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Comes 1247 ("A Tale of Two Markets - Workstations vs PCs") | 627 comments | Create New Account
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Comes 1247 ("A Tale of Two Markets - Workstations vs PCs")
Authored by: Anonymous on Thursday, November 01 2012 @ 06:48 PM EDT
http://groklawstatic.ibiblio.org/pdf/iowa/www.iowaconsumercase.org/011607/1000/PX01247.pdf


<p>
PLAINTIFF'S EXHIBIT 1247<br />
Comes v. Microsoft
</p>

<p>MICROSOFT RISC PC TASK FORCE REPORT</p>

<h1>A Tale of Two Markets - Workstations vs PCs</h1>

<p>ADVANCED TECHNOLOGY AND BUSINESS DEVELOPMENT</p>

<p>MICROSOFT CONFIDENTIAL</p>

<p>MS-PCA 1113854<br />
CONFIDENTIAL</p>

<p>
<b>TABLE OF CONTENTS</b>
</p>

<p>
TABLE OF CONTENTS<br />
INTRODUCTION<br />
MARKET COMPARISON<br />
<span style="margin-left: 4em">Sun's Strategy</span><br
/>
<span style="margin-left: 4em">Fundamental
Issues</span><br />
<span style="margin-left: 4em">Second Order
Effects</span><br />
WHAT TO DO<br />
<span style="margin-left: 4em">"Business Workstation"

Market</span><br />
<span style="margin-left: 4em">Technical Workstation
Market</span><br />
<span style="margin-left: 4em">Power PC</span>
</p>

<p>
2/26/92 11:13 AM MICROSOFT CONFIDENITAL PAGE 2
</p>

<em>[Ed: Page footer retained for date information. All
other headers and
footers omitted.]</em>

<h2>1. INTRODUCTION</h2>

<p>
We are facing a threat from Sun and the SPARC world which
has generated lots of concern both here
and among our OEM customers. One key issue which everyone
who looks at this problem discovers
at some point or another is that Sun's present business is
not the traditional PC market. At one level
this is obvious, but when it comes down to deciding how to
compete with Sun, the differences in their
current approach generate a lot of confusion. Don't we
need to have a workstation offering? Is RISC
what is important or is it UNIX? Do our OEMs need direct
sales?
</p>

<p>
The closest example was Carl's mail the other day that
started by saying that we are facing a
workstation threat rather than a RISC threat. Although I
largely agree with Carl's proposed actions,
and believe the he understands this issue, I think that
the reality of the situation is not that simple -
there is more than one threat, and it is easy for us or
our OEMs to get confused. We need to be very
clear on the distinction between the markets and what the
real threat is.
</p>

<p>
The challenge is all about Sun - they are the real enemy.
Unfortunately that has become a point of
confusion. In particular, we must distinguish between the
following goals:
</p>

<ol type="A">
<li><b>Prevent Sun from attracting our present end user
customers.</b> Sun clearly has a goal of
coming after our present customer base, or at least in
having the SPARC world as a whole do
so. We must take steps internally to our market to make
it immune to this thread. Although
this is phrased in terms of the final result with end
users, our OEM customers and ISVs will
fall long before end users do.</li>

<li><b>Compete with Sun for their <i>present</i> and
near
term customers.</b> This means going after a
particular set of customers in a particular fashion, and
is driven by looking at Sun's <i>current</i>
tactics.</li>
</ol>

<p>
These are not mutually exclusive, and it might even be
possible to achieve both of them with one
strategy, but in general they are utterly different and we
have to keep them straight.
</p>

<p>
Our efforts to create a RISC PC have been focussed
primarily on plan A. Compaq, on the other
hand, has gotten interested in B, in part because they
are worried about how to do plan A without
hurting their present market. Recent email here at
Microsoft about promoting 486 machines as
"business workstations" is aimed at plan B (but with an
eye toward assisting A).
</p>

<p>
We need to have a strategy in <i>both</i> cases. This is
true both in planning our own product line up, and
also in being able to articulate both strategies to our
OEM customers. As events progress they will
become increasingly confused over what to do, and this
only plays into Sun's hands.
</p>

<h2>2. MARKET COMPARISON</h2>

<p>
The most salient points of distinction between the two
markets are as follows:
</p>

<table border="1" cellpadding="1">
<tr><th>Workstations</th><th>PCs</th></tr>
<tr><td><b>175K machine/year run rate.</b> This is for

the
largest binary compatible standard.</td>
<td><b>12 million machine/year run rate</b> - of binary
compatible machines.</td></tr>
<tr><td><b>Direct sales</b> - Workstations today are
a "top
down" decision.</td>
<td><b>Retail/indirect distribution.</b> PCs have been a
"bottom up" phenomena.</td></tr>
<tr><td><b>High margins</b> - There is no clone
competition
yet.</td>
<td><b>Low margins</b> - enforced by competition from 3rd
tier clone vendors.</td></tr>
<tr><td><b>High growth.</b> Buyers are installing
workstations
for new tasks.</td>
<td><b>Lower growth.</b> PCs are more mature, more
upgrades than new adoption.</td></tr>
<tr><td><b>Bought as system</b> - Workstations sales
almost
always include servers and desktops.</td>
<td><b>Bought piecemeal.</b> The Lan is usually bought
from a separate vendor.</td></tr>
<tr><td><b>Small set of ISVs with niche products.</b>
This is
mainly focussed on engineering and technical
areas, with few horizontal apps.</td>
<td><b>Broad set of ISVs with horizontal applications.</b>
This is focussed on personal productivity and
individuals.</td></tr>
<tr><td><b>No good software distribution channel.</b>
Today
it is a mix of direct sales and VARs and what
amounts to mail order from the Catalyst catalog.
Plans for CD Rom distribution in the future.</td>
<td><b>Strong indirect distribution channel for binary
application software.</b> Application vendors in the
PC market do not typically have to have direct
sales forces, and can easily get mass
distribution.</td></tr>
<tr><td><b>UNIX</b> - This is perceived as a "real
os",
with
virtual memory, multitasking etc. In some cases
it also benefits from a "standards" and openness
message.</td>
<td><b>Windows &amp; Dos</b> - This mean no virtual
memory,
multitasking. Windows 3.0 actually corrects
most of these (NT fixes the rest) but there is
perception of weakness.</td></tr>
<tr><td><b>One primary vendor.</b> Sun is working hard
to
create the infrastructure to allow clones.</td>
<td><b>Large base of manufacturers</b> - This is enabled
by a well established infrastructure which
includes companies like Intel, Chips &amp;
Technologies and of course Microsoft.</td></tr>
<tr><td><b>RISC price/performance.</b> This is due to a

mix
of newer technology and the open processor
business model.</td>
<td><b>x86 price/performance.</b> The PC world is based
on an aging, closed processor which is technically
obsolete.</td></tr>
<tr><td><b>Powerful desktop machine.</b> Like a PC,
with
hi-
res graphics, a big monitor &amp; more RAM.</td>
<td><b>Nice desktop machine.</b> Like a workstation with
worse graphics &amp; less RAM.</td></tr>
</table>

<h3>2.1. Sun's Strategy</h3>

<p>
Our present understanding of Sun's overall strategy is as
follows:
</p>

<ul>
<li><b>Stay the course with direct sales and the
conventional UNIX workstation market.</b> They
will rely on their present approach as the mainstream core
of their business for the next two
years. The growth rate is large, and they can comfortably
use this to finance their assault on
other markets, and give them enough time to get the pieces
in place. The key niche markets
that they will exploit are technical workstations and
software development within
corporations. This will broaden to cover an increasingly
large set of customers, but it is a
mistake to think that this approach us the limit of Sun's
ambition. They will gladly take on
retail distributin when they have the pieces in place to
be successful at it. The market they
milk today is a convenient stepping stone, but not an end
unto itself.</li>

<li><b>Experiment with other channels.</b> This will
occur through limited test cases such as their
deal with Micro Age, and through SPARC clone companies
such as Northgate, Compuadd
and others who are expendable missionaries in new
markets.</li>

<li><b>Build an arsenal of ISV support.</b> They do not
have a sufficient set of desktop productivity
applications to really threaten PCs for control of
mainstream office computing, but they get
more support every dey. Their present growth rate even
<i>without</i> having such apps will take
them to 300K-500K units/year run rate within the next year
to 18 months, which looks
attractive to ISVs. In addition, there is the effect of
being the number two platform.
Everybody does some development on the number two
platform, for incremental revenue,
strategic hedge and so forth. Dos has been number one for
a long time. For a while, the
number two spot was taken by the Macintosh, then for a
while it was OS/2. We are in an
enormous danger right now of having SPARC be number two
and Windows be number one.
Since ISV support is cumulative and Sun is looking for
critical mass, having them in number
two is terrible for us - we must try to get one of our
platforms (such as Windows on RISC) to
be number two, and SPARC to be third or less.</li>

<li><b>Serve as a focal point for rancor with Intel and
Microsoft/</b> Many people in the industry
are jealous of our success - this includes ISVs, OEMs and
others. They also hate Intel for
much the same set of reasons. IBM's role in the market is
also a point against the PC world,
although less direct than Intel and us. Sun is the
beneficiary of all of this because they offer
a brand new world. The old saying about the "devil you
know being better than the devil
you don't" does not seem to impress many people.</li>

<li><b>Once they are ready, make a major push on the PC
market.</b> Within the next two years
they will be in an excellent position to directly assail
PCs with widespread retail distribution
of both machines and binary software packages. In early
1992 they will be selling at the
300K - 500K machines per year run rate, will have a
critial mass set of major applications,
and they will have a commanding price/performance lead on
the x86. Note that Sun is
playing a long term bet, and they can afford to wait until
the time is ripe.</li>
</ul>

<p>
This all assumes their present level of industry support.
The endorsement of major players in the PC
market might accelerate things.
</p>

<p>
Note that the strategy above is NOT aimed at bringing RISC
into the PC market - rather it is trying to
grow the workstation market to the same volume levels, and
the same distribution methods as PCs.
This is a critical distinction. Sun is creating a
parallel world to the PC industry, in much the same
way as the Macintosh is a parallel world to IBM compatible
PCs. It is not a high end PC, but rather a
new beast which has some key differentiating features.
</p>

<p>
The other key thing to note is that as far as Sun is
concerned, the die is cast - they are committed to a
strategy of rapid expansion and an assault on the PC
customer base. They have taken the step to build
a clone market, and this will <i>not</i> let them continue
as a technical niche oriented, workstation only
company. Leading a flotilla of clone vendors cuts into
your market share and your margins and the
only way that you can come out ahead is to have it
simulate extraordinary market expansion to
compensate. They have taken this bet, and there really is
no turning back - we can count on them to
see it through to the death.
</p>

<h3>2.2. Fundamental Issues</h3>

<p>
The comparison table covers many points that people raise
about the two markets. If you step back
and look at the really fundamental issues it boils down to
some very simple points.
</p>

<ul>
<li><b>We have the ISVs and a binary software distribution
channel.</b> This is tremendously
important if you want to address the mainstream office
productivity market. Sun is working
as hard as they can to fix this shortcoming. It is the
single largest thing holding them back
from the mass market - today you just can't use a Sun
workstation to do most of the things a
PC is used for. This is true regardless of price, who
sold you the machine, or other factors.
Although distribution, OEM support and other things are
crucial, ISVs are key. Sun is
already building all of the other infrastructure necessary
(clone kits, retail etc) - in part to be
ready and in part to influence ISVs.</li>

<li><b>We have the bulk of the end users.</b> This is a
vitally important thing to remember, but
people seem to forget this all the time - from a raw
numbers point of view, Sun wants our
market a hell of a lot more than we want theirs. If
tomorrow every existing Sun user threw
out his machine and bought a PC with Windows, we would
scarcely be able to tell from our
own sales figures - nor could our OEMs tell unless all of
the volume went to one of them.
Our kind of volume is the pot of gold that motivates Sun
to make some very risky moves,
such as bringing on clones (which could hurt margins). PC
OEMs that look at the
workstation market as an opportunity should keep in mind
that Sun itself is trying to shift
their market away from where it is today in order to
attain PC-like volume levels.</li>

<li><b>RISC gives them a superior technical base.</b>
Over time, ISVs can take the 2X or more
performance advantage that Sun will soon have and turn it
into compelling end user features
that we wil be unable to match with the x86 world. The
truly dangerous thing is that it
involves a change to the binary software compatibility
standard. It is tricky for us to take
advantage of RISC, and transfer our existing momentum
because it means we cannot rely on
compatibility - which has been our biggest strength. This
is true for our software, and also
true for our OEMs who have existing businesses to
protect.</li>
</ul>

<p>
In the "first order" approximation, <i>nothing</i> else
matters. In this sense we <i>are</i> facing a "RISC
threat" -
it is the only one of the points listed in the comparison
table above which in the long run is dramatic
enough that it could break our current momentum with ISVs.
This may sound extreme, but I think it
is the accurate long term view. There are many other
factors which will need to be considered once
you dive into the problem, but this is the key.
</p>

<p>
At the same time, it is important to recognize that it is
a long term issue. If we lose badly enough in
the short term, we may never get to roll out the long term
solution. We certainly must work to
address the short term issues, but without a long term
strategy we are sunk. Since the long term plan
takes a very long time to reach fruition we must start it
at once.
</p>

<p>
Given this view, the primary strategy for us is very
clear - find a way to transfer our existing strength
to a platform which includes RISC, and thus deny Sun the
one crucial point of differentiation which
cannot be addressed with incremental near term moves.
This is another way to phrase plan A
discussed in the introduction - prevent Sun from taking
over our market. The plan of record for
doing this is based on the following ideas:
</p>

<ul>
<li><b>Leverage Windows.</b> We will use the Windows API
implemented on top of NY to be the
bridge for ISVs, and make it easy to port a Windows
application to RISC.</li>

<li><b>Position RISC as a high end personal computer.</b>
This is one of the key goals of the Power
PC approach - unify the RISC platform with the x86 product
line and make them appear to
be part of a continuous spectrum.</li>

<li><b>Tantalize ISVs.</b> The other key thrust in Power
PC is to create a platform (for both x86 and
RISC) which gives them some very interesting new
capabilities. The goal is to make Power
PCs (of both instruction sets) the favored platform for
innovation.</li>

<li><b>Use our existing OEMs to create a standard.</b>
This has had very mixed success because
some of our OEMs, like Compaq are not comfortable in the
inherently risky role of an
innovator. Nevertheless, we must try to use our influence
in the industry as a weapon to
offset the fact that Sun is <i>way</i> ahead of us in many
other areas (reference platform, clone kits
...).</li>
</ul>

<p>
Note that this says nothing about competing with Sun in
their <i>present</i> market, or adopting their
present tactics because that is not our primary goal. It
is a fine secondary goal, but we must first
strengthen the PC industry against an impending assault
from Sun. This means changing the
instruction set and establishing a new binary standard,
which is a big enough undertaking that we
must move on it at once.
</p>

<p>
There are several immediate corollaries to the point that
our main strategy is not an attempt to go after
Sun's present market or tactics:
</p>

<ul>
<li><b>Market strength by itself is not enough.</b> We
cannot keep Sun away by just making
Windows on x86 even more popular. That would still leave
Sun with enough points of
differentiation (particularly RISC) that they can continue
to gain momentum. The analogy
we've used in the past is that no amount of strength in
the character mode PC market could
have stopped the Mac. The only thing which might have
worked would have been the ability
to deny the Mac it's key point of differentiation from
other PCs - which was GUI.</li>

<li><b>We do not have to stop Sun ISV activity in order to
win.</b> Some people (including those at
Compaq) get confused that we have to shut off ISVs from
going to Sun. We don't have to
do that, because we are ahead and will win a tie. In the
short term we must make sure that
ISVs funnel some of the Window 3 momentum toward RISC by
making it a small
incremental investment. In the long term we must make
sure that the next set of "killer
apps" that really exploits RISC performance is not a Sun
only phenomena. Every new
successful machine has been established on the strength of
one (or a mere handful) or killer
apps, and we must make sure that SPARC does not
<i>uniquely</i> get an edge over us in this way.</li>

<li><b>We do not have to be point for point
competitive.</b> One comment that has come up a lot is
whether we can "compete against UNIX with Windows" or
similar direct comparisons. In
this phase of our strategy we are not trying to compete
directly at all - instead we are trying
to end run the competition by making our own market
stronger. It is asking the question the
wrong way around - it is they that are coming after us.
We want to put <i>them</i> in the position
of saying "how can we compete with Windows using UNIX,
especially now that Windows
includes RISC!". The answer we want them to come up with
is that they probably can beat
us in the small, niche oriented, UNIX-loving market they
own today and not in our mass
market.</li>

<li><b>Hurting Sun sales is not enough.</b> One dangerous
illusion is that through efforts like plan B,
we can slow down or stop Sun. This ignores the fact that
Sun is making a long term bet on
the validity of RISC technology, and short term issues are
not going to effect them, unless
they are severe enough to actually bankrupt them. They
will stick to their current market,
keep making some money, and gather ISVs under the banner
of platform neutrality and RISC
performance. As the performance gap with x86 widens, and
some killer apps are written
which exploit it, they will have their chance. A good
analogy is Microsoft application
strategy to bet on GUI - it was a long term move which bet
on using a fundamental paradigm
shift in the technology to advance against entrenched
competition. Hurting Sun's present
market is a lot like Lotus beating up on Multiplan - it
was irrelevent to Jazz (their early shot
at GUI) and later on ws irrelevent in fighting Excel.</li>
</ul>

<p>
Obviously we would like to make our existing market super
strong, stop all Sun ISV activity and beat
them across the board on every feature. It is important
to remember that our strategy is not so fragile
that we need each of these in order to win.
</p>

<p>
The time scale on which we do this is also important.
Although the fundamental issue is a long term
one, that does not belie any lack of urgency. We need to
establish a new binary standard, which is a
hell of a hard thing to do. Precisely because of its long
term importance, it also takes a long time to
take effect. We are also way behind Sun, who put their
platform out four years ago.
</p>

<h3>2.3. Second Order Effects</h3>

<p>
Assuming that we have a strategy to deal with the
fundamental issues, there remains the question of
what to do about the shorter term tactics, and how we or
our OEMs can "take the battle to the enemy"
by adopting one level or another of plan B - competing
with Sun. There are several reasons for doing
this:
</p>

<ul>
<li><b>Give Sun some grief in their home territory.</b>
This is mainly interesting as an indirect way
to slow them down and delay or prevent their entry into
our market.</li>

<li><b>Make UNIX continue to look confused.</b> One of
their points which is anathema to us is
UNIX. This has been a mixed blessing for them because
UNIX is plagued with
fragmentation and confusion. Anything that we can do to
continue that state of affairs helps
us.</li>

<li><b>Learn any interesting tricks for our own
market.</b> The fact that Sun can sell 175K
units/year without a lot of the key benefits PC have is an
interesting fact that might help our
OEMs with incremental sales.</li>

<li><b>Prevent Sun from gaining general mindshare.</b> A
much more important issue than hurting
their sales in their home market is stopping the stream of
good news which fosters a general
impression of wild, monotonic success. As an example, the
PC industry must be seen as
having a long term future, and not simply be a interim
stage until we can all afford powerful
SPARCstations.</li>
</ul>

<p>
It cannot be stressed enough that these goals, however
nice, are not sufficient by themselves. Unless
we could <i>kill</i> Sun or <i>kill</i> UNIX outright
there is <i>no</i> way for Microsoft or the PC industry to
win by
taking these approaches alone. It is highly unlikely that
we or any of our OEMs could kill Sun at this
point by trying to compete on their home turf. Even if
one or more of our customers could do so, if
they didn't do it with a platform that we are involved in
(such as some kind of UNIX), we would just
as bad off. We'd replace "Sun" with another name. If a
PC company out-SPARCed Sun, or MIPS
suddenly took all of Sun's market, or IBM RIOS came out of
nowhere and wiped them out, then
pretty soon we'd be writing memos like this one talking
about how we faced a threat from the new
victor. The only long term hope is to get a platform which
we control to win, and that means NT
Windows.
</p>

<p>
Looking at the market comparison, there are a number of
points in Sun's favor which we, or the PC
industry, could exploit:
</p>

<ul>
<li><b>Direct vs indirect sales.</b> Sun is able to reach
some corporate customers which cannot buy a
similar package of goods and services from PC vendors
because they have a direct sales
force. One can make an argument that as corporate buying
decisions become more "top
down" and centralized, and systems increasing involve
networks and total systems sales, that
one needs a direct sales force to compete.</li>

<li><b>Selling the whole system, including the
network.</b> This is another area where the bulk of
the PC industry has not done a good job to date, but Sun
has. Part of this is a packaging
issue (UNIX includes most networking features), part is
sales and distribution and part of it
is product line (good support for diskless desktop
machines, admin features, security
features).</li>

<li><b>UNIX is a requirement for a segment of the
market.</b> This is because there are a number of
specialized applications which are only found there, or it
is the preferred development
environment for many people because of training and
background.</li>

<li><b>Sun machines are a good value versus PCs.</b> This
is particularly true in having a lot of
RAM, performance and graphics resolution. Most PC
configurations do not compete in this
domain, and if you do set up a PC which does, it is much
more expensive. We could
certainly put our best foot forward and create both price
competition and correct the
perception that PCs are weak compared to
SPARCstations.</li>
</ul>

<p>
The first two points really mean that IBM has not been
holding up their end. This is exactly the area
where they have traditionally been strong, and the market
to which OS/2 Extended Edition was
aimed. There are a number of obvious flaws with their
execution (such as OS/2 itself, too much
reliance on host based systems etc), but there are number
of similarities in the goals.
</p>

<p>
It is certainly possible to take an set of x86 based PCs
and servers (including the network) and
compete head to head with Sun. This means using a direct
sales force, and having the right product
pieces - but you could do this using existing products off
the shelf. It is just a marketing and
packaging issue. Ideally IBM and others will start to do
this.
</p>

<p>
It is the height of folly to believe that this is Sun's
secret, or the main thing we have to fear. The
direct sales force was necessary when they sold $40K
systems which had little third party software.
Now that they sell $5K systems it still works as long as
you sell a bunch of them at a time. The
traditional minicomputer and mainframe companies all do
this - direct sales is still a powerful tool and
Sun has used it like others have in the past - no better
or worse. If this was the sole issue, IBM would
have flattened the whole issue years ago, and they are
still the ones to emulate if you want to go about
this - not Sun. Sun will continue to do the familiar
thing and rely on direct sales until they have their
act together - which means ease of use, ease of
installation and most of all enough third party ISV
support that their systems appeal to the broad set of
people who buy their "solutions" in shrinkwrap at
Egghead rather than needing to have the Sun salesman set
up a turn key system. At that point Sun
will do retail, and what ever other channels make sense.
</p>

<p>
UNIX is another issue which can be a red herring. It is
the universal choice for machines that have
no applications - people in school learn how to write for
UNIX, academics (an important part of the
workstation market, especially in the early days), and it
was the obvious approach for hardware start
ups like Sun which founded the workstation market -
porting UNIX was easier than writing a
proprietary system from scratch. It is very easy to
forget that the company that lead the workstation
industry for many years, and who only recently slipped
into second place (largely because they did
not have RISC and lost to the SPARC's price/performance)
did <i>not</i> use UNIX, and <i>did</i> in fact write a
proprietary operating system (Apollo Domain). Apollo has
a UNIX mapping layer that works pretty
well, but they still use Domain as their base.
</p>

<p>
This is not an attempt to ridicule UNIX, but it is
important to kepp things in perspective. There are
customers that really do need UNIX, either because they
need features that it has, or for other
reasons. Nevertheless, it is not the source of Sun's
strength, and OEMs who think that they need it in
order to compete with Sun are almost certainly fooling
themselves. The market that really needs
UNIX already has it - Sun's market expansion is largely to
companies and customers which are
outside of the traditional scientific and engineering
user, or government user who really does want
UNIX. Unless you are after the SUN <i>installed base</i>,
or the installed base of other random
workstations (which in toto is far smaller than Sun
today), then UNIX in and of itself is not really the
hard requirement that it appears to be. It is very ironic
that at the very time that Sun is trying to get
ISVs from the PC and Mac worlds so that they can <i>break
out</i> of the traditional UNIX mold, other
people look from the outside and think that UNIX is a key
ingredient.
</p>

<p>
In general, trying to enter the market at this stage to
try and beat Sun by competing head to head with
them with UNIX is a sucker's game. Sun is too far ahead,
and too much in control of the key UNIX
standards to make it viable. Mini companies with an
existing sales force might sell some to loyal
accounts as a defensive action to keep Sun out, but they
are not going to take a significant chunk out
of Sun's hide. In flailing about, endorsing UNIX,
endorsing RISC etc, they will only play into Sun's
hands.
</p>

<p>
Finally, there is the issues of the hardware
capabilities. Sun has achieved the image of power and
technology. Part of this is based on the fact that they
used to be much more expensive, and part is a
real edge - the cheapest Sun machine is arguably (but not
dramatically) faster than the fastest machine
in many of our OEMs product line ups. In the short term
this is almost entirely a marketing issue
rather than a technical one - we need to get more
visibility for high end PCs, get the price of the 486
down, and create the impression that high end Windows
machines are cool. One thing that is
interesting is that to date Sun has <i>not</i> tried to
compete in the realm of the imagination by having a
machine which tantalizes ISVs in the way that Power PC
will, or the NeXT machine did when it was
introduced (it was pale in comparison). SPARCstations are
fast and have more RAM and resolution,
but they are not very interesting in other ways. This
could well change in the future, but for now Sun
means power and technology - not innovation.
</p>

<h2>3. WHAT TO DO</h2>

<p>
Our direct action plans are contained elsewhere, and I do
not want to just repeat everything here.
Here are some brief summaries which condense the key
steps.
</p>

<h3>3.1. "Business Workstation" Market</h3>

<p>
This is name that Intel has come up with to describe a
tactical short term response to Sun using x86
machines. Lots of email has been sent about this
recently, but here are the key steps:
</p>

<ul>
<li><b>Define a "flagship" 486 machine configuration for
1991.</b> This must be something which
OEMs can rapidly assemble and market to end users as a Sun
competitor, and has a hot
Windows machine.</li>

<li><b>Create a catch all name and slogan for these
machines.</b> The recent suggestion of the "4
Plus" machine is a good one (486 + 4 meg RAM + 40 meg HD
+ "4th" generation
display...). The name <i>must</i> be applicable to
machines from Compaq and IBM set for fall
release which will not carry the logo or name, so a self
describing name like 4 Plus is good.</li>

<li><b>Evangelize these to OEMs at our October Technical
Briefing.</b> We want to tell people that
the 386SX is doing well as the minimum Windows 3 machine,
but there is a real opportunity
to push the <i>cool</i> Windows machine.</li>

<li><b>Ask Intel to be aggressive about pricing the 486 to
OEMs that sign up.</b> This helps get
price competition with Sun, and makes the 4 Plus machines
appear mainstream rather than
the extravagant image they have today because of
ridiculous prices.</li>

<li><b>Cooperate with Intel and OEMs in a marketing
campaign to corporate end users.</b> This
pushes the notion of a scalable family of Windows 3
machines, perhaps called "the business
workstations" lead by the 4 plus machine.</li>

<li><b>Consider putting together products to
support "system sales".</b> This means LAN oriented
products. An example is the Workgroup Windows product
suggested a while back which is
optimized for diskless Windows machines. This is much
more of a packaging and marketing
issue than technology, although some work might have to be
done.</li>

<li><b>Encourage some OEMs to combine these machines with
direct sales.</b> A feature wise
competitive platform based on x86 machines with Windows
and LanMan (or Novell for that
matter) could easily be put together and sold to many of
the business customers that Sun is
attracting. There are plenty of OEMs who could see this
as an opportunity, and we should
support them if that is their goal.</li>
</ul>

<h3>3.2. Technical Workstation Market</h3>

<p>
This is largely a market which Sun is expanding away from,
but in the meantime there are companies
like DEC, HP, IBM and others who are committed to slugging
it out in the shadow of the Sun
juggernaut. Some OEMs see it as an incremental revenue
opportunity. In general this is an illusion,
Sun's strategy does not leave a lot of room for other
large players, but there are some for which it
could work out. The mail order companies who are planning
SPARC clones (Northgate and
Compuadd) for example, have little investment at stake,
and might have value to add in pioneering a
new channel for this type of machine. They can piggyback
on Sun's efforts and sell incremental
machines to universities or other places which have a Sun
network installed but need some more cheap
machines.
</p>

<p>
The key thing to do in this market is to prevent Sun from
achieving a total clean sweep. Unless they
organize very quickly, the anti-Sun forces will find
themselves swamped in the next year. Headlines
in the industry press saying that Sun has whupped DEC, HP,
IBM and others do not help our cause.
From the other perspective, most of these companies are
potential Power PC OEMs and we should
channel their Sun hatred toward this end.
</p>

<p>
Many of these companies are seeing the proverbial hand
writing on the wall, and see some or all of
the issues in the Trends on the Microprocessor Industry
document occurring. This is causing them to
organize, and as long as they are at it, they may as well
organize around a platform which does us
some good. The primary effort which effects us is the
DEC/MIPS/SCO project to establish a
standard UNIX version and clonable hardware platform based
on MIPS.
</p>

<p>
The steps that we should take are:
</p>

<ul>
<li><b>Negotiate a role in the MIPS/SCO version of
UNIX.</b> They are open to this, and we have
several potential approaches. It is important that we get
a stake and some control in this.</li>

<li><b>Work with DEC to merge their hardware reference
platform with ours.</b> Indications are
that they will be open to this. This would prevent a
needless fracturing of the MIPS market
and give chip companies a near term target for
making "clone kits" from our ASICs (and
those of DEC). It also helps de-emphasize our role in
creating a hardware design.</li>

<li><b>Encourage the non-Sun workstation world to sign
up.</b> Most of this effort will be done by
MIPS (with some help from DEC) and by the chip companies
who want to sell clone chips.
Our private support will be important to tip the balance
at many key OEMs, such as HP.
This would be announced in the next couple of months,
letting the world know that there was
a strong standard other than Sun.</li>

<li><b>Fold the MIPS UNIX based companies into Power PC
when it is available.</b> The basic
hardware platform would the same as Power PC (some
advanced features might need to be
added). Many Power PC supporters will not come from the
ranks of the MIPS workstation
world, but there is no reason not to work the other way
around and let the workstation guys
switch to Power PC when the time comes.</li>
</ul>

<h3>3.3. Power PC</h3>

<p>
This is the core strategy to lock Sun out of the
mainstream PC market. It is covered elsewhere, but
here is a brief description:
</p>

<ul>
<li><b>Define a set of innovative system features.</b>
These include advanced graphics, audio,
minimum RAM configurations etc which are designed for the
next generation of
applications.</li>

<li><b>This set is implemented with both R4000 and 486
processors.</b> We supply system software
for each, using the 32 bit Windows API. This includes new
APIs and libraries which use the
advanced hardware features. Other system features like
the user interface bitmaps and "look"
are tuned to the graphics (photorealistic shading
etc).</li>

<li><b>Power PC is the high end, ultimate Windows
machine.</b> This is its initial positioning - the
top 5% - 10% of the PC industry. Power PC with RISC is
the hot platform for those people
who have made the move to Windows apps exclusively and
don't need old binaries. It is
important to have Power PC with RISC appear as the newest
member of a broad Windows
family, which spans the range of computing from handhelds
to fast RISC machines.</li>

<li><b>Leverage Windows ISV support.</b> There is full
source compatibility between 32 bit
Windows on x86 and RISC, so that addressing RISC is a
small incremental investment. We
also provide a set of tools (pseudo 32 bit support) to
make it easy to port from 16 bit
Windows, and maintain common source code.</li>
</ul>

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