7 Computer Firms Set Joint Software Project

Financial

7 Computer Firms Set Joint Software Project

Consortium Seen as Bid to Head Off AT&T Control of Key Market With Unix System

John Burgess; Curt Suplee
The Washington Post

May 18, 1988

In a highly unusual act of collaboration, seven of the largest computer companies in the United States and Europe today announced plans to spend up to $90 million on joint research into software.

The companies said their goal is to develop software that can run on many different types of machines. But many analysts saw another objective: blunt aggressive moves by American Telephone & Telegraph to control a key corner of the market.

The consortium consists of International Business Machines Corp., Digital Equipment Corp., Hewlett-Packard Co., Apollo Computer Inc., Groupe Bull of France, and the West German companies Siemens AG and Nixdorf Computer AG.

Chief or senior executives from all seven firms addressed reporters and analysts here about the project today.

"I never thought I'd see the CEO's of IBM, DEC and H-P all on a stage smiling at each other," said Marc Schulman, senior technology analyst at Salomon Brothers.

What is bringing the group together is Unix, a computer operating system originally developed by AT&T. An operating system is a basic set of instructions that tells a machine how to run a specific software program. Since it lost its telephone operating companies in 1984, AT&T has been struggling to make it big in computers. However, it has chalked up enormous losses, estimated to total $1.4 billion over 1986 and 1987.

One point of strength that AT&T has always enjoyed, however, is Unix, which it devised in the 1960s to control its phone switches. Licensed out freely, it has become the favored system in many engineering and research labs. But its true domination in the market place has been hampered because there are so many versions of the Unix system-20 by some counts.

Many licensees have modified it, meaning software that runs on one can't be used on another without costly modifications. As linkage of different computer systems by telephone becomes more common, pressure for compatibility is on the rise.

Last year, AT&T teamed up with another hungry newcomer to the computer field, Sun Microsystems Inc., to merge the three dominant versions of the operating system into a single "unified Unix." This, it hoped, would serve the cause of compatibility and bring more of the Unix world under its direct control.

Later, it introduced a new, easier-to-use Unix in a bid to broaden the system's presence beyond laboratories. It also cemented the alliance with Sun by buying a 20 percent stake in the company.

Many competitors cried foul, saying AT&T was not giving them fair input into design of the new Unix. Furthermore, they argued that Sun would have a leg up in the hardware market by knowing in advance the form it would take, some executives complained.

In response, AT&T convened an advisory council, but the companies were not satisfied. Private talks were then initiated, which, in some analysts' view, resulted in today's consortium, to be known as the Open Software Foundation.

Starting from a base of IBM's form of Unix, the foundation will attempt to devise its own universal Unix. The organization will be run democratically, it promises, with any company-including AT&T-free to join and to be on the inside of all developments.

"The only disappointment we have is that AT&T isn't sitting here with us," Digital Equipment President Kenneth Olson told the group today. His remarks drew laughter.

AT&T, meanwhile, said today it will not join the foundation. It cited plans to continue its own work on Unix and questioned whether a coalition of so many disparate parties could make timely progress, an issue also raised by many analysts.

Groupe Bull President Jacques Stern maintained that "independent software houses will be encouraged to develop new applications because they can address much broader markets."

Gordon Bridge, national sales vice president for AT&T's Data Systems Group, praised the foundation's creation, calling it "a very good day for AT&T." The foundation had endorsed Unix, he noted, and this could only be good news for AT&T.

Other analysts, however, suggested that AT&T was putting on a brave face. Announcement of the foundation could slow proliferation of AT&T's form of Unix, some said, by causing buyers to hold off purchases to see what emerges from it.

But IBM Chairman John Akers said customers "can be best served if an independent body beholden to no one vendor ... can create a common set of specification."

CAPTION: WHAT IS AN OPERATING SYSTEM?

American Telephone & Telegraph Co.'s Unix system-a key element of its high-tech competitive strategy-is a complex "operating system" software program that governs how computers and other hardware communicate.

Operating systems provide instructions that link pieces of hardware, enable computers to run spreadsheets, word processing programs and other software applications, and let the machines process commands and information entered by users.

Many operating systems, because of their close relationship with specific computers, are limited to use on only one manufacturer's brand of hardware. Some can be used on a variety of machines if they are designed to accommodate them. (Microsoft's MS-DOS, for IBM-compatible personal computers, is an example of the latter.)

Some operating systems are designed for a single user performing a single task. Some will run on mainframes, but not on mini- or microcomputers, and vice versa. It is difficult, and sometimes impossible, to transfer files between computers using different operating systems.

This forces commercial software publishers to create different versions of their programs for each operating system used in their target market-an expensive and laborious process. And it obliges a business to restrict its computer purchases to a single vendor to ensure that additions to a system will work with the old hardware.

Unix, pioneered at AT&T's Bell Laboratories in the late '60s and early '70s, offers solutions for both problems. Its core code (or "kernel") needs little modification to run on a wide range of computer hardware, from workstations to personal computers. It is designed to accommodate a number of different users simultaneously and to permit users to do two or more jobs at once.

-Curt Suplee

PHOTO,,Upi; PHOTO,,Ap; CHART Caption: Groupe Bull's Jacques Stern: Move will encourage independent firms. Caption: IBM's John F. Akers: Customers "best served" by an independent body. Caption: UNIX MARKET SHARE (The data from this chart is not included).