Title: OS/2 and Windows 95 Article from: InnoVal Report on OS/2, Feb 13, 1995 Published Weekly By: InnoVal Systems Solutions, Inc. 600 Mamaroneck Avenue Harrison, NY 10528 For a printed copy write to the address shown above or send a fax to (914)835-3857 or call (914)835-3838 OS/2 and Windows 95 =================== In the January issue of OS/2 Professional, the publisher Edwin Black wrote, "Many, including OS/2 Professional and even senior executives at IBM, have given OS/2 six months to prove it can compete with Windows 95." He argues correctly that many of the installed base statistics being bantered about are poor measures of success and are probably highly inaccurate. On that we can agree. But then Mr. Black goes on to argue for quality instead of quantity, almost implying mutual exclusivity. He states, "I am reminded of the city of Chicago, where I grew up, and the suburbs, such as Evanston. The suburbs were a better place to live and they offered a quality of life that attracted many. But Evanston and other suburbs never pretended to compete with Chicago's economy or size. By concentrating on realistic goals aimed at those who lived, worked, and shopped there, Chicago suburbs thrived. Maybe OS/2 should become an affluent suburb of Chicago?" Mr. Black, though eloquent, has missed the mark. The marketplace cares little about which operating system is best. Software developers, as businesses, are more interested in marketplace realities that translate into revenue than the relative merits of one operating system versus another. So, too, are equipment manufacturers, service providers, retailers, and resellers. Customers, who are the decision makers and users at the end of the pipeline, not surprisingly, are of the same mind. Most will opt for the operating system that promises a full pipeline of useful applications and services. Among proponents of OS/2, there are two schools of thought about what constitutes a full pipeline. Some argue that the pipeline is already full of Windows applications and that IBM should focus more attention on this fact. They argue that the most recent release of OS/2, OS/2 Warp 3.0, enhances the usability of Windows sufficiently to warrant its use by a large percentage of approximately 50 to 60 million Windows users. IBM understands this vast market and is even encouraging application development for Windows with tools such as Visual Age for Windows and the Database 2 Development Kit for DOS (and Windows). This fact adds credence to the argument. Apple's introduction of the Power Macintosh 6100/66 DOS Compatible Computer is a factor worth considering. It is important to realize that Apple is not directing this product at existing Macintosh customers but towards Windows users and first-time buyers. Marketplace realists of the Windows school argue: Seize the opportunity. It seems ironic that OS/2 Warp might actually extend the product life of Windows applications by providing a better platform. The second school of thought is that native OS/2 applications that exploit 32 bit technology are needed if OS/2 is to be truly successful in the marketplace. The proponents of this school argue that such applications offer the greatest benefits and therefore justify the move to OS/2. There are some very good native OS/2 applications. Not many, but some. Unfortunately, most of them can only be obtained directly from the software producers, reseller channels, or mail order houses. Because advertising for these products is usually quite limited and highly specialized, and because these products are not widely available in the retail stores, they lack visibility. The 32 bit product pipeline is all but empty. Knowing this, the proponents of the 32 bit school argue for a big collaborative effort between IBM and software producers or ISV's (independent software vendor). Word processing software Perhaps the biggest problem for OS/2 is the lack of a high quality, high profile word processing program that exploits the benefits of OS/2 technology. The vast majority of PC users today, from students in elementary school to executives in major corporations and government, use word processing software. Small businesses use word processing programs extensively, not only for letters and documents but for invoicing and forms generation. Today, few law firms are without word processing software. Word processing is used extensively in every industry and market segment. Word processing, in 1995, is the proverbial tail that wags the dog. The information highway, voice recognition, language translation software, and electronic publishing, all burgeoning technologies, will only make word processing ever more important. And, for effective and seamless integration, word processing software will need to work in a pre-emptive multitasking environment. Ami Pro for OS/2, a word processing package being marketed by IBM, is sluggish and slow on all but the fastest machines. It is a poor testament to what OS/2 is all about. One of the biggest annoyances for Ami Pro users is the inordinate amount of time required to format a document for the printer. This is perhaps the most significant and visible place to utilize OS/2's multithread capabilities in word processing software. DeScribe, a true native word processor for OS/2, does a good job of exploiting the benefits of OS/2. For whatever reason, though, it is not gaining a sufficient foothold in the market. Two rights make a right. Both schools of thought are right. If OS/2 is to be successful then IBM must fully exploit the Windows market and the 32 bit market. Mr. Black's premise was that OS/2 has about six months to prove that it can compete with Windows 95. With regard to quality, it can. Warp, now on the market for about three months, has proven to be fast and reliable - as a Windows machine and as a 32 bit machine. Windows 95 will also be a high quality product when it is finally released. Windows 95 will have the same base of Windows users. Like Warp, it should enhance the use of Windows applications. The name, "Windows 95", suggestive of a new release or a logical next step for Windows, should be an advantage for Microsoft. The Microsoft brand name will also be a factor. "The folks who brought you Windows now bring you Windows 95," could easily become the battle cry. And it is likely, too, that there will be at least one high quality, high profile, 32 bit multithread word processing program for Windows 95. IBM versus Microsoft The question isn't really if OS/2 can compete with Windows 95. The question is: Can IBM compete with Micro- soft? IBM recognized the vast opportunity that the Windows installed base offers. Microsoft, because of the success of Windows, has actually handed IBM a gold mine of opportunity. IBM stepped into the market with OS/2 for Windows and Warp, not to compete with Windows, but to mine the gold. That was sound strategy. IBM must now convince the world that OS/2 is the platform of choice for running Windows applications. That is execution. To date, IBM has shipped over one million copies of Warp. How many of these were to Windows only users or first-time PC buyers? That measures success. One the other hand, how many were to users merely upgrading OS/2 for Windows? And though IBM documentation states that OS/2 Warp cannot be installed on top of Versions 2.1 and 2.11, it did not take long for the word to get out that one can do so, given the right set of instructions. How significant are upgrades as a portion of the one million shipments? Retail outlets One observer of the OS/2 market suggests than anyone who really wants to understand the dynamics of the marketplace visit some retail stores. Visits should include software specialty stores, electronics stores and office supply super stores. In these stores, the shelves are brimming with Windows software. Much of it is on CD. In fact, in some stores, at least a third of the shelf space is for CD titles. He argues, "Put the CD version of Warp in the CD section. Sell it as a major enhancement to Windows, not an operating system. Put it near the games and the high profile CD titles such as Quicken for Windows. Give the product more visibility. What little space the stores have provided as an OS/2 section is uninteresting at best." When we visited the Egghead software store in Greenwich, Connecticut on January 22nd, we found the OS/2 section in the back of the store, around a corner, and invisible to most of the store's customers. There were seven copies of Warp on the shelf and no OS/2 specific application software. Most of the OS/2 section, beneath IBM's OS/2 logo, was filled with copies of Microsoft Office. We are in an era when people go to the mall to buy software. Home computer users do and so do small and medium size businesses. The movers and shakers in industry and government also visit software retail outlets. They do so if for no other reason than that they are home users. OS/2 seems invisible in stores and the message seems to be that OS/2 is not a player. Will Windows 95 have the same problem when it is released? That is an important question to ask. Legal Tech 1995 How really invisible is OS/2? Last week, we visited Legal Tech 1995, a major trade show for the New York area legal community. Most of the 200 exhibitors were showing software or computer related products. Nearly 9,500 people visited the show over a three day period. Microsoft had a booth featuring Windows, Microsoft Office and other Microsoft solutions. The Novell exhibit featured their LAN offerings, groupware and PerfectOffice for Windows. The Intel booth was drawing a particularly large crowd to see ProShare for Windows. ProShare, a video con- ferencing and document interchange facility looks a lot like Person-to-Person for OS/2. We suspect that a showing of Person-to-Person would have generated similar interest. We thought we had found the IBM booth. The familiar official blue-on-white IBM logo was prominently displayed as the title for the booth. We assumed, as we suspect many others did, that this was, in fact, the IBM booth. There was no hardware and no software to examine. The only display was a poorly drawn, totally confusing process flow chart. Only by asking about the chart did we discover that this was the booth of an IBM Business Partner. There was no IBM booth and there was no sign that OS/2 existed. If OS/2 is to live up to its potential, IBM must find a way to gain visibility and generate more interest. In the fast paced personal computer market, interest feeds on interest. The Borders Book Store in White Plains, New York has Windows 95 books on the featured books tables. There is interest in Windows 95. There appears to be less interest in OS/2. It is not that OS/2 has six months to prove that it can compete with Windows 95. Rather, it is that IBM has about that many months to prove that it can compete with Microsoft in the marketplace. Some Encouraging Signs Last week, Ned Lautenbach, an IBM senior vice president and group executive announced the formation of a new worldwide software marketing organization. Executives in this new organization will be working closely with IBM's software group headed by John Thompson. The intent, according to IBM, is to ensure that IBM's software products are brought to market in the most effective, coordinated manner possible. In announcing the organization, Mr. Lautenbach said, "John and I want this new organization to help make IBM the best software company in the world." The success of OS/2 is crucial to this ambitious goal. It is crucial to IBM customers who have committed themselves to, or are considering, IBM's LAN technology, DB2, or other strategies of software inter-operability across multiple platforms; platforms that include the mainframe, the AS/400, the RISC 6000, the x86 PC and eventually the PowerPC. Osborne, Australia's largest PC manufacturer, recently decided to standardize on IBM PC DOS and OS/2 Warp for their entire line of PCs. Vobis, Escom, and Comtech in Germany made similar decisions to pre-load Warp. Some IBM PC's and systems built by Toshiba and CompuAdd are already entering the marketplace with Warp installed. This is a step in the right direction but high visibility will only be achieved when one enters an electronics or office supply outlet and sees Warp on the screens of popular PC's including IBM's Aptiva. Influential industry writers such as Jerry Pournelle and Peter Coffee are commenting about the incremental values of Warp for Windows users. And at some of the favorite IBM watering holes around Westchester County talk is turning from competing against Windows to mining what may well be a mother-lode of gold the Windows marketplace. The Windows market is large and so, too, is the 32 bit market. IBM knows that it must succeed in this market with OS/2 if it is to become the best software company in the world. It will not settle intentionally for Mr. Black's Evanston niche. So how viable is OS/2 in the marketplace? It seems probable, now, that Windows 95 will appear later this year. Software producers, equipment manufacturers, customers, and businesses in the channels, all need to know how to invest money and resources. The issue is not technology. It is market share. Marketplace commitment is tied to expectations about IBM's ability to deliver sufficient market share. It is not tied to the quality of OS/2. In the months ahead, InnoVal Report on OS/2 will focus on this marketplace. With commentary and analysis, we will examine what IBM is doing correctly. We will also discuss where IBM and others seem to be missing the mark in this wide open marketplace. Along the way, we will direct your attention to other sources of valuable information, some with different points of view. Recommended Reading Peter Coffee in the January 9, 1995 issue of PC Week. "Third Time the Charm?" in the January 1995 issue of Computer Shopper. Edwin Black in the January 1995 issue of OS/2 Professional. Jerry Pournelle in the February 1995 issue of Byte Magazine. "This MAC Really Does Windows," in the February 13, 1995 issue of Business Week. The advertisement inside the front cover of the January 1995 issue of OS/2 Professional. This is as much an editorial comment as it is an advertisement. Read the title, the first sentence, and the fine print at the bottom. Perception Problem? Overheard in the Egghead store in Greenwich, Connecticut: "I am looking for an Internet program. Does Warp run under DOS or Windows?" End of Article