded server marketplace.
Of course, continued support from the Windows NT design team is a major key to Alpha's success. As long as Microsoft honors its commitment to deliver Alpha versions of Windows 2000 (Win2K--formerly Windows NT 5.0) and the follow-on 64-bit Windows 2000 Datacenter Server (Datacenter) version in parallel with x86 and Merced versions, Compaq's strategy could pay off handsomely. Company officials are so confident in this tactic that there are plans to introduce 2-way symmet-ric multiprocessing (SMP) Alpha workstations in the first half of this year. Once again, this strategy is good news for customers already committed to the Alpha platform and for designers and developers seeking greater-than-Xeon performance under NT Workstation.
ANALYSIS
If Compaq positions Alpha as a high-end alternative when x86
technology isn't enough, the company will be in a position to profit as a
hardware vendor on the level of Sun or Silicon Graphics. However, for this
strategy to succeed, Compaq must be careful not to confuse customers by allowing overlap with its Intel-based platforms. Compaq's commitment to incorporating Alpha EV6 technology into its high-end Tandem host systems product line signals that the company is pursuing such a strategy.
However, if Microsoft waivers in its support for the Alpha, the platform might not survive as an alternative to Intel CPUs. Although Compaq would continue to exploit the chip in support of its UNIX, Tandem, and Open VMS markets, Alpha wouldn't reach the crucial mass necessary to guarantee its longevity. Compaq has put together an impressive strategy for leveraging Alpha technology to differentiate itself from competitors. As a result, Compaq could stake out a lucrative position as a supercomputer vendor.
—Randall C. Kennedy
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