October 9, 1995

When the Internet’s original creators decided to publish their networking standards – called the Internet Protocol – so that any computer could connect to the network, they certainly had no idea that almost 30 years later, their decision would provide the first real lever to pry the Microsoft-Intel duopoly from its leadership role.

But this very prospect is why one well-known technology investor was able to make a speech last week that might have gotten him laughed off the stage a year ago. He called it, “Why Microsoft and Intel Don’t Matter Anymore.”

The speaker was Roger McNamee of Integral Capital Partners and the audience was personal computer industry executives attending the annual Agenda conference in Scottsdale, Ariz. Until recently, he said, so-called Wintel PCs – the industry’s name for computers that run Microsoft Windows software on an Intel microprocessor – were mostly used for word processing, spreadsheets and other office applications. As the applications became more complex, the processor became faster and more able to keep up.

But, McNamee said, the critical shift taking place is that the market will no longer need to care how much faster a chip can crunch numbers or process documents.

He believes the new top priority is communications-centric applications like electronic mail, groupware and information services and making sure computers have the right software to send messages and interact easily with different computer systems.

And since interacting with other computers is the Internet’s job description, a growing number of people believe it is on its way to becoming the world’s largest computing environment – a kind of global operating system.

A new generation of applications, designed to run on top of the Internet’s protocols, won’t care if you have a Wintel machine, a Unix workstation or a Macintosh. All that will matter is how fast a computer can reach other computers and how much information it can suck in and spit out onto the network.

If you’re a hardware or software company built around this model, said McNamee, then “Microsoft and Intel don’t matter. Operating systems don’t matter. Bandwidth matters.”

McNamee made it clear, however, that it is foolish to count out Microsoft and Intel just yet. Based on the success of Windows 95, people will be buying new computers, word processors, spreadsheets and other off-the-shelf applications for a while longer. “Microsoft is in the biggest product cycle of its life now,” said McNamee. “They’ll have good earnings for at least another year or two.”

And he knows that Microsoft is well aware the majority of its profits come from a market that is getting long in the tooth. Microsoft’s new online service, Microsoft Network, and its Blackbird software that builds interactive services, are a couple of hedges against the future.

But while Microsoft slowly throttles up its Internet engine, the prospect of new types of computers optimized for communication and digital media is already at hand. Jean-Louis Gassee, the former chief technologist at Apple Computer, last week demonstrated just such a machine, produced by his start-up company, Be Inc.

And both Larry Ellison, chairman of Oracle Corp., and Eric Schmidt, chief technical officer for Sun Microsystems Inc., said at the Agenda conference that there was a market for a small, cheap computer for Internet computing. Ellison said later, at the Telecom 95 trade show in Geneva, that Oracle would have a device fitting that description by mid-1996.

Though Sun doesn’t intend to manufacture such a device, the company must feel especially vindicated by the events of the past year. In 1985, prescient in the extreme about the role the Internet would assume in the world, Sun introduced a marketing campaign called “The Network Is the Computer” to encourage vendors to support the open system standards – like Unix, Ethernet and the Internet protocols – upon which Sun continues to base its business.

Indeed, as a new generation of entrepreneurs uses the Internet to push Microsoft and Intel aside, they may want to meditate for a moment on how these open standards actually created this new “computer” called the Internet.

Ambitious companies like Netscape Communications and Oracle, both promoting a browser-plus-server strategy, have each declared they want to be “the Microsoft of the Internet,” and they don’t just mean they want to sell a lot of software. Both want to dominate the Internet in the same way that Microsoft and Intel have controlled the desktop for the past decade.

By using proprietary chunks of software to give each company’s Web browser features that would only work on that company’s Web server – features like better security methods and more powerful searching capabilities – Netscape and Oracle would effectively balkanize sections of the Internet. This is Microsoft’s approach, too.

But balkanizing the Web is a short-sighted strategy, because the Internet will become a thriving marketplace only if everyone who uses it can easily get anywhere they want to go.

Companies and users are being drawn by the millions to the Web because it is open. And it is open because people created, published and distributed its software underpinnings: Internet protocols, the World Wide Web format, Mosaic (the original Web browser), and HTML, the web’s software language.

In fact, it is because people all over the world were encouraged to copy and distribute and use that free software that Netscape, the Internet’s first billionaire baby, has a reason to exist. So it is a bit worrisome that Netscape and others who took great advantage of open protocols are now looking at ways to wall in parts of the network with their custom software.

After working so hard to beat Microsoft to market, it might be nice to wait a while before becoming them.

Denise Caruso

c.1995 N.Y. Times News Service