Network computing might have been an idea hyped out of all proportionme very fat profit up for grabs for the resellers that secure their place in the market now. by Larry Ellison, chief executive of Oracle, only to fizzle out amid the stunning indifference of the dealer community and the industry, but if you thought the thin client was heading for a similar fate, think again.
Thin clients are threatening to make some companies very fat indeed.
Wyse Technology and IBM, NCD and Boundless Technologies and, of course, Citrix and Microsoft with Terminal Server, are all benefiting. Fujitsu is in the game, along with Hewlett Packard and Data General, while Dell is advertising Boundless thin clients on its Website. The one vacant name here is Compaq.
Resellers are benefiting as well. Some of the thin client path-finders are already known and acknowledged - Esteem, Esoft, Point to Point. But other resellers that might be deemed as corporate businesses are also involved, including Lynx Technology, Basillica, SCC and Computacenter.
'Apart from the internet, this is probably the most exciting and interesting market to be in,' says Dave Mills, marketing director at Wyse Technology.
IBM, Wyse and NCD all boast they will double sales this year. Market leader Wyse claims to have shipped 112,000 units last year and to be growing at 30 per cent quarter-to-quarter. NCD claims to be doubling sales in every three-month period.
It isn't just in niche markets that the thin client is finding a home.
IBM claims to have taken an order for 12,500 machines from a German bank recently, another for 6,000 from a Dutch distribution company and one for 3,500 from a UK insurance firm. Local government and education are taking a keen interest as well as the private sector. Citrix is said to have four million concurrent licenses with a user-to-license ratio of four to one.
According to the Gartner Group, half of all applications will be running on thin clients by 2001. Aberdeen Group estimates that 30 per cent of all desktops will be thin devices by 2002 and that 80 per cent of the world's users could benefit from thin clients. It also believes that the only barrier to their use is psychological, as people are still addicted to the desktop PC.
Interest is growing fast, say the vendors. 'We are seeing an explosion in the Windows Terminal Server business,' says David Perry, regional director of NCD. 'X-terminal business has declined and is being replaced by Windows.
Microsoft coming in has validated the whole game.'
There are a number of drivers for the market: the needs to reduce total cost of ownership (TCO), year 2000 compliance (thin clients are a cheap, quick answer that doesn't entail a big commitment), migration from client-server, band-width preservation and, according to Mills, the rise in merger and acquisition (M&A) activity.
'If a company is going to make two or three acquisitions in the next couple of years, it can deploy thin-client technology very quickly and the back end is already year 2000 compliant,' he adds.
Uncertainty about the future and the need to keep options open are holding back the thin client market but giving it hope for the future. Many users don't want to make any further commitment to the PC until they know what the future holds, according to Mills.
As well as the year 2000 and M&A activity, globalisation, virtual organisations and the influence of the internet are all making users think hard about the future. There are opportunities, but many users still need convincing, says Davison Baron, thin client specialist at distributor KNS.
'Every month has been a complete surprise. We have seen some phenomenal wins and great projects, but a lot of people have been scared because they haven't understood where it was going or what a thin client is and what it does.'
Peter Warrington, technical services product manager at Lynx Technology, says users still need to be educated on the limitations of the technology, as well as its capabilities. 'If they are expecting it to be an all-encompassing open architecture, they need to think again.'
Being thin is the problem - thin clients handle screen and keyboard information, but multimedia files and images can cause bad bottlenecks. For voice, .wav files are supported but most other multimedia formats are not and must be kept off the system.
There are incompatibilities between the different versions of the Office applications, Windows operating systems and Terminal Server itself, Warrington adds. And applications from other software vendors such as Lotus may not run very well, if at all.
'To assume it will all come across on a thin client is a mistake,' he says. 'This is not an open standard and the integration and support of third-party applications is not necessarily always available. You need experience and skills to sell and support thin-client systems. We have had to focus on systems to make sure we have the experience of multi-server environments. We had to focus on growing our skills.'
What many vendors need at this stage of the game is access to the top projects. 'I sign off between 12 and 20 Var applications a week across Europe, but we are really looking for the larger companies capable of doing the big launches at the moment,' Mills explains.
Jane Rimmer, marketing manager for northern Europe at Citrix, thinks there is a place for them all. 'Resellers such as Esoft, Esteem and Point to Point do a good job for us. As it gets more integrated into enterprise computing, the bigger boys are seeing the benefits.'
The big projects are there now, Mills adds. 'I attended a seminar recently with 70 users. When they were asked how many of them were not looking at or not thinking about implementing thin-client technology, not one of them put up their hands.'
Some resellers are still ignoring thin clients, according to Derek Ashmore, director of sales operations and product management for the network computer division at IBM. 'There are still a lot of dealers out there sticking to the devil they know. Yet a lot of agents and Vars are embracing it because they see it as a much more manageable, controllable system.'
Those resellers that have come from a mainframe or host-driven background, he adds, are more likely to understand the benefits of the server model.
And there is plenty in it for the resellers that do address the business: 'The customer model changes. They are moving from a client-server to a server-client model and someone has to help them do that - that's what's in it for the channel.'
In the four years that Point to Point has been running, it has got better, claims Michelle Gibson, product manager at the reseller, but there is still a long way to go. 'I wouldn't say it's a lot easier. When we first started educating users, it was a pretty hard slog. Now we are in an enviable position because we are fairly well established, but there are still an awful lot of users that don't know about thin clients.'
This is a potential opportunity for the reseller willing to go out and sell the thin client concept. But it's not a subject you can just jump into headfirst, hoping to muddle through, she warns. 'A lot of resellers have tried that and got their fingers burned. Just last week, one reseller was canned because it got a thin client project wrong. We have been involved in a lot of projects where the customer has been given the impression that it is just a boxed system, only to discover that the skills just aren't there.'
Resellers need the right attitude and experience to sell thin clients, says Baron. 'I have some very good resellers out there but these are guys who are used to going out and doing a concept sell. Resellers that are just responding to people are not doing such a good job.'
Frances Fawcett, Windows product marketing manager at Microsoft, also thinks resellers should be cautious, but says no special skills are required to get into thin clients. 'It's an extension of their NT skills and they have had to build on those skill to deploy NT,' she says.
Resellers don't need a special accreditation to sell Terminal Server - just the NT skills. But that doesn't mean they don't need other talents, Fawcett explains. 'It's a bit like any other technology - e-commerce, for example. There are resellers with greater depths of understanding in certain areas.'
Timing is the key. Resellers entering the market so far may have found customers willing to look at the technology and run pilots, but there are complications that can't be seen at the outset. Thin-client installations, like any others, always have their unforeseen hurdles and teething problems, says Warrington.
But the arrival of Windows 2000 will almost certainly make life easier with thin clients. This is because, as Mills puts it, it is a more integrated product for the server-client environment. Windows Terminal Server has been bolted onto NT and this is the root of all the compatibility problems.
Windows 2000 and the Office 2000 products are expected to integrate more smoothly with the thin-client environment although this, of course, remains to be seen. But if the system works well, it could provide a real shot in the arm for thin-client sales.
But a boom is not guaranteed. Firstly, Windows 2000 has to arrive and work well with Office 2000. Then there would need to be a widespread abandonment of the PC - and indeed of existing PCs, including Pentiums, PIIs and PIIIs - that are more than capable of running the thin-client version of the Office 2000 applications.
Organisations that already have the Citrix Metaframe products and the management capabilities that brings over and above the Microsoft remote desktop protocol (RDP) clients, probably won't want to revert back to a more basic client. But if Windows 2000 works and works well, management may not be such an issue. That could mean a lot of sales for thin-client vendors and could cause some problems for Citrix.
You do not need, even today, any special client program from Citrix to run Windows applications on Windows terminals using Terminal Server at the centre. Microsoft provides the RDP and Windows 95 or 98, Windows CE and Windows for Workgroups will run with Terminal Server.
But users have to have Windows for that as any other client needs Citrix Metaframe and the ICA protocol. So Dos machines, Macs, Unix terminals, X-terminals and anything else needs Citrix. And Metaframe has other capabilities that might make you want to run it that RDP does not offer.
The exclusive deal on non-Windows clients, however, ends in November, although Citrix and Microsoft have a joint development agreement that runs into 2001. What happens to Citrix after Windows 2000 arrives will depend on how good the latter is at handling the server-client set-up.
For now there is no arguing with Citrix' performance.
Rimmer claims the qualities of Metaframe will give Citrix a distinct edge. Beta products that will run with Windows 2000 are out already and features such as load balancing, resource management and installation management services will set its products apart.
For resellers, whether it is Citrix or RDP at the client end running Windows, there is no difference. The message and the potential is the same - lower cost, more centralised management, better control of versions and licensing.
The thin-client vendors will also be pressing home the applications service provider (ASP) line which will, they claim, enable users to reduce costs even further. The idea of ASP is that all the applications sit on one central server and are called upon only when they are needed at a particular the client station. Subsequently, users need only pay for the number of concurrent users. This could lead the concept of applications rental to become a reality - users will be able to source applications time from servers in the IT department or even located at an outside supplier.
Microsoft is circumspect about this particular issue. 'The interesting thing to explore is the licensing,' says Fawcett. 'As it becomes possible to be more component-based, we will have to look at how that is managed.
But that's not exclusively a Microsoft thing - it applies to any application.'
Before most companies seriously consider such systems, the next real wave of thin client adoption needs to happen. Most people involved in the thin client business agree with Gibson that there is 'corporate acceptance of the technology', but think there's still some way to go in turning pilots into projects and live working systems.
There are already some big, well-known users. Point to Point has put systems in for Vodafone, Littlewoods has a large Wyse Winterm installation, Muller Dairies has installed NCD machines and there are many others, including Volkswagon, General Accident and EuropBank, for example.
'We are able to give people that comfort factor,' Perry claims. 'We have the sites and IT managers are beginning to talk to each other.'
Microsoft's involvement has made all the difference, adds Gibson. 'It was almost as if customers had said, "Microsoft has endorsed it so now we can buy it".'
If Windows 2000 proves to be really good at the server-client game, thin clients can surely expect another boost. But will it? Up until now, it is not a desire to run Windows applications that has been triggering projects, says Warrington. Most of the work is in line-of-business applications that are being migrated from mainframes or from client-server networks.
Often these applications need to be run across Wans and IS managers see thin client as a way of keeping want to keep traffic levels down.
'A lot of customers want to deploy line-of-business and central-office applications to a Wan and thin client is a way to deliver that. Microsoft has made a strong TCO case but the prime driver is in the line of business applications.
This causes complexities, he points out. In one test implementation of a customer's application, a PDF file was sent and displayed in response to the initial log-on, but that filled up the pipe so it had to be reduced in size. A certain amount of configuration and rewriting was needed to make the system work properly. Printer configuration problems are also common in thin client set-ups.
Because of these problems, pilots are essential, says Baron. 'Most applications aren't written for this environment and there are a lot of bad applications out there.'
Experience and skill count when it comes to the real-life implementation, Warrington adds. 'You need knowledgeable staff because there is a danger of walking into "contractual holes".'
Users and resellers are gaining confidence in thin client technology - no systems integrator should leave the area to its competitors for much longer.
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