When Microsoft launched its NetPC offensive last week, it dealt a strong blow to a network computer (NC) alliance already weakened by competition and infighting, according to analysts. The NC consortium, led by Oracle, Sun and Netscape, is "a very touchy coalition", says Dwight Davis, editorial director of Windows Watcher, a newsletter based in Redmond, Washington.
"Most of the partners are going to be competing, if they're not already, on various Internet fronts. They want to pry the Internet business out of Microsoft's hands and that has sort of united a lot of strange bedfellows on the NC side," Davis says. "And I think it's going to be a constant battle for them to maintain their unity as they go forward in this battle with Microsoft." In particular, Netscape is alienating its NC partners by forging into the server market, analyst Amy Wohl says, speaking at Microsoft's Site Builder conference last week. "Sun seems less happy and Oracle seems less interested."
The clashing takes place not only on the level of business competition, but also on a more visceral level. For instance, the NC partners have a nasty habit of bickering with each other, says Rob Enderle, an analyst at Giga Information Group in Santa Clara, California.
Oracle head Larry Ellison has publicly questioned Netscape's long-term viability, and Netscape has accused Ellison of trying to drive Netscape's stock price down so he can buy the company. "This does not lead to warm, close relationships," he says. "It's hard to find a set of alliances around Sun or Oracle, for that matter, that have stood the test of time."
The paradigm shift from PCs to the network appliances that the NC group promotes, analysts say, is more drastic and harder to sell to corporations than Microsoft's option of offering a middle solution, in which users are more reliant on the network but maintain their Windows applications. "The switching costs for a company moving over to the NC is quite a bit higher than a move to the NetPC, which is much closer to what they already have," Enderle says.
In addition, users are turned off by compatibility issues that are cropping up in the NC camp, says Davis, of Windows Watcher. "They're already talking about some incompatibilities in some NC options, and the corporate IS manager is facing the prospect of inevitably having PCs to begin with," he says. "If on the NC side you've got further subdivisions, that makes it tougher to sell."
Initially, however, the NetPC announcement lends credibility to the NC strategy to move more resources off the computer and onto the network, according to Davis. "Microsoft carries a lot of weight in the industry and I think Sun, Netscape, Oracle and others have called Microsoft's bluff," he says. "The fact is that they've found that the key weakness of PCs isn't really the selling price," but maintenance and administration, he says.