Network: Microsoft follows the Oracle

After years of rubbishing Larry Ellison's idea, Bill Gates has joined the NC club. By Cliff Joseph

There's a saying in the computer industry that whenever an important new development comes along, Microsoft ignores it for a couple of years and then ends up copying it. One of the most talked-about developments in the computer industry in the last year or so has been the NC, or network computer. True to form, Microsoft initially dismissed the NC as an irrelevance, but has now hijacked the idea and come up with a version of its own that it calls the Windows Terminal.

The NC was the brainchild of Larry Ellison, CEO of the database giant Oracle, and a man who makes no bones of his ambitions to end Microsoft's domination of the computer industry. An NC is a stripped-down computer that works only when it is connected to a network. Ordinary desktop PCs have all their software stored on their own hard disks, but NCs download their software from another computer on the network, called a server. They don't need very much memory or a hard disk, so they are simpler and less expensive to produce than PCs. And, instead of using Microsoft's Windows operating system, Ellison has made it very clear that NCs should use software written with Java, the new programming language developed by Sun Microsystems.

Not surprisingly, Microsoft saw the NC as a challenge to Windows, and criticised it as costly, incompatible and difficult to manage.The company also hit back by producing a specification for a "NetPC", a simplified PC design that was intended to be less expensive than a conventional PC. However, a NetPC wouldn't be that much cheaper than an ordinary PC, as it still needs to have Windows, and applications such as spreadsheets and wordprocessors, stored on its own hard disk.

Despite its best efforts, Microsoft couldn't prevent the NC bandwagon from gaining momentum. The idea of a low-cost alternative to traditional PCs appeals to many users. There are many simple business tasks, such as processing sales in shops or taking credit card orders over the phone, that don't require a PC or even one of Microsoft's NetPCs. However, an inexpensive NC would be ideal for this type of task.

So, under pressure from its customers, Microsoft has finally acknowledged that there is some merit in the NC idea. "Customers have told us that reducing total cost of ownership is a critical issue," said Microsoft's vice-president, Paul Maritz, last week. "We are evolving the Windows platform with key hardware and software initiatives to address this fundamental issue aggressively for our customers."

This evolution takes the form of a licensing deal with a company called Citrix. Microsoft has paid Citrix around $100m for its WinFrame software, which turns Microsoft's Windows NT Server into a multi-user operating system. This means that a network server running Windows NT can download the operating system to multiple "client" systems, which could be ordinary PCs, NetPCs or low-cost Windows Terminals.

The Windows Terminal is, of course, simply another name for a network computer. However, there is one big difference between Larry Ellison's NC and Microsoft's version. The Windows Terminal continues to use Windows as its operating system, rather than Java. WinFrame also allows the Windows Terminal to act as a "front end" for Windows programs that are running on the server. This means that you could type some numbers into a spreadsheet on a Windows Terminal, but it would be the server that stored those numbers and performed any calculations on them. This is an important issue for many business users as it allows them to carry on using the same Windows programs that they have on their existing PCs.

Boundless Technology, a company that is already producing network computers, confirms the importance of being able to run Windows. Boundless has sold several thousand of its ViewPoint terminals to corporations such as AT&T, and already uses WinFrame to run Windows software on them.

"We've conducted a lot of market research among potential customers," says Mike Stebel, vice-president of Boundless. "What they want to run is Windows."

Boundless network computers are capable of running Java if that's what a customer wants, but Stebel argues that Java isn't yet ready to replace Windows. "The applications just aren't there," he says, and also points out that Java isn't yet capable of controlling devices such as cash registers and credit card scanners.

That will be music to Bill Gates's ears. Microsoft doesn't care whether you use a PC or an NC, as long as it's running Windows. The irony is that the NC could be a success, but could end up strengthening Microsoft's control of the computer industry. It wouldn't be the first time this has happened. After all, Windows itself is simply a poor copy of Apple's Macintosh operating system, but it's Apple that is currently fighting to survive.

And what does Larry Ellison think of his arch-rival's sudden conversion to the NC faith? So far he hasn't made any public comments. He's probably too busy spitting bloodn