IBM, Digital, Others Form Coalition On Unix System to Challenge AT&T, Sun

By Paul B. Carroll, Staff Reporter
The Wall Street Journal

New York, N.Y. -- May 18, 1988 -- International Business Machines Corp., Digital Equipment Corp. and five other big computer companies announced an unusual coalition that will challenge the alliance between American Telephone & Telegraph Co. and Sun Microsystems Inc.

IBM, Digital, Hewlett-Packard Co., Apollo Computer Inc., Siemens AG, Nixdorf Computer AG and Groupe Bull announced that they will develop a version of the Unix operating system. The move, which was expected, initiates a battle for the hearts and minds of users of work stations and many types of minicomputers. The battle pits AT&T, Unix's creator, and Sun, the hottest seller of Unix-based systems, against companies that account for more than 40% of the computer industry's world-wide revenue.

This battle is expected to confuse customers, possibly for years to come. That could slow sales of Unix systems and benefit those, such as IBM and Digital, that sell hardware that uses their own operating systems -- a possibility that AT&T and other critics said didn't go unnoticed by IBM and Digital.

With so many different versions, said Bill Gates, chairman of Microsoft Corp., "There's always been Tower of Babel sort of bickering inside Unix, but this is the most extreme form ever. . . . This means at least several years of confusion."

Those involved in the coalition, called the Open Software Foundation, said they had no choice. They said AT&T was shutting them out of development work on Unix, which controls the basic functions of most computers used in scientific and engineering applications and which is growing in popularity. Coalition members said this would let AT&T and Sun bring Unix-based products to market well ahead of their competitors.

"Only after they brought products to market would the rest of the dum-dums in the industry get access" to the AT&T/Sun changes in Unix, said Thomas A. Vanderslice, chief executive officer of Apollo. "And that puts you about 18 months behind."

Digital and IBM, which have sometimes seemed allergic to Unix, dismissed the talk that they have nefarious motives in joining the coalition. They indicated that the world is changing and that customers are demanding that standard operating systems such as Unix be used. Though they certainly can make more money from customers who use either company's private operating systems, and thus are locked into using their hardware, both companies said they must move ahead with Unix or lose out on a lot of business.

The members of the coalition said they will contribute a total of $90 million over three years to the group, which will have its own staff and will try to resolve all areas of disagreement without taking a vote of its members. The group said it expects to bring out a full new version of Unix in 18 months, though the timing is uncertain because the group was put together extremely quickly.

The group said it has sent hundreds of telegrams to computer companies world-wide, seeking their participation. In a potentially significant move, Unisys Corp., which has supported the AT&T/Sun version of Unix, issued a statement that left open the possibility it would support the rival group. Members of the Open Software Foundation also said N.V. Philips of the Netherlands has expressed support, as has a Japanese company that wasn't identified. The group had invited AT&T to join and hopes it eventually will do so, because "The industry doesn't need two Unix standards," said Jack Smith, a senior vice president of Digital.

That seems unlikely. In the days since AT&T was told of the coalition, it has been trying hard to line up further support in the industry for its version of Unix. Robert M. Kavner, the new president of AT&T's Data Systems Group, said AT&T believes it has addressed other companies' concerns about being involved in the development of Unix and will take further actions. He also said AT&T has taken steps to remove the lead time it would have in bringing products to market -- which an AT&T official had put at three months, not 18.

Mr. Kavner said the rival group lacks a clear process for resolving differences. In addition, he said AT&T spends far more each year on developing Unix than the Open Software Foundation has indicated it will spend. He added that AT&T plans to incorporate into its Unix any useful features from its rivals' version.

The whole issue is crucial for AT&T, because the company has made a mess of its push into the computer business and is relying on Unix to turn things around. If it can get enough customers to use Unix, that would free them from their dependence on the proprietary operating systems of companies such as IBM and Digital and would give AT&T a shot at the business.

For Sun, yesterday's announcement could threaten the company's role as the industry's technological leader in the Unix market. Still, Sun's momentum is so strong at this point that the rival group's challenge seems likely to have minimal immediate effect. "Look at it this way," said Mr. Gates of Microsoft. "Sun is so golden that it forced all these industry giants to band together against it."

Ironically, the Open Software Foundation could get Sun and Motorola Inc. to smooth over their differences. Top officials of the two companies are scheduled to meet tonight to discuss how the foundation has changed their relationship. In recent months, Motorola and Sun have introduced competing, state-of-the-art microprocessors designed to make the most of AT&T's new Unix, and until recently have been battling it out to sign up customers. Now, however, as the two main supporters of AT&T, they find themselves on the same side in the Unix battle.

The importance of the issue is underscored by the speed with which the Open Software Foundation effort came together. A group of companies, which came to be called the Hamilton Group, had met in January to air their concerns about the AT&T/Sun alliance but that group disbanded and nothing more came of it until mid-March. At that point, Apollo, Hewlett-Packard and Digital decided to pursue the idea of a Unix alternative.

They cordoned off an area at Apollo's headquarters in Chelmsford, Mass., and put together a team of about 50, consisting mainly of technical and marketing people -- and "eight million lawyers," said Mr. Vanderslice of Apollo. By the end of March, the group had decided to ask IBM to participate, to forestall it from proposing its own Unix standard. But IBM didn't sign on until three weeks ago. The group had been ready to make its announcement last week but held off to give the European companies time to get involved.

The group made its announcement in an auditorium in New York filled with 300 people and providing a satellite hookup to an auditorium in Geneva, Switzerland, that drew another 300. Reflecting the rarity of such a coalition of competitors, no one seemed to be able to remember the last time Digital President Kenneth H. Olsen had shared a stage with an IBM chief executive.


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