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Illustration by Nick Galafianakis

For years, Microsoft has been nearly invincible. The company's Windows operating system software now runs on 85% of the world's personal computers. Its Office suite of applications claims 87% of the $3.8 billion market. And in what seemed like the click of a mouse, the software giant overhauled its strategy to zero in on the World Wide Web, capturing 36% of the browser market--in just two years. Microsoft even fought off the Justice Dept. in 1995, agreeing to a consent decree that hasn't slowed it down one whit. Now, with trustbusters having filed a petition on Oct. 22 claiming Microsoft has violated that consent decree, one can't help but wonder: What will stall the software titan?

EQUAL ACCESS. As it turns out, corporations--those very customers that have propelled Microsoft Corp. by buying Windows and office applications--are starting to deal the company a blow by turning to Java, the programming language pioneered by Sun Microsystems Inc. Thanks to Java's potential to make computing much easier by creating programs that are written once and then run on many operating systems--not just on Microsoft's Windows software--the technology is starting to get a head of steam inside corporations. According to market researcher Zona Research Inc., a survey of 279 companies revealed that half use Java and that the rest plan to within a year. By 2000, Zona estimates, 97% of all corporations will have Java applications whizzing through their enterprises.

If that comes to pass, it could force Microsoft to share the mantle of computing leadership--but not, surprisingly, on the desktop. Contrary to popular belief, Java's big appeal is not its ability to replace Windows and other incumbent software. Few want to do that. The big lure is Java's ability to pave over differences between old software programs--decades-old ''legacy systems'' in computer-industry parlance--and newer Internet applications for, say, electronic commerce. Many of the older systems are running out of gas in a Web-enabled world.

If Java can extend the usefulness of these programs and give them a hook into the Net at the same time, companies will be less likely to switch to powerful new servers--a market Microsoft has targeted with its Windows NT software. Microsoft's march up the computing food chain, from desktop machines to massive computer servers running major corporations, will slow.

That's why no battle is more pitched--nor more important to the future of computing--than the current fight over Java. On one side is Sun's feisty chief executive, Scott G. McNealy, aided by a weighty cadre of partners, such as IBM, Netscape Communications, and Oracle, that portray Java as a means to escape Microsoft's yoke. On the other is Microsoft Chairman William H. Gates III, for whom the prospect of losing his company's primacy in the industry--especially to a wiseacre such as McNealy--has him scrambling to contain Java's reach.

The tensions have even spilled into court. On Oct. 7, Sun Microsystems sued the software giant, claiming it breached its Java license when Microsoft's Internet Explorer 4.0 browser did not pass the Java compatibility test. Then, on Oct. 27, Microsoft countersued, charging that Sun violated the license agreement by failing to ship a software-development kit that was compatible with previous versions.

SPREADING FAST. But forget the suits. Despite all of Gates's efforts, Java is making headway in corporations. Underneath the humongous hype, Java has arrived as a way to write programs quickly and cheaply, as well as distribute and run them. With the ability to run on 85 million computers through Web browsers, Java is becoming nearly as ubiquitous as Windows.

No other technology promises to let companies create software--and new opportunities--faster. It took Banco do Brasil, one of Latin America's largest retail banks, less than three months to write a Java application for home banking via the Web. And KeyCorp, a leading U.S. financial-services company, developed a Java-based auto-financing system in just 60 days that helps consumers buy cars over the Internet. Instead of writing an entirely new program--which would have been a huge undertaking--the company used Java software to make it easy to get loan information from the Net into its corporate database.

Indeed, Java is becoming a kind of high-tech glue that makes it possible for companies to take advantage of the Net era without having to give up all their old mainframe and minicomputer software systems. In short, Java is being used to develop so-called ''middleware'' software, which links up industrial-strength programs that run big corporate jobs, such as payroll and inventory management, with desktop applications and Web software. ''Java is an important technology because it brings a whole bunch of legacy software and ties it to the Internet,'' says Intel CEO Andrew S. Grove.

Java works its magic through a piece of software called the Java Virtual Machine. It's essentially a complete computer, simulated in software, that runs inside a computer's Web browser. That way it's insulated from the vagaries of different operating software and hardware--and it doesn't care if information is on a 30-year-old mainframe or a month-old PC. At SABRE Technology Solutions, for example, the company is rewriting a program in Java to make it easy for travel agents using the Net to get information from SABRE's mainframe computers that run its reservation system. The program will be able to run unchanged on a number of systems, including IBM's OS/2 operating system, Windows, and DOS.

Think of the productivity gains. For most corporations, the bottleneck is not computer speed but the time it takes to write, test, and learn how to use programs for the vast hardware-software combinations out there. Some analysts say writing in Java can cut development time in half for some types of applications. ''The real breakthroughs with Java come in greater degrees of flexibility--being able to roll out programs faster and keep the skill set of your people current in a shorter period of time,'' says Federal Express Corp.'s chief information officer, Dennis H. Jones. FedEx is testing a new suite of Java-based applets from Lotus Development Corp. (page 82).

Java is just the most visible part of a sweeping movement in computing away from the primacy of desktop computers, which have held sway for more than two decades. Corporations are already betting big that Java can help them strike a balance between the reliability of the mainframe days and the flexibility of the PC era. How? By delivering Java programs from a central computer server to run on so-called network computers that are simply stripped-down, inexpensive PCs--starting at around $500--tethered to a network and sans local storage. Says Michael B. Prince, information-systems director for Burlington Coat Factory Warehouse Corp.: ''Centralizing computing makes a lot of sense.''

That's why Burlington is trying out network computers--some 1,500 by the end of 1998--four or five for each of its 250 retail stores. By next April, customers will be able to walk into a Burlington Coat Factory store and use the Java-based network computers to check out a baby-gift registry. Meanwhile, Home Depot Inc. plans to incorporate network computers and Java software for point-of-sale systems at its hardware stores.

STILL TINKERING. For all this activity, though, Java is still in its toddler stage, as Gates correctly points out. Java is slow and so new that it doesn't have all the necessary software-development tools for creating and maintaining large-scale corporate programs yet.

But Java's problems are being ironed out with amazing speed. IBM, for one, has invested $200 million in the programming language and has 2,500 developers in 24 locations around the world working on Java applications--from smart cards to enterprise servers to special software tools to help developers write programs. What's more, IBM says it expects to see a flood of Java-savvy developers from the 160 universities that now offer courses in the programming language. Meanwhile, Zona Research estimates that there are already 300,000 Java programmers out there.

Does this mean that Microsoft loses? Not at all. Just as PCs didn't put IBM out of business, Java won't wipe out Microsoft. But Java is taking hold in the computer industry, and this is one of those fundamental shifts that may be unstoppable. The only questions are how fast it will spread and who's smart enough to come out on top.

By Ira Sager & Robert D. Hof


TABLE: Java's Head of Steam in Two Years


Updated Oct. 30, 1997 by bwwebmaster
Copyright 1997, Bloomberg L.P.
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