IP: Bus.Wk: S/W REVOLUTION--Internet changes everything

[Dave Farber <farber () cis upenn edu>]

Posted-Date: Fri, 24 Nov 1995 17:34:15 -0500
Date: Fri, 24 Nov 1995 14:33:44 -0800
To: farber () central cis upenn edu
From: Jim Opfer (via RadioMail) <opfer () radiomail net>
Subject: Fwd: Bus.Wk: S/W REVOLUTION--Internet changes everything




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> Business Week: December 4, 1995
>
> THE SOFTWARE REVOLUTION--
> The Internet changes everything.  Coming soon: Cheap, Web-ready
> mini-programs. No wonder the giants are jumpy
> .
> .
> .
> Now, Microsoft is in the hot seat. On Nov. 16, Rick G. Sherlund, the
> influential Goldman, Sachs & Co. analyst, dropped Microsoft from the
> firm's recommended list, citing slower sales growth in conventional PC
> software and warning of the rising challenge to the giant from Internet
> software suppliers. The Web, he noted, ``is a serious threat to
> Microsoft's ability to set standards for important parts of the
> industry.''
> .
> .
> Meanwhile, thousands of programmers and computer designers are racing to
> prove that on the Web, there's a better way--a chance to end software
> lock-in forever and perhaps make bloatware obsolete. The breakthrough
> technology? It could be a programming language from Sun Microsystems
> called Java.
>    Once a computer--no matter what brand--is equipped with Java
``client''
> software, it can run any Java application that comes across the Net.
Click
> on a hyperlink to your bank to check loan rates and you'll get the data
as
> well as a Java ``applet,'' a special application program to calculate
what
> your monthly payments would be for different amounts and different loan
> lengths (page 82). Soon, little Java programs may hit your PC the way
> E-mail does. ``The Web turned the Internet into a giant disk drive,''
says
> Mark Pesce, a San Francisco creator of Web software and a Java
enthusiast.
> ``Java turns the Internet into a giant processor.'' JAVA'S MASSIVE BUZZ.
> Java embodies two key attributes of the new software business. It is
> designed specifically for the Net, and it is an object-oriented
> programming tool, based on the object language C++. Object technology
> turns conventional software on its head. Since the earliest days of
> computing, programs and data have been rigidly separated. The financial
> information you want to assess and the program that does the
> number-crunching are completely independent, yet useless without one
> another. With object technology, information and programming are merged.
> These ``objects'' behave the way objects in the real world would: One
> called ``checkbook'' might tally up your checking account, for example.
> .
> .
> There will be Java rivals, too. While considering licensing Java, IBM is
> working on its own ``Web-executable'' language. It's a combination of a
> new programming language called Bart and LotusScript, the development
> software that will ship with an upcoming release of Notes, IBM's Lotus
> subsidiary's groupware program. Netscape--which will bundle Java into the
> next release of its Navigator browser--has its own language, called
> LiveScript. It's based on Java, but easier to use. And Microsoft says it
> will have a Java equivalent in its Visual Basic language--once that is
> adapted to the Net.
>    From tiny one-person shops to startups staffed by prominent Silicon
> Valley executives, the Net is teeming with new Web software companies.
> Most wouldn't have a prayer in the conventional software market. But the
> Net represents a green field where no software maker dominates. ``The
> Internet changes everything,'' says J. Neil Weintraut, managing director
> for technology research at Hambrecht & Quist Inc.
>    Start with something as simple as distribution. Today, software makers
> spend huge sums to crank out disks, put them in appealing packages, and
> move them through wholesalers to store shelves. Then, they spend millions
> more on advertising to get customers to go into the stores and buy. On
the
> Web, a customer simply clicks a few onscreen buttons, and the software
> comes back across the line. When there is a new version of software,
``you
> turn on your network computer and it will show up. There is no store to
go
> to. There is no installation,'' says Ellison. Today, it can take anywhere
> from several minutes to several hours to download a program, but
> high-speed communications will make electronic distribution more
> practical.
>    The way you pay for software will change, too. Instead of paying a
> one-time license fee, which entitles you to perpetual use of a program,
> you may pay for software the way you pay for a magazine. For example,
> software companies may offer subscriptions that, for an annual fee,
> entitle you to unlimited usage and the latest updates to a program or
> group of programs. At the same time, all sorts of network services--stock
> quotes, digital photo archives, bill-paying services, and the like will
be
> delivered online, along with software to use them. ``What you're really
> selling is a service fielded over the Internet--the software comes for
> free,'' says John Landry, a former Lotus executive and now an IBM
> consultant.
>    Eventually, all we'll think about is the content--we'll assume the
> software is there. ``The lines between content and applications are
> blurring,'' says Marc Andreessen, the 24-year-old programmer who helped
> dream up Mosaic, the original Web-browsing software, and is now
> vice-president for technology at Netscape. Helping the process will be
> Java and other Web-programming systems that make it possible to ship
> ``interactive content'' across the Net. An example might be an electronic
> catalog that includes a Java applet for ordering. When you hit the
``buy''
> button, the program will execute on your computer--then vanish when the
> transaction is complete. Scott McNealy, Sun's CEO, calls it disposable
> software.
> .
> .
> It's an idea that has a lot of appeal in Silicon Valley--not least
because
> it has the potential to undo the dominance of the Wintel standard. One of
> the most fervent supporters of the idea is Oracle CEO Lawrence J.
Ellison.
> Oracle has developed an operating system that takes up just 1 megabyte of
> main memory, Ellison claims, vs. as much as 8 megabytes for Windows 95.
He
> says the program will be given away by Internet services providers and
> built in to computers and consumer-electronics gadgets by next summer.
> After that, says Ellison, it's downhill for the PC. ``I really think that
> Windows 95 marked the zenith of the personal-computer industry.'' ``A
> DARWINIAN DEVICE.'' Ellison is also a big backer of Java, which is built
> into the planned Oracle operating system. He says the new setup will have
> special appeal for corporations that want to cut PC support costs.
> Improvements to the software will simply show up across the Net. ``We're
> talking about enormous savings of not only dollars but time,'' he says.
> .
> .
> FED UP WITH THE MANIA. Microsoft, too, may be a prisoner of its own
> success. With an installed base of 100 million computers running Windows,
> the company puts more and more resources into keeping new versions of the
> program compatible with previous ones.
>    In Win95, a big chunk of the 15 million lines of code are there just
to
> ensure compatibility.
>    The new competition has no such baggage. Java--and programs like
> it--are ``a direct assault on Microsoft's whole paradigm,'' says Robert
> Aston, president of market researcher Market Vision in Santa Cruz, Calif.
>    Leading the assault, Sun is busily seeding the Java software market.
> It's selling Java licenses at $125,000 a crack--and downloading free
> HotJava browsers with Java clients to workstation and PC users on the
Net.
> Licensees include Oracle, Macromedia, Toshiba, Borland, and Spyglass. Sun
> is also making Java freely available for research, education, or
> evaluation purposes.
>    The Java mania grates on Gates. ``What's new about [Java] vs. other
> programming languages? Why is BUSINESS WEEK writing about Java?'' he
says.
> ``Just having another computer language doesn't change the dynamics of
any
> of these things.'' But Doug Henrich, Microsoft's director of developer
> relations, says the company ``is looking hard'' at licensing Java, since
> the market is clamoring for it.
>    For now, Microsoft is racing to get its own Web software going. It's
> pushing Visual Basic as the programming language for developing Web
> applications. A complementary software scheme, called Object Linking &
> Embedding (OLE), lets developers create objects--say a spell checker--
that
> can be moved from one program to another. Originally designed for use on
> stand-alone PCs, OLE is being extended to operate across networks--no
easy
> task. Blackbird, the proprietary ``authoring'' tool originally designed
to
> create multimedia content for the Microsoft Network, is being reworked
for
> the Web.
>    Because its tools are already used by thousands of developers who have
> invested hundreds of hours learning the intricacies of Windows software,
> Microsoft can be assured that many will follow it to the Internet. There
> is already a thriving market for ready-made Visual Basic and OLE objects,
> such as spell checkers or chart objects, that developers can drop into
> their programs. Microsoft would like to extend those to the Net--before
> another scheme catches on.
>    At this point, Wall Street is betting on the challengers. The stories
> (often exaggerated) of Java's potential--along with a booming market for
> Web servers--has helped Sun's stock more than triple this year since
June.
> Netscape's shares continue their gravity-defying rise, reaching a new
high
> of $120 on Nov. 20. That gave the startup--with projected sales of $47
> million this year--a market value of more than $6 billion, exceeding that
> of $11 billion Apple Computer.
>    No wonder Netscape is providing the business model for the new
software
> industry. It won 70% of the browser market by giving its product away on
> the Net. Now dozens of startups are doing the same. Take Progressive
> Networks Inc., a Seattle-based startup that makes software for delivering
> real-time streams of audio over the Net. The company's Real Audio
> player--which is needed to play the sound clips--can be downloaded for
> free from links to dozens of Web sites. ``The marching orders are: Get
big
> fast, subjugate profit--even revenues. Just get your product out there,''
> says Hambrecht & Quist's Weintraut.
>    How will these strategies ever pay off? Netscape has started to sell
> Navigator for $40 in stores, and bulk sales to corporations helped it
turn
> its first profit--ahead of schedule--in September. But the master plan is
> to cash in by selling the lucrative ``server'' software that companies
use
> to create and run Web sites. SEEDING THE BROWSER MARKET. In its own way,
> Netscape hopes to gain the type of leverage on the Web that Microsoft has
> with the Wintel lock-in. Having seeded the market with millions of
> Navigator browsers, it is feverishly adding extensions to the HTML
> standard so that Web pages programmed with Netscape software will look
> their best only when seen with the Netscape browser. Anybody can use the
> extensions, but by the time they do, Netscape will be adding something
> else. That creates the potential for locking in operators of Web sites
> with the Netscape server. ``When you see a Web page that says Netscape
> 1.1-enhanced, you're looking at the value of Netscape's stock,'' says
> David Winer, a veteran software developer and commentator.
>    Not to be out-Microsofted, developers there are working on their own
> browser and server software. The browser, called Internet Explorer, has
> been available since shortly after the August release of Windows 95, as
> part of an add-on package called Microsoft Plus! And it has been shipping
> with new Windows 95 PCs. A new version, Explorer 2.0, is now available.
> Like Netscape, it includes proprietary changes to the HTML format to
> enhance graphics and improve performance--and plant the seeds of software
> lock-in.
>    Microsoft could afford to lose the browser market. But it's determined
> not to give Netscape the strategically important server business. It is
> testing a Web-server program, dubbed Gibraltar, that it expects to
release
> early next year. Gibraltar is based on the two-year-old Windows NT but
> adds features for handling HTML documents. Another product due next year,
> called Catapult, will add security features. The server market, expected
> to zoom from just $20 million this year to $300 million by the end of the
> decade, ``is much more up for grabs,'' notes Sherlund.
>    Like its new competitors, Microsoft is giving away software to get a
> position in the Web market. Some 500,000 copies of the Internet Assistant,
> a program that converts Microsoft Word documents to HTML, have been
> downloaded free from Microsoft's Web site. In addition, Microsoft just
> came out with Word Viewer, a freebie for viewing or printing Microsoft
> Word documents on the Net without having Word installed on your PC.
>    Microsoft isn't the only software maker to feel the effects of the Net
> software revolution. Lotus, now an IBM subsidiary, is furiously
attempting
> to adapt its information-sharing Notes program to the Web--before cheap
> Web-based products displace it. Lotus is trying to convince corporations
> that Notes offers more than they can get with simple Web tools. It's also
> adding features to smooth the flow of information between Notes and the
> Web and to let the Notes ``client'' view Web information. A likely next
> step: drastically cutting the price of the Notes ``client'' software.
> ``RECREATING WINDOWS.'' As the old gang learns new tricks, so do the
> newcomers. The next version of Netscape Navigator 2.0, due in December,
> will include tools for developing Web applications, E-mail, and workgroup
> software gained from the company's purchase of Collabra Software. In
> addition, Netscape will bundle ``plug-in'' programs, including Java,
> Adobe's Acrobat document viewer, and the Real Audio player. Netscape is
> also exploring other areas, including such applications as word
> processors. The danger: In its attempt to be more like Microsoft,
Netscape
> could succeed--in the wrong ways. ``Pretty soon, you end up recreating
> Windows,'' says Sherlund.
>    So who will come out on top in the new software business? Perhaps no
> single company. If the Web revolution really creates a level playing
> field, then the days when a few giants call the shots could be gone
> forever. Let the games begin.
> .
> .
> ---------------------------
> The Shifting Balance of Power
>
> WHO MAY WIN --
>
> NETSCAPE: Its Navigator browser could become the Windows of the Web.
>
> SUN: Java is gaining a fast following among programming's vanguard. The
> challenge: Turn Java into a moneymaking business.
>
> SMALL DEVELOPERS: Using the Net to distribute software opens the market
to
> small developers that could not crack the old business.
>
> WHO STANDS TO LOSE --
>
> MICROSOFT: The software giant has the most to lose if it can't extend its
> influence to the Web.
>
> IBM/LOTUS: The Internet provides a low-cost way to do many of the basic
> tasks performed by Lotus Notes. A Net-friendly Notes is a must.
>
> RETAILERS: Some consumers will continue to shop in stores, but more and
> more software will be distributed over the Net.
> ###


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