October 1998

There's nothing like having friends in high places.

When times get tough and money is tight, people truly realize the truth of that statement. Having access to capital is the key ingredient to business success; after all, you can guarantee an eventual win even in a stupid card game like Blackjack if you simply keep doubling the bet on every turn. Even poor products can find success in the marketplace if enough money is spent fooling enough people -- remember that RAM "doubler" for Windows95? Great products with meager financial backing generally disappear over time -- remember Quarterdeck DesqView? Entire companies with portfolios of intellectual property, staffs of brilliant technical minds, and led by insightful geniuses are usually no match for well-financed mediocrity.

We see evidence of this situation every day in the computer industry. The ability of companies like Microsoft to use the stock market to generate economic power, combined with a willingness to leverage influential media members, gives them a degree of power that is undeserved based on the poor quality of their products. But they are never satisfied with mere success; it is the failure of competing companies with superior alternatives that is their ultimate goal. Since success depends most often upon access to capital, Microsoft's overall strategy must therefore involve denying capital to competitors above all else.

This may help explain why IBM has poured its heart and soul into selling OS/2 almost exclusively to the big banks -- the large financial powerhouses with global influence and boatloads of capital. When Microsoft began attacking the banking industry with its Windows NT kludge back in 1992, they were going for the "quick kill" -- flood a market with a product before anybody realizes how bad it is, squeeze out the competition, and then reap the benefits of monopoly market share to prevent the resurgence of the superior alternatives. Microsoft did this despite the fact that they knew then, and still know now, and NT is not ready for enterprise-class computing and probably never will be. The sheer volume of work being carried on to produce "clustering" and "failover switching" shows that the inherent reliability of Windows NT is like the old trash bag commercial -- wimpy, wimpy, wimpy.

Why then did Microsoft endanger the health of the banking system with a product that is not capable of sustaining the uptime and the transaction rates required by the fast-moving world of global capital markets? Because the goal was then, and is now, to deny their competitors (particularly IBM) access to capital. Think about what Microsoft does with a market once they capture it. They don't just sit there raking in the profits; they immediately leverage that victory to attack related markets. If Microsoft gains control of the financial industry, you can bet your bottom dollar that there will suddenly be great difficulty finding capital for non-Microsoft product development, even among the global manufacturing and distribution conglomerates. I suspect that this is what IBM began to notice back in the early 1990's -- I believe that banks which foolishly dumped their reliable IBM-based infrastructure and were suckered into downgrading to NT were simultaneously being "influenced" by Microsoft to cut off investment capital to IBM and other signficant competitors of Microsoft.

This may be why IBM has allowed its influence in other big-market sectors to wither and has focused so intently on selling OS/2 to the big banks. Insurance companies won't provide the capital that IBM and its partners need; banks will. Manufacturing corporations won't provide loans or investment arrangements to IBM; banks will. If a major bank has its infrastructure built on a system that only IBM supports (namely, OS/2 Warp and Warp Server), these banks will find it essentially impossible to deny IBM access to capital. That means that the financial marketplace is likely to remain open to providers of safe, reliable, Microsoft-free technologies only as long as IBM maintains a healthy presence there.

The implication of all this is that IBM is indeed betting its corporate future on OS/2. No, this doesn't mean that IBM is going to sell only OS/2-related products. Instead, the meaning of IBM's OS/2 strategy is that it is designed to prevent a complete Microsoft takeover of the lifeblood of a free economy. As long as OS/2 has continued success in the banking industry, anything else is a realistic possibility. Corporations that dump their legacy NT systems and upgrade to OS/2 will not have their aspirations cut short by bankers who are in Microsoft's pocket. In this way, IBM's self-interest is actually of benefit to the global economy at large. Selling OS/2 to banks is thus not merely a money-making venture; it is a defensive move designed to ensure the flow of capital for IBM's other activities.

Most recent revision: October 1, 1998
Copyright © 1998, Tom Nadeau
All Rights Reserved.