September 16, 1990

HIGH-TECH executives today are all too aware that calling the global computer business mercurial is the understatement of the year. No matter what part of the world they’re sitting in, all know that a dumb move may spook the horses and empty their corrals. One very good reason is that customers are a lot more savvy than they used to be about who holds the reins.

This became very clear to me a little over a week ago, during a lunch meeting with 17 visiting executives from Groupe Bull S.A., the French computer conglomerate that bought Zenith Data Systems nearly a year ago.

It was a bit unsettling to be on the other end of the interrogation process, but highly educational. And one of their main topics was about the UNIX operating system.

Frankly, I hadn’t realized how hot the winds of UNIX were blowing around the world. Bull executives claim that European customers absolutely insist on UNIX today, that the French government will not buy a computer that is not capable of running the UNIX operating system, and that Bull’s biggest challenge today is to move successfully from its proprietary operating system to the industry standard of UNIX.

That’s a very big deal, and similar stories are affecting every company in the global computer industry. As little as 10 years ago, virtually all the big hardware firms — IBM, Bull, Digital Equipment Corp., etc. — used proprietary operating systems to handle the interaction between a computer and the applications it runs. An application generates data, and when an application is based on a proprietary system, I can’t take my payroll data, for example, from my Hewlett-Packard minicomputer and run it on my Digital Equipment minicomputer.

Until a few years ago, “proprietary” was a useful marketing tool, though it was more like a gun to the head than a sales pitch — customers were disinclined to change computer companies when it meant enormous (and often insurmountable) hassles converting data from one to another.

Then a gangly colt called Sun Microsystems decided that customers were tired of being held at gunpoint by the computer industry, and started marketing the “open system” concept — an industry-wide operating system standard using AT&T’s UNIX — and invented a networking system that would let customers use any computers they wanted in any configuration, invisibly swapping data between them.

Customers really, really liked this, and as a direct result, every week you can read reports about another big computer company like Bull, H-P or DEC finding its painful, costly, booby-trapped way toward shifting decades-old product lines to UNIX.

Bull was already hurting. It ended the first six months of 1990 with a $331 million net loss, and is planning to lay off 3,000 of its 50,000 employees by year end. But this story is not news. It’s on the financial pages every day, about one computer company or another. Customers just won’t buy computers today unless they conform to some kind of standard, and their willingness to say, “That’s okay, I’ll wait,” has thrown the computer industry on its ear.

But good things are happening as a result. The inevitability of worldwide standards has made computer companies pull their heads out of the sand and start seriously considering how to be competitive in the world market, too.

Bull’s field trip to the United States was a very visible part of this trend, because it’s just one indication that Bull wants the U.S. market as much as the U.S. wants to chip away at Bull’s. I’m hoping to get a better idea of how all this will shake out when I visit France next month for the first European Technology Roundtable Exhibition, called “Technology and the New Europe.”

Alex Vieux, chairman of ETRE and West Coast correspondent for the French newspaper Le Monde, has rounded up a veritable Who’s Who of top executives from 17 countries. Under the auspices of Palo Alto-based consulting firm Dasar Inc., he is encouraging American and Asian technology innovators to talk strategy with European customers, distributors and public officials.

I am quite certain that such discussions could not even have been conceived without the enormous push toward standards that the user community demands today. So I must respectfully submit that although I’m sorry that times are tough for the computer industry right now, nothing but good can come of being purified by the fire of giving customers what they really want.