The biggest story of 1996, the event that threw all of the cards for 1997 right up in the air, was Apple's unexpected acquisition of Next.
It was a dramatic and superbly timed coup - a twist in the tail of the year that put Apple back in the frame.
1996 proved a particularly harsh year for Apple: sales and profits decimated, massive staff lay-offs, new corporate brooms sweeping clean, and a clawback in its reseller channels like nothing that has gone before. Mac OS had started losing its momentum, developers were edgy, and then Ellen Hancock had come along and burst the hopelessly over-inflated Copland balloon.
Mac users started to revolt and look elsewhere, especially on the Internet/intranet front - a 'creative' market sector where Apple technology did not reign supreme.
The $400 million deal to bag Next put paid to suspicions that Gil Amelio was a hatchet man who was scaling down Apple's bloated expectations and turning the company into a profitable, but second-rate, player. Amelio now looks like a grand architect of the future face of the industry, bringing back into the company not just Steve Jobs but people such as Rick LeFaivre, who will be in charge of research, with a special emphasis on human interface design.
It's not just the immediate product range that Next brings, it's the long-term goals of the PC industry, well into the next century, that Amelio is preparing Apple for.
The Next deal immediately positions Apple superbly in both the enterprise and Internet/intranet markets. It brings in technologies - the object-oriented Open Step enterprise solutions and the Web Objects Internet-enabling environment - that could blow away Windows and NT as the platforms of choice in those arenas.
Apple may have lost the Mac-Windows war with Microsoft in the first half of this decade, and it may have made a big mistake in letting Steve Jobs go. But now the company's visionaries and troops are coming home, and the mother of all battles with Apple's Wintel adversaries is looming in the closing years of the millennium. My, how quickly the landscape can change in the computer business.
For much of last year there had been a lot of speculation that Apple would buy up Be OS, the operating system developed by Be, a start-up company created by former Apple employee Jean Louis-Gassee. But while Be thrilled the pants off Mac users at various Apple trade shows last year, it clearly lacked one or two things that Next has: a long-term track record and developer awareness as well as key strengths in enterprise
and Internet areas. In other words, Be just wasn't big enough for the job.
There was also a great deal of scepticism about among key Mac developers that a dual-operating system strategy - half-Mac, half-Be - would work for Apple. The Next deal means new life for Mac OS as Next Step technologies are grafted on to the OS.
In some respects the two key PC players over the past two decades have now gone back to square one.
Jobs couldn't resist rubbing Microsoft's nose in it: 'Much of the industry has lived off the Mac for over 10 years now, slowly copying the Mac's revolutionary interface,' he said. 'Now the time has come for new innovation.
'With this merger, the advance software from Next will be married with Apple's very high-volume hardware platforms and marketing
channels to create another breakthrough, leapfrogging existing platforms, and fuelling Apple as well as the industry copycats for the next 10 years and beyond.'
That's fighting talk of the highest order, and it inclines one to be a little sceptical, and ask whether Apple really is capable of rising from the flames.
As with all mergers, this one could fail to be smooth and 'the perfect fit' - although marrying the Apple and Next cultures shouldn't prove to be too problematic.
It has suddenly started dawning on a lot of people that Big Blue is back in town.
Lou Gerstner's three-and- a-half years at the top have seen Wall Street fall back into line and start heaping praise on a resurgent IBM.
The RJR Nabisco kid has got Big Blue back to basics and focused on giving the customers everyday solutions to their business needs, and not pushing agendas that nobody wants. Hence, last year saw a belated goodbye to OS/2 Warp, now in maintenance mode, according to Bluespeak (or 'shelved' to mere mortals). Next year could see dramatic moves in the Internet and intranet markets.
The decision to de-Warp was undoubtedly a good one, because it offloads a lot of old baggage - especially all the energy IBM has spent on a misguided punching match with the Wintel alliance. OS/2 Warp had become a totemised relic of that now almost forgotten war with Microsoft, Intel and the tin kids from Texas: Dell and Compaq.
The great success of the Wintel axis was in piercing Big Blue's armour, previously thought impenetrable, and squarely edging IBM out of control of the desktop market. The Power PC alliance with Apple and Motorola, and the Warp development effort were attempts to stop the rot on the desktop, but they don't seem to have worked.
Ditching Warp leaves IBM with a clean slate and hopefully a wiser view of the market. It has announced that it has split the personal software products group into three divisions, of which the main one will be network computing solutions.
It will handle the Domino/ Notes software line and incorporate a collaboration with Netscape on a joint project, codenamed Galileo, for intranet and groupware applications. Netscape seems to have a special place at Big Blue - the company's server products have been shipping with RS/6000 servers for some time. Lately, though, the affair has turned into a bit of a love-hate relationship on Netscape's part.
In October, Netscape declared that it wanted to focus its efforts on destroying Notes' domination of the groupware market, which puts the two Galileo collaborators head-to-head in the coming intranet/ groupware wars.
One can't help thinking that IBM must be feeling cocky and sure of itself in having tiny little Netscape as its sparring partner rather than the nasty Wintel axis. But then, that seemed to be IBM's attitude when it did the Dos deal with the tiny upstart newcomer Microsoft in the early 80s.
Some feel that being kingmaker to key software technologies is IBM's strength - a role that it has historically been unable to come to terms with. Rather than using its dominant position in the hardware market to its advantage in selling tin, middleware and services, it has sought to take out operating system suppliers with its own competitive versions - PC-Dos vs MS-Dos, Warp vs Windows, AIX vs all the other flavours of Unix. Maybe it has learned a lesson, and in 1997 it might position itself to take advantage of the next platform.
Gerstner has made no secret of the fact that he's a Java addict. He thinks thin-client/ fat-server is the future, and IBM certainly seems to have been positioning itself in the later part of 1996 for all the ramifications that the new Internet and intranet technologies will have on the PC and Unix markets.
As it did with MS-Dos and Presentation Manager/ Windows, IBM may give the new Java-based platform the kind of endorsement that will make the technology a pervasive standard, and certainly a credible alternative to the Wintel Net PC, which should start shipping next year.
In the channel, IBM has been working hard to create more consistency across its product ranges in how it deals with its business partners - a standard set of terms and conditions, for instance, is being implemented.
It is also widening its RS/6000 channels (the November appointment of Ingram Micro to supply RS/6000 across Europe has sent shockwaves through the distribution channel), in preparation for growing demand for client/ server intranet solutions.
All this suggests that in 1997 IBM could start to re-emerge as the powerhouse that drives the channel, as it was in the early 80s. Once again, it could become the central player that no one can afford to ignore.
Crunch time grows ever nearer for Microsoft, which embarked on its Internet-embracing and enhancing strategy this year by way of its Internet Explorer and Active X initiatives.
But is all the hype and commotion it is generating on these fronts doomed to be overtaken by events? Will another browser - perhaps based on the Java Virtual Machine, and possibly originating inside IBM - emerge in the course of the next 12 months? Will Active X simply run out of steam?
None of this is likely, because Microsoft has a formidable marketing machine, it has loyal channel partners that depend on it, it has heaps of cash and, above all, mountains of momentum.
Just as it's riding the waves of NT, Backoffice and Windows 95/97 across the corporates, the beginning of the next wave in computing, thin-client/fat-server, is starting to take hold of the imaginations in big business.
All the plans that Microsoft had laid to win the server market from Big Blue suddenly seem irrelevant in a volatile and changing market.
Sun's Scott McNealy has had a perfectly mischievous year taking the wind out of Microsoft's sails. So much so, in fact, that Microsoft has retreated in sensational ways before the onslaught. It licensed Java off Sun - licensing someone else's software is something Microsoft has never done before because it prefers to own and control key technologies. It opened out a core technology, Active X, to an open standards group, despite previous protestations that open standards never work. It retreated from its position that thin clients aren't the future by announcing its Net PC initiative with Intel, and it admitted there's a lot of truth in the 'zero administration' manifesto that Sun has been putting about.
The fact is that talk of zero administration costs, combined with the thin-client/fat-server model, is music to the ears of corporations, which view computing purchases not in terms of the upfront capital outlay, but in terms of the ongoing costs. That means long-term maintenance and reliability issues, alongside staff training costs, are more important than the cost of the installation.
The thin-client/fat-server model, as Sun's channel manager Pete Deane rightly points out, is one that 'combines the best of both worlds - the control of a centralised system, which the old IT departments lost when desktop PCs were introduced, and the power of the dispersed networked PC model.'
Corporate minds are being won over by the concept of easily upgradable and easy-to-use thin clients, while PCs weighed down with heavyweight Microsoft applications are looking increasingly uneconomic in the corporate computing framework.
'Why rip and replace?' goes the current Microsoft hymn sheet. 'Why not build on what's there, and save money?'
The problem is that many corporations may well now be thinking there could be a lot of savings in the long term if they go for a dramatic transition to a completely new IT model over the next couple of years.
But the war of the words is a bit of a smokescreen for a more uneven battle on the ground. In simple terms, Microsoft has more troops and artillery than Sun has - probably enough to win the war. Microsoft has always been good at building up a diversity of channels to market and managing the conflicts that sometimes arise. Sun's channels are strong, but very linear.
Microsoft now has a wide range of business partners that depend on it.
They're hooked, and they have to make Microsoft technologies succeed if they're to survive. Microsoft's business partners will have to do some hard thinking in 97, as well as keep on pushing that Active X bandwagon uphill. The incline may be steep, but they've got no option.
Sun is cocky right now. Too damn arrogant some say. A lot of people might get satisfaction from seeing the company take Billionaire Bill down a peg or two, but will they be laughing in a few years' time if sneery Scott McNealy - the man who just named his first-born Maverick - is king of the castle?
The worst thing that could happen to Java - that it gets broken up into a variety of competing flavours just like Unix did - could well be the thing that is currently happening to it. Microsoft would dearly love to turn the Java arena into a battlefield where a myriad of warring factions get sucked into an unresolvable tangle. Divide and conquer is probably the only option open to Microsoft.
The licensing deal that Microsoft signed for Java seems to have tied its hands in the ways that it can take the language and alter it to its advantage. Several other Java licensees, notably Netscape, have gone off in a proprietary direction, creating foundation classes for their versions of Java, which Sun has refused to endorse as part of the official Java class library.
Microsoft is similarly arranging for its Microsoft version of Java to include class libraries that favour the Windows environment, by pulling together a range of third-party class developers under the banner Microsoft Gallery for Java. These include: Aimtech's Jamba for multimedia, Intel's Realistic Sound experience (RSX) and Realistic Display mixer (RDX) for positional sound and animation effects; and Object Design's Objectstore PSE for persistent storage of Java objects.
These class libraries are being distributed from Microsoft's site under the Gallery tag, which probably means they're not in breach of the licensing agreement. But they herald a future, maybe two years downstream, where Microsoft and its partners have created a Java development environment that is multimedia rich, and particularly suited to intranet applications.
The Sun/ Apple link-up, and possibly the IBM/Netscape alliance, are potentially the only competitors with enough background and expertise to turn out a multimedia-rich version of Java that could compete with the Wintel axis.
It is around Java that the seeds for future conflict, competition and profit are being sown. Over the next 12 months, resellers will have to start making up their minds who the potential winners and losers are going to be in the next wave of computing - the first wave of the 21st century.
As the emerging battlelines become clearer in 1997, and the outlines of the evolving channels become more certain, resellers will be in a better position to plan for the future.
Right now, it's still very much a wait and see policy, though perhaps aided by percolating a bit of Java expertise in-house as insurance, no matter what brew you choose. You won't go wrong with that.
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