Fundamental Changes Shaping Industry / Trends Include Information Sharing, Uniform Standards, New Power

By Andrew Pollack, Ny Times | THE JOURNAL RECORD, March 31, 1988 | Go to article overview

Fundamental Changes Shaping Industry / Trends Include Information Sharing, Uniform Standards, New Power


Andrew Pollack, Ny Times, THE JOURNAL RECORD


MOUNTAIN VIEW, Calif. - When Andreas V. Bechtolsheim, a Stanford University graduate student, could not find a computer that would satisfy his needs, he built his own, a machine that used standard microprocessors and software and easily connected to other computers.

That computer became a sensation and led to the founding of Sun Microsystems Inc. Six years later, Sun is on its way to achieving $1 billion in annual sales and becoming the next major computer company.

The rise of Sun is more than just the story of a company with a ``hot box,'' as a fast computer is often called. Sun has exemplified the trends that are now sweeping the computer industry during its most fundamental change since the introduction of the personal computer a decade ago.

Among the trends, all of which Sun has capitalized on, are these:

- Computer makers are increasingly adopting standards to allow one computer to exchange information with another and machines made by different vendors to use the same software. This is a sharp departure from the traditional approach - using proprietary systems - of International Business Machines Corp., Digital Equipment Corp., and others.

- Customers are more often connecting computers to exchange information, rather than simply using individual machines. Such distributed processing potentially offers lower costs.

- Computers based on microprocessors are becoming as powerful as some mainframe computers or minicomputers, yet for only a fraction of the price. A Sun work station offers computing for $5,000 per million instructions per second, compared with $60,000 for a Digital minicomputer and $140,000 for an IBM mainframe, according to John C. Levinson, computer analyst at Goldman, Sachs & Co.

The changes propelling newcomers like Sun are hurting many of the entrenched companies. IBM has barely grown in three years, and minicomputer makers like the Data General Corp. and Wang Laboratories Inc. have gone through painful losses. The trends also are behind several recently announced joint alliances like those between Apple Computer Inc. and the Digital Equipment Corp. and between Sun and the American Telephone and Telegraph Co.

Indeed, some analysts predict the whole industry will be turned topsy-turvy, with new powerhouses emerging.

``The companies that benefited most from the old world have the most to lose'' in the new world, Levinson said.

``The real impact of the microprocessor revolution will not come from the individual use of personal computers but from the accelerating replacement of traditional mainframe and minicomputers with much lower-cost microprocessor-based alternatives,'' William F. Zachmann, vice president of International Data Corp., a consulting firm, said in a recent report. The result will be a dramatic collapse in the price of a given level of computing power ``that will make the stock market's Oct. 19 crash seem tame by comparison.''

Traditionally, computer makers produced computers with unique operating systems, the basic software that controls the machine. As a result, a Data General computer could not run software written for a Hewlett-Packard computer. A video game for the Commodore personal computer could not run on an Apple.

This tended to lock customers in to a single vendor. IBM, which took the biggest lead in large computers, benefited the most. Software companies wanting the biggest potential market would write for IBM computers, which made IBM machines even more attractive to buyers.

But customers became increasingly reluctant to become locked in to a single vendor, because they could encounter problems if that vendor stumbled or better software appeared for another machine.

The result has been a big push away from proprietary systems toward standardized systems. …

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