ANALYSIS: Is this a Sea Change?

By: Bob Diefenbacher

Skippers who sail large yachts are skilled at reading the waves and sensing the slightest shift in the breeze. The boat that first adapts to new conditions often gains a lead. Even a major change still begins with a barely noticeable shift in the ambient conditions.

Is a major sea change in the offing for the PC industry? Will a fresh breeze from some unsuspected quarter blow across the fleet? Are there a few who already sense the shift, and are they taking steps to capitalize on it? We won't know the answer until after the change is well upon us, when new leaders emerge and some now at the head of the fleet find themselves left behind. But for long range IT weather forecasting, it is worth pondering some of the small wind shifts and slight changes in sea conditions.

Consider the Microsoft "yacht." Mighty strange that all of a sudden the company is ready to settle its differences with the government. Yes, the case has not proceeded that well for Bill Gates, and as this column is being written, both sides have indicated an interest in ending the trial. But Microsoft says there are some non-negotiable points. In particular, the company wants the right to add function to its operating system as it sees fit. On the surface that is a reasonable demand.

Flash back to IBM's original consent decree with the US government. The settlement stipulated, among other things, that IBM would have to maintain the punched card equipment it rented to its customers even if the customers used cards manufactured by someone other than IBM. Up until then, IBM had forced customers to use cards it made. In the negotiations, the story goes, IBM was adamant it would not give up that requirement. By negotiating hard on that issue, IBM distracted the government from other secret developments with greater strategic value.

Only Microsoft knows what's going on in its deepest, secret development mind. Could it be that a good fight over its operating system may distract everyone from a more important strategic matter?

What about operating systems, anyway? Is the industry fascination with freebie Linux simply an expression of manufacturers' desire to find an alternative to Windowsany alternative as long as it's not from Microsoft? Then there is another interesting software development called VMWare, from a Palo Alto, Calif. Company by the same name. VMWare is software running on an Intel chip that allows users to run multiple operating systems concurrently on the same machine. Users easily can switch between applications built on different operating systems. Is an operating system losing its ability to "lock-in" users?

There is also development activity to produce SOCs (systems on a chip), which place the entire computer on one chip. This change is out there on the far horizon right now, but ultimately it may affect the role of OS software. Other developments such as the possibility that application functions may end up in chunks downloadable from the Internet on a rental basis could put a dent in Microsoft's predictable revenue from regular software upgrades.

Then there is the whole Internet thing itself. Sub-$600 personal computerseven free onesare coming onto the market to entice people into the rich store of information and commerce on the Internet. On the hardware side, IBM lost nearly $1 billion on its PC business last year. This year its big thrust is selling Internet servers and e-business. IBM's focus is off the PC box and onto the application solution. Hewlett-Packard is changing its emphasis, too, with a $150 million advertising campaign to reposition itself as a major Internet company.

Finally, the March 29 issue of “The Industry Standard” raised an interesting question. Commenting that Microsoft's upgrade of IE is a big yawn, the magazine posed the question, "Where does Bill Gates want to go?" Microsoft's brightest people are reaching middle age, the article points out, and they may lack the fire and agility needed to shift as quickly as they once did.

Do these seemingly unrelated events presage a true sea change? In the IT development cycle it is time for a major shift in the weather. Who will be at the head of the fleet when the new breeze settles in? It may not be the boys from Redmond.

After 18 years in marketing and sales at IBM, Bob Diefenbacher founded Denbrook Systems Associates, an IT consulting firm based in Malvern, Pa. denbrook@aol.com.