Microsoft Makes Windows NT Sparkle

Corporate Japan has been slow in adopting computer networks, which has worked to Microsoft's advantage. Through the combination of a good product, great timing, productive partnerships, and savvy marketing, Windows NT has achieved spectacular sales volume.
by John Boyd

Windows NT, Microsoft's Windows-based network operating system (NOS), has achieved spectacular success in the Japanese market over the past 18 months. In 1996, Windows NT soared past Novell's competing NetWare to seize roughly 70% of all PC server NOS shipments in Japan. And this year, according to market researcher IDC Japan, NT is expected to grab 80% of the market, a complete reversal of the ratio it held vis-a-vis NetWare just three years ago. NT has certain obvious advantages - such as its PC look-and-feel and price competitiveness - when compared to NetWare and the other leading NOS, Unix. But while these advantages have clearly contributed to Windows NT's popularity, another factor in the NT success story in Japan are some of the unique characteristics of the Japanese computer market.

The roots of corporate networking
One significant market difference is the tardiness that Japanese corporations have shown in taking up computer networks - or, for that matter, the desktop PC. As late as 1994, the ratio of PCs installed in corporations and industry in Japan "was something like one-eighth to one-tenth" that of the US, estimates Jun-ichi Saeki, a computer systems analyst with IDC Japan. "In Japan, the history of PC networks is very short. It really only started around 1994 or '95."

Klaus Bollman, chief executive of UK-based NT Networks, a seller of various network technologies to Japanese computer vendors, agrees. "As late as 1992," says Bollman, "the typical network technology in Japanese companies was still passing 'round a floppy disk."

By comparison, the US can trace its love affair with networks back to the mid-1980s, when Sun Microsystems began to exploit the powerful communications features of Unix, eventually hitting on the maxim "The network is the computer." Sun wasn't left to shine alone, as numerous industry newcomers and veterans, including Stratus, Tandem, NCR, and Unisys, also zeroed in on networking by taking advantage of the easily licensed Unix operating system from AT&T (the originators of Unix). Even the industry's ancients - Digital Equipment Corp. and IBM - despite favoring proprietary technologies, hopped onto the Unix bandwagon at their customers' insistence.

Toward the end of the '80s, IS (information systems) managers - the people who run corporate mission-critical computer systems - discovered that implementing Unix in a client/server setup provided a cost-effective means of distributing computer power throughout an enterprise. In fact, client/server quickly evolved into a new computing paradigm, one that broke the dominance of the mainframe in the US.

Meanwhile, Novell was busy conquering the low end of corporate computing with its popular NetWare NOS. As companies sought improved communications by tying their PCs together in local area networks (LANs), installations of NetWare increased. Novell, with its army of independent certified NetWare engineers, together with the Unix vendors, helped establish networking technology as a fundamental part of America's corporate computing scene.

Right place, right time
Not so in Japan. "Here, very few companies focused on NetWare or Unix, especially in the commercial market," says IDC Japan's Saeki. "This is why the mainframe and the ofucon (midrange "office computer") has had such a long life in Japan."

The situation only began to change after Japan's bubble economy burst, in the early part of this decade. Finally, around 1994, "Japanese companies became enthusiastic about the PC when they saw PCs could help raise productivity, especially white collar productivity," notes Saeki. The next logical step was to get PC users communicating together, in order to further boost productivity. And so, networking has finally started blossoming here.

The timing could hardly have been better for Microsoft Japan, which shipped the Japanese version of NT 3.1 in January 1994, just as corporations were seriously beginning to consider investing in networking technologies. "NetWare had never been strong in Japan," acknowledges Kiyoshi Fujioka, manager for Microsoft Japan's NOS business. "So when we entered the Japanese market with NT, no one was really established - which has been fortunate for us." In explaining NT's success, Fujioka candidly admits, "We didn't really do anything unusual. We did what we had to."

Nevertheless, one special marketing effort has focused on computer magazines. Microsoft has courted them enthusiastically, and supplied beta software giveaways for their readers. A good example of this market-seeding took place when Microsoft chairman Bill Gates visited Tokyo this summer to unveil the Zero Administration Kit (ZAK) for NT 4.0. ZAK aims to give PC administrators central control of all PCs on a network; it also enhances security by limiting the number of applications end-users can install on their PCs, or that they can access from a server.

Prior to the ZAK launch, Microsoft Japan supplied beta copies on CD-ROM to selected magazine publishers, for distribution with their publications. One result was that Windows NT World set aside 20 pages to cover the technology. "Think how much 20 pages of advertising would cost," says Fujioka with a shudder. "It would be huge!" (He adds that Microsoft products in the US don't get that kind of coverage.) To milk the opportunity to the max, notes Fujioka, Microsoft Japan provides an upgrade from the beta disk to production software, at an attractive promotional price.

Strength through partnership
But it's not all about slick marketing. "A unique feature of the Japanese market is that the hardware vendors are also major systems integrators," points out Microsoft's Fujioka. "So we worked hard to make good relations with NEC, Fujitsu, Hitachi.... Every time we released a new version [of NT], we carefully briefed these vendors early. This was important to our success."

Now that such relations with vendors concerning NT are firmly established, Microsoft is working to get its Back Office suite of NT applications (database, communications and network management software) equally accepted. To this end, it has established a Back Office support division within Microsoft to work with counterparts among its major partners. Probably no one is working more closely with Microsoft than NEC, which also happened to oust Compaq Japan as market leader in PC servers in 1996. NEC has established an engineering center in the US with Microsoft, where it's helping the latter to evaluate and improve new versions of NT and Back Office.

"We can use our mainframe experience of the past 30 years to help test the software and raise reliability," says Hisanori Yamauchi, senior manager of product planning in NEC's workstation division. "As these systems grow more important, they must run nonstop 24-hours a day, so we are providing know-how and certain technologies to help Microsoft."

Yamauchi observes that this tight relationship has given NEC a time-to-market advantage over the competition when it comes to introducing NT hardware. For instance, NEC claims to lead the competition with emerging clustering technology (the capability of tying NT servers together to scale as one virtual computer, or to cover for each other if there's a breakdown). Currently, Microsoft's Wolfpack clustering technology can typically support a cluster of two to four servers. But NEC - through the use of proprietary middleware - demonstrated at a September expo for its NT Express servers held in Tokyo the capability of supporting up to eight servers in a cluster. What's more, Yamauchi says that though NT servers normally support up to four CPUs, NEC can support up to eight in one Express server. This is a scalability that can provide a challenge to Unix at the high end.

The NT migration
Its not only NT's growing power at the high-end that makes it attractive. Given that NT uses virtually the same interface as Windows 95, and given that it can run earlier 16-bit Windows applications as well as the newest 32-bit industrial strength software, companies with large PC installations find it cost-effective and convenient to choose NT for their PC server NOS.

"You can train a person to be an adequate - not a brilliant - NT administrator in just a few days if they are already familiar with Windows PC-style computing," says Steve Carter, an independent computer consultant in Tokyo. "At least the manual is readable." On the other hand, he cautions, "If you want to train somebody on Novell, you've got a lifetime job because it's so arcane. A great system, but arcane."

As for Unix, Carter says, "If you want a Unix master... well, you can't even find one in Japan. Every headhunter is out there looking for them."

All of which helps to explain why more corporations are leaning ever closer to Windows NT. "We plan to migrate from Windows 3.1 to Windows NT," says Hideaki Nishimura, an IS section manager for Nippon Roche KK in Kamakura. Nishimura explains that Nippon Roche has about 60 NT file and application servers, operating in its various offices throughout Japan, as well as a small number of Unix servers running mission-critical client/server software from the German-based software house SAP.

"There's a problem with standard memory in the Windows 3.1 clients," laments Nishimura. "Sometimes, the software freezes. We will migrate these clients to Windows NT because it's more stable."

It's a similar story at the Tokyo offices of IS consultants and accountants Price Waterhouse. Maurice Toyama, a partner and IS risk management specialist with the company, says that the consulting arm of Price Waterhouse has moved from Windows 3.1 to Windows NT, while the auditing and tax services groups will do the same before the end of the year. "Evolution of Windows 3.1 has stopped. But the 32-bit NT architecture is stable and evolving, with applications like Microsoft Office 98," explains Toyama. "We want the same secure architecture throughout the network."

Toyama adds, however, that for the company's fundamental computing services, including accounting, it continues to use SAP running on Unix. "And that's not going to change."

Such examples illustrate a point made by Susan Frankle [See last month's Industry Eye column, page 56.-Ed.], a server analyst with market researcher IDC. Frankle estimates that roughly 80% of NT's current market is focused on departmental applications like filing and printing. This indicates that despite NT's rapid penetration, when it comes to the day-to-day operation of most organizations, Unix continues to be the NOS of choice - at least for the present.?

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