Will NT Server Bail Under Vendor Pressure?

Tom is particularly incensed that Microsoft managed to preempt and precede applications competitors to market through reports that the group developing Microsoft IIS (Internet Information Server) played a big hand in developing the NT APIs used to support that Web server functionality. In addition, Dataquest says, Microsoft catapulted from ground zero in the 1995 Web server market to a spot second only to Netscape Communications Corp. after bundling IIS with NT Server at no extra charge (23 percent versus 35 percent for Netscape). Others have long charged that Microsoft applications can use operating system APIs that aren't available to third-party application developers, and that some applications include code that changes the OS to meet the needs of the particular application. Tom believes these practices give Microsoft too great an advantage over competitors in the applications market and foster poor performance. "I'd like for it to unbundle this stuff, the way the government forced IBM to do," he says. Tom joins others who fear that Microsoft will shut down competition and increase prices, much the way IBM Corp. controlled the mainframe hardware and software market prior to government intervention and the voluntary opening of IBM APIs. Tom's perspective isn't unusual. Scott Winkler, a vice president at Gartner Group, says most of his clients have expressed concern or at least questioned the influence that Microsoft exerts on the entire industry. Many, he says, tell him they are considering tacks like buying Lotus Notes rather than Microsoft Exchange "to make sure Microsoft doesn't have it all." The Uneven Playing Field At issue is Microsoft's penchant for leveraging its DOS success to Windows to NT to desktop and server applications and then on to content and media (desktop, the Internet and TV), and ultimately commerce and vertical industries. Microsoft may not dominate each and every venture, but it has shown an ability to capture significant market share through business practices that some competitors consider illegal and some users believe inhibit innovation. For example, Netscape counsel Roberta Katz says Microsoft "came after" Netscape. She says Microsoft targeted Netscape, which ha d developed Web server capabilities on Windows NT Workstation, when Microsoft limited the license for that server to 10 clients--effectively disabling its use as a Web server and forcing anyone who wants to use Netscape's software on NT to buy it on an operating system that includes Microsoft's competing Web Server. She adds, "It is our understanding that the same kinds of threats and intimidating messages have applied in the server context as apply in the client context." Microsoft is willing to confirm that resellers are not allowed to remove IIS from a server's operating system--an issue of product "tying," similar to the browser issue under legal scrutiny. If Microsoft did not take this stance, a company spokesman insists, it would wind up with a balkanized operating system. The fundamental question then becomes whether Microsoft can legally piggyback on the NT Server operating system to preserve its position and enter or even control new applications markets. Gary Reback, who legally represen ts many of Microsoft's competitors, points to Windows NT Server 4.0 and 5.0 as clear examples that "you have the same issues on the server side as you have on the desktop." For instance, Windows NT 4.0 Server bundles symmetric multiprocessing, RAM tuning, clustering, failover, load balancing, message queuing, a transaction server, defragmentation and backup utilities, IIS, Index Server, streaming video and FrontPage (used to author Web sites) for a price tag that can range up to about $9,600. It comes packaged with 25- and 50-client licenses. NT 5.0, scheduled to ship in the second half of 1998, adds Very Large Memory Support, DHCP capabilities, a cluster-enabled distributed file system, I/O transfer off the main CPU, disk quotas, file encryption, distributed link tracking, directory services woven with public key server capabilities (including smart-card support), Kerberos, policy server capabilities, a Windows scripting tool, snap-in management tools and new versions of IIS, Index Server, Transaction Se rver and Message Queue Server. Two industry analysts say Microsoft also may bundle Exchange with 5.0, though Microsoft says it has no plans to do so. "These are issues of predation, where you are not only giving away products free, but in effect, paying people to take them," says Reback, adding that such "software dumping" practices have long been recognized as damaging to business interests.

Industry Briefs By Kelly Jackson Higgins