November 1999

The Year 2000: right in front of us and yet, like any other year in the future, inscrutable and unfathomable and obscure. Predicting the future has always been quite a challenge outside the realm of religious prophecy. (Then again, false prophets abound, too.) People have looked forward to the coming year with dread, with fear, with optimism, with anticipation. Well, the time is close at hand to see what Y2K (the year, not the phenomenon) brings.

Here at OS/2 Headquarters, this column has attempted to keep people up-to-date on what is happening and will happen, based on the trends and the news, with a focus on how we can benefit from these trends using OS/2. As we approach this most intriguing of years, it is time to review what this column has stated over the past year, and compare it with what we have learned and experienced since then. In other words, it's time for a reality check.

Warped Perspective from one year ago put odds on several Y2K-related issues. Here are the revised odds:

1. (10% chance) A 20-year recession. From all corners, it seems that a tremendous job has been done in ferreting out Y2K-related issues. It's quite unlikely that a total economic collapse will occur. However, there still will be a large number of unexpected bugs and inconsistencies over the next 20 years, as many patches were done in a short-sighted and haphazard manner. Likely, the frequency of these bugs will be randomly distributed over the next 20 years, making opportunities at unknown intervals for large enterprises to rush in with patches and/or replacement products. (Cut to a short film clip of IBM executives gloating and salivating.) There might be just enough of these kind of bugs to make for some interesting income opportunities; however, only large enterprises will have the fast response and the ready resources to deal with most of them. An exception is the small-business market, which has not had its needs addressed in any meaningful way over the last year.

2. (10% chance) The end of the Democratic and/or Republican party in America. Even if there is a period of economic chaos, the slickmeisters (of both parties) have proven quite adept at shifting blame to others. It's doubtful that either of these parties will have to pay the ultimate price, no matter how bad it gets. They are just too smooth and crafty to suffer the indignity of punishment, particularly from voters who are asleep at the wheel. The unexpected mouth-offs by independent governor Jesse Ventura also lend an air of suspicion to third-party candidates and outsiders.

3. (20% chance) The end of Small Business as an American institution. Although most small businesses are woefully unprepared for Y2K (particularly since they use Windows products and have not taken their Y2K faults seriously), the failures and data corruption that we will likely see over the first three to six months of the next year will probably not kill them off completely. Instead, we will see a huge mountain of debt as the federal government provides billions of dollars of loans to help these businesses buy new computers and patch their decrepit Windows software. The boom times for major corporate vendors of Y2K solutions are probably behind us for the most part. However, those who sell small-business solutions may find the next 12 months to be a veritable gold mine. It's also a great opportunity to bring the reliable, enjoyable performance of OS/2 Warp into a lot of businesses that have not taken Y2K seriously enough. The difference between prepared and unprepared small businesses in the next 12 months will likely be how high their debt load becomes. Resellers that can quickly provide access to funding for their small-business clients may get the lion's share of this new business, provided they have not lost credibility by downplaying or overhyping the Y2K issue too much.

4. (30% chance) Microsoft bails out of the software business. Enough of the large enterprises have patched and replaced faulty MS products, so that Y2K may not be Microsoft's total downfall. However, a combination of other factors has arisen to challenge Microsoft's power elite: temp-worker lawsuits for back benefits; a growing accounting scandal that calls Microsoft a Ponzi Scheme; and a labor-union movement among underpaid and overworked software programmers. The DOJ decision looms; a breakup or severe restrictions are serious possibilities. Year 2000 software failures may possibly cause enough trouble to push the MS puppetmasters "over the edge". Interestingly, a growing number of top Microsoft executives have recently cashed in their chips and have gotten out while the getting was good. This is not an organization with its best days ahead.

5. (90% chance) Massive global consolidation in all categories of business. BINGO. This has already happened in banking and financial services; recent legislation will remove the protective barriers that kept banks out of insurance, stock market, and other money-based businesses. Transportation mergers are reducing the number of railroads, automobile companies, and airlines. Y2K problems will likely accelerate this trend, as companies that are prepared consume those that are not. Large banks running OS/2 will eat small banks running Windows, for example. (My local bank is changing names twice in six months, due to this type of multiple merger!)

6. (30% chance) A major pension-fund meltdown. If and when Microsoft exits the software business, or is dramatically punished by either Y2K failures, court decisions, or other shakeups, the pension funds and mutual funds that have overcommitted to Microsoft stock will suffer severe damage. Diversity is the key to long-term success in investing, since it reduces risk. Microsoft provides a high rate of return in exchange for a high risk. Sooner or later the chickens will come home to roost.

A few other issues were addressed this year, too. I stated several months ago that IBM needed to reduce the number of OS/2 client offerings in order to allow room for a new OS/2 client. Shortly afterward, IBM (listening??) closed out Warp 3 sales and began preparing for OS/2 Warp 4.5 upgrade service. Rumors of a new, full-blown client still abound. (Some things never change!) IBM looks to begin building a revenue stream from OS/2 updates instead of relying on packaged client sales, though. What we need from IBM is a commitment as to what exactly the Software Choice offerings will be. Nobody likes buying an unknown product.

What will Windows2000 version 1.0 mean to OS/2 users? For the most part, nothing at all. Since it is a version 1.0 product, it is important that people realize that a version 1.0 product will have version 1.0 bugs. Next to Windows2000 version 1.0, OS/2 Warp 4 looks like a "thin client" or a "lite OS". W2K version 1 will have approximately 35 million lines of code, or roughly three times as many as Warp -- with the larger number of bugs that accompany a larger code base. Unresolved isses include backwards compatibility (MS is trying to kill off support for DOS applications), poor resource utilization (slower Java and slower system performance), poor horizontal application compatibility (only ONE application has been approved as "MS certified" to run on W2K version 1.0), and unknown reliability problems. For people who want the most efficient, reliable desktop PCs that money can buy, OS/2 is a clearly superior choice. For those who want to chase fashion, OS/2 never appealed to them anyway!

As I predicted a year ago, Warpstock has continued to prosper and improve. A professional-caliber staff is in place, and IBM has shown its willingness to participate regularly in the show. OS/2 continues to be a futuristic product that indeed "arrived before its time". Well, its time is almost here. PC vendors are looking to provide alternatives as never before. While IBM is not particularly interested in OEM business selling OS/2 to the public, the small OS/2 reseller can take advantage of this sudden public open-mindedness by offering OS/2 as a "new" product to a user base that for the most part has never heard of it. Can money be made doing this? In certain markets, it already is. Kim Cheung doesn't need a wheelbarrow to get to the bank; he practically needs a dump truck. OS/2 Headquarters will provide more details about this kind of opportunity as the new year rolls on.

Until then, keep enjoying and using OS/2. Make plenty of backups of your data, as we may have a few "rough spots" in the year ahead. And most of all, keep looking for ways to take the initiative instead of waiting for IBM. IBM is our OEM, not our retail partner.

Most recent revision: October 25, 1999
Copyright © 1999, Tom Nadeau
All Rights Reserved.