From the Horses' Mouths

ACCJ High Tech Committee luncheon

In a voice as large as his towering frame, Steve Ballmer, executive vice president of Microsoft, bulldozed his way non-stop through a dozen different topics, enthralling a packed luncheon meeting in Tokyo recently. Speaking at the invitation of the High Tech Committee, a standing committee of the American Chamber of Commerce in Japan, Ballmer displayed the power and enthusiasm that has made him number two at Microsoft, right next to chairman Bill Gates.

Ballmer began by observing that the industry has undergone a fundamental shift over the past 10 years. Until a decade ago, it was a monolithic mainframe environment, with minicomputer manufacturers like IBM, Fujitsu, and DEC single-handedly supplying a corporation's total computer needs. Today a dynamic, fragmented personal computer industry dominates the market, setting the pace of change. The industry is led by entrepreneurial companies focused on specific technology segments.

Ballmer noted that a second major phenomenon is underway: business process re-engineering (BPR). Companies are reconsidering how they can fundamentally restructure themselves to do business more efficiently. "The advent of the change to smaller computers, with this different kind of infrastructure, is allowing people to combine technology with new business processes in ways fundamentally changing the way people live and work," Ballmer declared.

Driving the PC to dominance are the continual advances being made in hardware, accompanied by falling prices. Ballmer pointed out that in comparison to a typical personal computer of just four years ago, today's PC offers roughly 8 times more memory and 6 times more hard disk capacity, runs 10 times faster, and includes a CD-ROM drive -- all for about two-thirds of the 1990 price.

Expect such advances to continue, Ballmer advised, though don't expect much more reduction in price. "The somebody else will [still] cost between $2,000 and $3,000. But the capacity, the change, and the innovation at that price point will be amazing."

Other prophecies from Ballmer included "softer software" applications that will monitor your behavior and intelligently anticipate your actions. "We expect to see great innovation... that will make routine tasks automatic, and complex tasks routine." He also predicted innovative OA equipment from Japanese manufacturers that use more digital technology and Microsoft at Work, a Windows-based interface aimed at bringing standardization and ease-of use to machines in the office.

IDC International Computer Seminar

In the same week that Ballmer was forecasting industry trends, David Moschellar, senior vice president of market researcher International Data Corp. (IDC), was predicting a major move by Microsoft into the home computing market.

Moschellar was one of nine analysts speaking at IDC's annual International Computer Seminar at the Four Seasons Hotel in Tokyo. He reasoned that Microsoft is facing redoubled competition at every level of business computing from the likes of IBM, Oracle, Novell, Computer Associates, and Lotus. It would be a smart move, he suggested, for Microsoft to put more priority on the home market, where competition remains second tier with leaders of the Broderbund. The home market, Moschellar added, will be "the big growth market over the next five or six years."

Analyst Nancy Battey noted that the workstation market is changing as it reaches maturity: growth is slowing from the 30 to 50 percent range annually in the late 1980s to less than 10 percent in 1993. With the slowdown, manufacturers are faced with a number of strategic choices about what to do next. They can choose to go after the lucrative server market that's fuelling the growth in networking. They can stick with the traditional workstation market that gets most of its business from engineers and scientists, and hope to expand into the business world. And/or they can help pioneer the personal workstation market, an emerging market based on "Power Desktop" computing running on low end workstations and high-end PCs using advanced operating systems like Windows NT, Solaris, NextStep, and UnixWare According to Battey "The personal workstation is the last chance traditional workstation vendors have to make any inroads into the desktop market."

Personal computer analyst Bruce Stephen focused on the worldwide PC marketplace. Stephen said that while the US industry has come out of the recent worldwide PC buying boom stronger than ever, other regions including Latin America and emerging Asia-Pacific countries "have become ever more important pieces of the global [market] puzzle."

Underscoring the continuing US supremacy, 8 of the top 10 PC vendors globally in 1993 were American. The other two were Japanese: NEC in the No. 4 spot (on the strength of its continued dominance of the Japanese market) and Toshiba at No. 9 (based on its know-how in notebook engineering.

Regarding the 1994 outlook, Stephen expects the majority of top 10 vendors "to grow well above the market average." IBM, though, currently No. 1 in the rankings, is expected to record flat growth, given that it gets harder to increase growth when shipments are already exceeding 4 million units a year. The one vendor Stephen singled out for a drop was Commodore, which has been experiencing a slow-down in growth and is undergoing a financial crunch.