The Bloor Perspective: Microsoft, Citrix, CA and Sterling

It cost $1bn to develop and its release date slipped several times, but it's here now. The build-up to the release of Windows 2000 has been more muted it was for Windows 98, which itself never reached the heights of Windows 95. There have also been a few 'flies in the ointment' this time including the release of a Gartner Group report which claimed the new OS would be slow and possibly incompatible with some existing software - which had Microsoft shares in retreat.

By the end of the Win2000 day, an unexpected departure from the set script occurred. Bill Gates stated that Microsoft would be willing to open the source code for its Windows software to competitors in order to settle the long running antitrust case. Such a move would allow competitors to create and sell their own modified versions of Windows and might even make it possible for Microsoft to run some kind of 'open source' programme.

We believe that the take-up of Windows 2000 will be strong on PCs and notebooks for all the usual reasons and we can expect the Windows NT server momentum to push through to server sales. What is less clear, is how large the take-up will be in the over $100,000 server market, where currently NT only has about 2 per cent share. This is what Windows 2000 is really targeted at and this is where it will ultimately be judged either as a success or failure.

** Windows world turned upside down **

Citrix has just turned the world inside out by allowing Windows applications to be run inside of a Web browser. This is achieved through the newly launched NFuse add-on to its Metaframe Windows server product. The basic idea is to allow the user interface for Windows applications running on Metaframe to be published onto a Web site. One of the big advantages of this - the user needs no Citrix software installed on their client machine. They can therefore access applications from any device with an Internet connection and a browser, regardless of where it is located.

This facility will be extremely attractive to ASPs who wish to provide an aggregated service based on multiple applications. With no proprietary component required on the desktop, the provision of services is that much cleaner. NFuse will therefore allow Citrix to build upon the momentum it has already gathered in the ASP arena.

Citrix could be criticised before for having only a partial thin client offering as it was tied to the idea of Windows emulation. Some have argued quite convincingly that the browser will become the default thin client interface over time. That way, the client device is completely independent of the service provider and the vendor of the software that drives its servers. Citrix can now deal with this objection very effectively through the launch of NFuse. This, together with the recent announcement of Metaframe becoming available on Unix, really does make Citrix a total thin client solution provider.

** CA's Sterling opportunity **

When Sanjay Kumar - Computer Associate's president and COO - described the proposed acquisition of Sterling Software, the word that kept recurring was "largest". In monetary terms, this - at $4bn - is the largest acquisition in the software industry to-date. The combination of the product lines is claimed by CA to make the company the "largest" supplier of storage management technology. The total software portfolio will certainly be the "largest" outside of IBM, and specific product lines such as business intelligence will also get pretty close to being the largest set of offerings. The combined company will be one of the largest suppliers of Federal systems.

So what? Is CA really in a position to exploit the breadth of scope of Sterling Software's solutions?

At first sight CA already operates in all of the principal technology areas addressed by Sterling, but in fact the degree of product overlap is quite small - the capabilities and missing features of the two organisations seem to mesh remarkably well. It will be a considerable task to integrate the product lines so that CA can deliver a comprehensive suite of functionality with a single management interface - expensive but certainly achievable. These new capabilities provide the challenge for CA as well as the opportunity. Not only must development work be carried out to exploit the capabilities of technology from both companies, but also field operations must adapt to sell and support the resulting products. The success of this will depend, at least in part, on the ability of CA to retain a core of sales and field support staff from Sterling. Kumar indicated that there would not be large numbers of job losses due to the acquisition. History has shown, however, that over the coming weeks while awaiting FTC (Federal Trade Commission) approval, there is likely to be an open-season for competitors to sow the seeds of disillusionment and encourage as many key staff as possible to jump ship.

This will be the critical factor in the success of the acquisition. CA must retain a sufficient percentage of skilled staff in development, sales and support. If it is successful in this, then the company should be able to exploit the Sterling technology to retain its lead in systems management, join the leaders in storage management and start to challenge in the areas of business intelligence and application development. Without these skills it will be an uphill task to deliver on the full potential of the acquired products. So this becomes another "largest" - CA's largest challenge.

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