Conference 7.286::digital

    Thank you for posting this timely TidBit.
    
    A recent Gartner Group research note (S-230-1164 April 12,1995)
    hinted that this might happen.
    
    Steve
    

    
    	Geez,
    
    		Just when I was getting to like the way IBM dug in its
    heels, and told folks, "Like it, or else". Sure miss that kind of
    arrogance. Oh, well, another convert to consumerism in computers.
    
    
    			the Greyhawk

Maybe all those PC journalists will recant their
opinion pieces on the glory of OS/2 now.

Naw, never happen. But the Warp ads were good.

  The sad part, of course, is that it would be just another
  proof-point that quality is no assurance of success.

  There was no doubt that OS/2 was the superior operating
  system to DOS/Windows, but Bill Gates' out-maneuvered and
  out-marketed IBM.
                                   Atlant

    After the form-feed is the NY Times piece.   IBM claims that
    Gerstner was quoted out of context.  The next reply is their
    rebuttal.

    It's nice to be able to agree with Atlant once in a while.
    If quality always won, the world might be full of rainbow
    clones, no disk would have a FAT file-system, all notebooks
    would be powerbooks, etc.

    Personally, I want OS/2 to suceed, because I don't want my
    PC life ruled by Bill Gates.


    IBM Chief Concedes OS/2 Has Lost Desktop War

    The following is reprinted from the August 1 edition of The
    New York Times without permission. My apologies to the people
    at the paper, but this is too important to not put here. 

    By Laurence Zuckerman 

    Just as a new battle for the heart of the desktop computer
    has begun, Louis V. Gerstner, the chief executive of IBM,
    appeared to concede defeat yesterday. 

    In his annual session with analysts, Mr. Gerstner admitted
    what many industry watchers have been saying for years: that
    IBM has failed in its multibillion-dollar attempt to
    establish an alternative to the  Microsoft Corporation's
    stranglehold on the software that runs personal computers. 

    Obsessing about operating systems is "fighting the last war,"
    he told the group, later adding that it is "too late to go
    after the desktop." 

    "We have to go on to the next thing," he said. 

    Mr. Gerstner's comments came only three weeks before
    Microsoft is to introduce Windows 95, the successor to the
    Windows and MS-DOS programs that now control about 80 percent
    of all personal computers. Most analysts believe that the new
    program will gain wide acceptance, cementing Microsoft's
    primacy in a market that it has dominated since 1980, when
    IBM licensed MS-DOS for its first personal computer. 

    IBM has since tried to challenge Microsoft with a program
    called OS/2. Although many analysts say OS/2 is
    technologically superior to both the current version of
    Windows and the soon-to-be-released Windows 95, it has never
    caught on with more than a small minority of consumers. 

    Some IBM executives have argued that the introduction of
    Windows 95 will help OS/2 because consumers will be forced to
    make a change and will see the benefits of IBM's offering.
    But others within the company have countered that it would be
    futile and a waste of money to go head to head against
    Microsoft where it is strongest. 

    Yesterday, for the first time, Mr. Gerstner appeared to side
    with those pragmatists. He said IBM would aggressively sell
    OS/2 to large companies and institutions that use it on
    application servers, which allow networks of desktop
    computers to share a variety of computer programs. 

    OS/2 has dominated the market for such servers in recent
    years, but many analysts said the company was quickly losing
    ground to another Microsoft program, Windows NT. 

    "NT is displacing OS/2 servers extremely rapidly," said Rob
    Enderle, a senior research analyst at Dataquest, an industry
    consultant based in San Jose, Calif. He estimated that IBM
    had more than a 2-to-1 advantage at the beginning of the year
    in the number of servers running OS/2 compared with NT, but
    that Microsoft had probably pulled even and was likely to
    overtake IBM by the end of the year. 

    IBM still has a chance, Mr. Enderle said, "but it is
    narrowing fast." 

    "A lot of premier IBM accounts have indicated that they will
    be pulling off OS/2 in the next 12 to 18 months," he added. 

    During his 90-minute session with analysts, Mr. Gerstner
    expanded on a theme that he has been warming to since he
    arrived at IBM two years ago: that IBM is now focused on
    providing value to its customers rather than simply foisting
    the latest technology on them. 

    He said that the company had identified five groups of
    customers that it would now try to serve: large enterprises
    and institutions; small and medium-sized businesses;
    consumers; other hardware manufacturers, and resellers and
    other distributors. 

    Asked if IBM's recent $3.5 billion acquisition of the Lotus
    Development Corporation was an admission that the company had
    failed to plan properly for its future, Mr. Gerstner admitted
    that it was. "It is an indictment of things we did wrong in
    the past and I am glad that we had the opportunity to fix
    it," he said. 

    But he added that he and his management team now spend a lot
    of time thinking ahead. "There is a very strong preoccupation
    in the company today to understand where the industry is
    going and get there first," he said.

 

August 1, 1995

IBM claims Gerstner quoted out of context, restates OS/2 commitment

By Charles Cooper 



    IBM disputed published reports that the company may be
    backing away from its commitment to market OS/2 as a desktop
    operating system. 

    During the course of a 90 minute presentation to securities
    analysts yesterday, IBM Chairman, Louis V. Gerstner, turned
    the conversation to a discussion of operating systems. At one
    point, the New York Times wrote, Gerstner appeared to suggest
    that IBM was ready to raise the white flag in the desktop
    computer wars to Microsoft Corp. 

    "Obsessing about operating systems is `fighting the last
    war,'" he told the group, later adding that it is "too late
    to go after the desktop. . .we have to go on to the next
    thing," according to the Times article. 

    However, an IBM spokeswoman said the newspaper quoted
    Gerstner's comments out of context. 

    "[Gerstner] was referring to the standalone desktop that's
    become the new focus," said the spokeswoman, Jo Sager. "The
    battle is in the network-centric, or distributed kind of
    environment.' 

    Earlier today, Gerstner sent out a memo to the IBM sales
    force that reaffirmeed the company's commitment to OS/2. He
    said his comments were "regarding the fact that OS/2 is the
    market leader in enterprise and commercial accounts and that
    IBM's primary OS/2 focus is to maintain that leadership. The
    consumer and standalone desktop markets for OS/2 are growing
    but are secondary to our emphasis on client-server
    applications." 

    The interest in IBM's plans for OS/2 -- on both the client
    and server ends -- has ratcheted even higher as the debut of
    Windows 95 draws near. But despite the varying
    interpretations put on Gerstner's comments, some analysts
    maintain that OS/2's best chance for success is at the high
    end of the market. 

    "IBM's still losing hundreds of millions of dollars on OS/2
    per year," said David Wu, an analyst with The Chicago
    Company. "Gerstner knows that IBM is not going to win the PC
    desktop war, so why pretend that they're fighting that
    battle." 

    Perhaps not surprisingly, that's how Microsoft viewed the
    day's events. 

    "Notes is an OS/2 Server app, so maybe this is Gerstner's way
    of saying they will focus on selling Notes instead of waging
    OS/2 client operating systems war," said Microsoft's senior
    vice president, personal systems division, Brad Sliverberg,
    "Notes also has an implementation as an NT server app, not
    just OS/2." 



    Copyright (c) 1995 Ziff-Davis Publishing Company. All rights
    reserved. Reproduction in whole or in part in any form or
    medium without express written permission of Ziff-Davis
    Publishing Company is prohibited. PC Week and the PC Week
    logo are trademarks of Ziff-Davis Publishing Company. PC Week
    Online and the PC Week Online logo are trademarks of
    Ziff-Davis Publishing Company. 

 The PC Week home page
 Go to This Week's News 

JF

RE: .-1

It's real nice to see someone else have to squirm for a while...

RE: all

I am glad that IBM has publicly committed to OS/2 again.  Gerstner's comments
about having "lost the desktop wars", whether he meant OS/2 vs Microsoft or
not, were accurate.  Every other technology (MS-DOS, IBM-DOS, OpenVMS, AIX,
HP/UX, Solaris, OS/2, Macintosh, etc) has lost the desktop war to MS-Windows 
and it's clones.  This has nothing to do with quality (Lindquist is right
that OS/2 is greatly superior to MS-Windows from a tech-dweebs point of
view, in the same way that Macintosh is greatly superior to MS-Windows from
a usability engineers point of view, and Betamax is greatly superior to VHS 
from a video engineers point of view), it has everything to do with satisfying 
market demands.

Most people are not tech-dweebs or usability engineers or video engineers.
They are people who (at best) treat their computers like their phone or their
automobile: they don't have a clue about what goes on inside, and they don't
care as long as it works.  And when it doesn't work they get frustrated at
how long it takes to fix and how expensive the trip to the repair shop is.
They certainly *depend* on their computer systems, but they don't like them
very much, they don't value the segmented memory model in OS/2 over the TSRs 
in MS-DOS, they don't care about the exact password encryption algorithm in
UNIX, and they don't realize the benefit of having C2 security out of the box
in OpenVMS.  In the same way that people didn't care that Betamax has superior
drop-out rates over VHS, and they didn't care that Macintosh had Plug-and-Play
from day one.

(And lets be careful about getting uppity and feeling superior to them. Most
of these people are excellent in their fields: secretaries who can handle 157
unreasonable demands all at once while making their boss look good and making
it seem easy, aeronautical engineers who operate at the edge of human knowledge
in terms of things like airflow and mechanical engineering, financial people
who understand market forces and investments such that they make lots of
money for their investors, etc etc.  They just don't happen to be interested
in the inner workings of their computers, in the same way that many of us 
are not interested in understanding the inner workings of the jet engine on
the aircraft which flies us to our vacation.  Hey, as long as it works...)

They don't understand those things, they don't care about those things, and
they get confused and upset when you try to tell them they should care.  They
only want to know one thing: will this satisfy my requirements?

For VHS vs Betamax, they wanted to record 2 hour movies on one tape.  VHS did
this, Betamax couldn't, so guess which one won?

For Macintosh (and OS/2 and OpenVMS and UNIX and CP/M) vs MS-Windows, they 
wanted to run the applications they needed to get their job done.  MS-Windows
does this (and it does it better every day as more ISVs are porting to NT),
the others are less able to do this, so guess which one won?

Perception plays a large part in this, in the fact that OS/2 will in fact run
MS-Windows applications very well.  But Microsoft out-marketed IBM by placing
MS-Windows on virtually every PC shipped by every vendor, such that people
got used to it and requested it on all the new machines they purchased and
recommended.

But bottom line, the desktop wars are in fact over and MS-Windows won.  It
will take a while for the UNIX camp to recognize this fact, because of the
large installed base and the wide variety of applications available, but
notice that more and more of those applications are being ported to MS-Windows.

And I am glad that IBM has re-affirmed it's commitment to OS/2.  This means
that they will spend tons of money on building, marketing and supporting a
product which will very shortly have no importance in the market they have
chosen for it: the desktop.  Hey, better they spend the money on that than
spend the money on something that might actually pose a threat to Digital's
business plans...

-- Ken Moreau

    And right now. Mr. Palmer and Mr. Gates are announcing an alliance
    where Microsoft and Digital will work together to jointly develop and
    support enterprise-wide client-server systems using windows clients.
    
    There's other thing included in the announcement, but it is very
    nice to see digital aimed in the same direction as our customers now.
    

           Reminds me of my fave quote from (was it) H.L. Mencken:
    
  "Nobody ever went broke underestimating the taste of the American public."
  

    Could be Mencken, but I always thought it was P. T. Barnum.

    Who said there's a sucker born every minute
    
    
        or was it
    
    
    You can fool some of the people all of the time, all of the people
    some of the time, but never all of the people all of the time...
    
    

    re .13
    
    You can fool some of the people all of the time, and all of the people
    some of the time
    
    And that's usually sufficient...
    

Here is the latest article from InformationWeek magazine.

Steve
=========================================================


R.I.P. Warp?

Even as IBM tries to breathe new life into OS/2, chairman Lou Gerstner
concedes it will never dominate the consumer desktop. Is this the end?
----------------------------------------------------------------------
By Brian Gillooly and Bruce Caldwell
Issue date: August 14, 1995

At first, it sounded like good news. IBM chairman and CEO Lou Gerstner
spoke with financial analysts on July 31, and indicated that the company is
redoubling its efforts to market the OS/2 operating system to enterprise
customers. The company, Gerstner told the analysts, will focus its
marketing efforts on OS/2 as an enterprise server operating system and as
an operating system for "fat" clients, high-performance workstation-level
machines.

But that strategic announcement was followed by an admission that IBM is
giving up its effort to dominate the consumer desktop operating system
market. That effort is known by OS/2's popular name, Warp.

"That's not our primary target," Gerstner said. "There are people out there
who love [Warp] on the desktop, but our focus is on large enterprise
customers."

That's quite a change from a year ago, when IBM began running ads on TV
featuring nuns touting the popular advantages of Warp. Yet Gerstner was
only spelling out for analysts the direction in which the company has been
moving for several months. As InformationWeek reported in its Feb. 20 issue
(p. 12), IBM has been looking critically at Warp's consumer thrust. Earlier
this year Jerome York, IBM chief financial officer, told company execs that
if Warp did not produce significant revenue, IBM would shift the emphasis
of its OS/2 marketing to workstations and servers rather than the volume
desktop.

Now, IBM may be tightening the screws. Rob Enderle, a former software
analyst at IBM and now an analyst with Dataquest Inc., says IBM's OS/2
development team has "been bleeding people." IBM recently began shifting
its marketing and development dollars away from pushing Warp as a volume
desktop product, according to some of IBM's applications software partners,
to aim OS/2 at the enterprise.

IBM general manager John Thompson acknowledges that the company must
"radiate more loudly the story of how well OS/2 has done" in the enterprise
market, but he emphatically denies any shift in resources.

IBM's actions may indicate otherwise. Despite Gerstner's pledge to have
Warp installed on every IBM PC that can support it, only three out of the
18 current standard configurations of the IBM PC 750 desktop line that can
support the operating system actually offer it. Still, IBM builds most
systems to order. But the only standard configuration of the low-end PC 300
series that came bundled solely with Warp was withdrawn from the market on
June 16.

IBM may back off even further. The PC models that offer Warp do so through
a dual-boot Select-A-System feature that gives customers the option of
booting OS/2 or Microsoft Windows. While IBM will continue to sell PCs that
offer a choice of Windows 3.1 or OS/2, sources say the company doesn't plan
to continue that option on machines bundled with Windows 95, Microsoft's
coming upgrade. An IBM spokesman says the company may offer OS/2 Warp on a
separate CD-ROM instead.

IBM is only reading the writing on the wall. IBM executives say that focus
groups they've conducted indicate customers choose Warp under the dual-boot
option less than 5% of the time. "In the world of standalone desktops, we
all know who the leader is," admits Thompson.

Gerstner's most recent comments were meant to position OS/2 where it has
the best chance to survive: the enterprise client-server market. But even
there, IBM is bedeviled by its archrival, Microsoft. Windows NT, Mi-
crosoft's 32-bit system that, like OS/2, is both a server and a workstation
operating system, has been making significant headway in both those markets
since its introduction almost two years ago.

Some analysts claim IBM's consumer effort caused Big Blue to delay giving
Warp the features it needs for enterprise computing. Now almost a year old,
Warp still lacks support for symmetrical multiprocessing (SMP) and powerful
RISC microprocessors--two features that come standard with Windows NT and
most flavors of Unix.

"This is Custer's last stand and the Indians are beginning to circle
around," says David Wu, an analyst with S.G. Warburg in New York, referring
to IBM and its competitors in the operating system space. "NT will dominate
the workgroup and low-end application server market, and OS/2 will be a
niche product."

IBM plans to regroup with several OS/2 upgrades this fall and winter
targeted at the enterprise, including OS/2 Warp LAN Server, OS/2 Warp
Connect for the PowerPC, OS/2 Warp SMP, and a suite of tightly integrated
server applications, known internally as "server stacks," for OS/2. The
server stacks, IBM's answer to Microsoft's BackOffice suite for Windows NT,
are expected to include various network and database tools as well as Lotus
Notes (See related story here). But it may be too little, too late.

"Few IS decision-makers are seriously considering OS/2 for major server
rollouts," says Peter Kastner, executive VP at Aberdeen Group Inc., a
consulting firm in Boston. The point is particularly ironic when it
involves running Lotus Notes, a product recently acquired by IBM when it
bought Lotus Development Corp.

Chase Manhattan Bank N.A., historically one of IBM's staunchest supporters,
has begun piloting NT Servers. The plan, according to Craig Goldman, chief
information officer, is to gradually replace its OS/2 servers with NT, to
run its Lotus Notes client-server system, primarily because of NT's greater
scalability. "We're finding with NT, we can get more users on those servers
than on OS/2 servers," Goldman explains.

For the same reason, accounting firm Coopers & Lybrand in New York is
positioning NT as its server operating system partly to help reduce the
number of servers the firm uses to support its 30,000 Notes users.
Currently, says Richard Koppel, managing partner of IT at Coopers &
Lybrand, one OS/2 server can support just 100 to 125 Notes users, but with
Lotus Notes 4.0, NT should be able to support between 1,000 to 2,000 users
per server. "OS/2 doesn't promise that," says Koppel.

There are other reasons. "The battle is finished [on the server side]. We
went from OS/2 to NT," says Phil Usher, VP of information systems and
groupware at Countrywide Funding in Pasadena, Calif. "For us, NT became the
better choice."

Countrywide is on the last leg of migrating about 3,600 Notes users to 42
NT servers because Notes on NT is fully 32-bit. By contrast, Usher says,
OS/2 contains some 16-bit code that caused scaling problems. In addition to
making it easier to work with multiple networking protocols, Usher says he
found that error rates dropped by 50% with NT, which also offers simpler
performance monitoring and faster recovery from network connection losses
than OS/2.

Countrywide still sees a use for OS/2. While its headquarters uses Windows,
the 350 branch offices are about to upgrade from OS/2 to OS/2 Warp.

But Thompson remains stalwart. "Any time there's a new product, customers
will try it," he says. "Whether they move all their applications to [NT]
still remains to be seen."

Now that IBM has conceded the desktop, and with so many IT managers jumping
ship in favor of Windows NT on the enterprise server, time could be running
out. IBM's latest repositioning of OS/2 may end up being its last.

With additional reporting by Joseph C. Panettieri.

Comments on this story?

InformationWeek http://techweb.cmp.com/iwk
--------------------------------------------------------------------------

>                                              <<< Note 4019.15 by PENSKE::SDATZMAN >>>
>                                                        -< InformationWeek >-
>
>
>Here is the latest article from InformationWeek magazine.

    Wow, same day service.

    I thought the artical and the associated sidebars were
    pretty bleak for os/2.

    	- concede the desktop
    	- current customers moving to nt
    	- power pc version not out 'in time'

    However, there is a feature piece on UNION BANK
    moving 7000 seats to OS/2.   I guess the folks at
    UNION BANK don't read INFO WEEK.


    The best quote is from the editorial:

    	"The truth is that -- despite a terrific
         ad campaign -- IBM's OS/2 WARP is not going
    	 to displace Microsoft Windows as the No. 1
    	 desktop operating system.  This has nothing
    	 to do with the quality of Warp, which by all
     	 measures is technically superior and far more
    	 robust than Windows 95.   IBM, once again,
         was simply outmanuvered by Microsoft in the
    	 struggle for mindshare among computer users."

    I think this is a good lesson for Digital -- who is blithly
    climbing into bed with gates. I'd bet on gates owning
    everything by the next morning.

    And some good news: in the same issue of INFO WEEK,
    it talks about corporate customers ignoring
    WIN95 and either staying put, or going directly to NT.

RE: .4

OS/2 definitely was superior to DOS/Windows, but it's inferior to 
WIndows NT, which is what is driving it out of the market.

--PSW

RE: .9

    It's hard to believe that anyone as slick as Gerstner, in
    a company as slick as IBM could be quoted out of context.

Never underestimate the ability of the press to mangle and misreport 
what someone says.

--PSW

Paul:

> OS/2 definitely was superior to DOS/Windows, but it's inferior to 
> WIndows NT, which is what is driving it out of the market.

  Your "IMO" was implied, right?

                                   Atlant

    This all reminds me of the atmosphere within Digital when K.O. made his
    "snakeoil" comments about UNIX and did his slam-dunk on M.A.P. 
    
    I agree with a previous note ... nice to watch somebody else squirm for
    a while.   Squirm away ....
    
    /se
    

    re: .20
    Opinions are like a certain part of our anatomy.  Everyone has one,
    but, most stink and aren't very nice to look at.
    
    tony
    ;^)

With the announcement of Warp Server going GA, Merlin(next release of OS/2)
going beta during the summer, and Warp Server on a single cpu outperforming
Windows NT on a 4 way SMP system, OS/2 winning best OS of the year for the 4th
straight year, I wonder what happens now?

OS/2 is dead articles appear every year. The question becomes which year will
these predictions come true<g>?

    I'm told that only 5% of the profits from IBM's mainframe software (and
    the profits are huge!) go back into that business. The remaining 95% of
    the profits are used to subsidize other IBM software efforts.

    OS/2 will only die when IBM tires of bugging Microsoft -or- the
    mainframe business fails. I'm not holding my breath in either case...
    
    /s/ MarkB