ou've heard about Microsoft's plans to move into the enterprise systems market. Now get ready to pay the bill.
While Microsoft has yet to announce official pricing for the recently unveiled Enterprise editions of its Windows NT 4.0 operating system and SQL Server 6.5 d
atabase-management system, preliminary pricing provided to a standards body shows the licensing fee for a server running both products is $11,998. That's more than five times higher than the current point of entry, $2,208, for the standard editions of NT 4.0 and SQL Server 6.5 (see chart, p. 16). Also, two-node clustering-one of the major new features of Windows NT/Enterprise and SQL Server 6.5/Enterprise-requires dual copies of each product to work. That brings the grand total for a two-node NT/Enterprise cluster to $23,996, barring any discounts.
"That's a big price jump," says James Xu, VP of technology with Aristotle Publishing in Washington. The higher prices put a new spin on the Windows NT vs. Unix debate. Conventional wisdom has been that Unix systems deliver higher performance than NT, but at a premium price. But the price/performance gap is closing. Microsoft's top-of-the-line NT and SQL Server, announced May 20, feature two-node clustering, support for up to eight processors, transaction manage
ment, message queuing, and an ability to use an extra gigabyte of RAM for memory-intensive applications.
Microsoft officials say the NT/ Enterprise pricing-which they call tentative-is subject to change. They also point out that the base Enterprise configuration is for a 25-user license rather than a 5-user license for the standard NT. Still, the increase could cause sticker shock among companies looking at Microsoft's new Enterprise products, says Patrick Connolly, VP of Internet platform and tools with Neural Applications Corp., a developer of neural networking software in San Francisco. A long-time NT user, Connolly says he'll shop around when it comes time to upgrade the company's existing NT systems. "I would have to take a look at other solutions," he says.
Also, NT software suppliers could follow Microsoft's lead by boosting the price of products that run on NT. "I price for the NT market-and the price is going up," says Jocelyne Attal, VP of NT marketing with IBM Software Solutions. "As you ev
olve the operating system, grab market share, and add functions," she adds, "you don't need to be so cheap."
Computer hardware manufacturers agree. While Compaq no longer bundles NT with its systems, the computer maker may add a "modest premium" to servers that support NT to cover the cost of support and other added value, says David Rodgers, VP of database and business applications with Compaq.
Bargain?
Microsoft's licensing fees account for only a portion of a system's cost. That leads some users to conclude that the total cost of owning Intel-based servers will still be a bargain compared with proprietary Unix machines. For PSC Inc., a Webster, N.Y., maker of bar-code scanners, the biggest concern isn't the cost of the software-it's the hardware. "The price will go up and may be comparable with the cost of Unix, but that would still not offset the differential in hardware costs," says John Burns, project manager at PSC. "For us, the principal savings is on the hardware side." PSC runs
SAP applications on Unix but plans to migrate to NT.
The first indication of NT/Enterprise pricing came on June 2, when NCR Corp. registered new benchmark results with the Transaction Processing Council, a nonprofit consortium that audits and certifies database performance. NCR's WorldMark 4300 server, running Microsoft's Enterprise software, attained 9,116 transactions per minute, a record for an NT system. But that's not necessarily a bargain compared with an earlier benchmark using the standard edition of NT that generated 7,368 TPM. Effectively, the newer system was just 24% faster, but 39% more expensive. The overall system cost for the NCR WorldMark 4300 Server, including support, is $779,000.
Mark Hurd, VP of marketing with NCR's computer systems group, says Microsoft's increased licensing fees account for only a small part of that price differential. Most of the increase, he says, covers the extra disc storage and RAM needed to set the benchmark record for NT.
Enzo Schiano, group product
manager for Windows NT Server, confirms that Microsoft provided pricing information to the Transaction Processing Council, but says the prices are guidelines and that official prices will not be announced until the products ship next quarter.
Still, Microsoft execs acknowledge that NT systems are going to get more expensive. Speaking at the company's May 20 Scalability Day event in New York, group VP of platforms and applications Paul Maritz indicated NT servers would eventually range from $2,000 at the low end to "millions of dollars" at the high end.
It is doubtful that Microsoft will raise the cost of the client licenses needed to access NT/Enterprise. But the trend is clear. Microsoft has been gradually raising the price of NT Server since its introduction in August 1993. Initially, Microsoft sold Windows NT Server with a license for an unlimited number of users. A year later, when it delivered NT 3.5, Microsoft instituted licensing fees for specific numbers of users in addition to the cost of th
e server software. When it shipped NT 4.0 last August, Microsoft tacked on an upgrade fee for each user client from any previous client license.
Pricing could rise again next year, when Microsoft delivers NT 5.0, which adds many manageability features as well as the ability to function as a mainframe-like multiuser system capable of supporting Microsoft's so-called Windows Terminals.
But will the additional functions justify the cost increases? Microsoft may find that it is its own worst enemy by turning customers who had planned to deploy NT back toward the Unix camp and into the waiting arms of its database rivals.
The change in pricing means that corporations will have to weigh even more carefully the value of NT Server vs. comparably equipped Unix servers, says Richard Adelson, enterprise architect with Hartford Financial. The insurance and financial services company, in Hartford, Conn., relies heavily on Unix and has standardized on Oracle's database. But its use of NT is growing. The company
runs benchmarks to determine the best platform for new applications, a process that becomes even more critical with the higher-priced NT/Enterprise software. "The price/performance curve becomes very important," says Adelson.
Price Advantage Needed
In a recent interview, Rich Tong, Microsoft's VP of marketing for the personal and business systems group, said Microsoft realizes it must maintain a price advantage for NT. "We can't go to customers with [only] a 5% difference [between NT and Unix pricing]," said Tong. Microsoft is also working on a lower-priced NT bundle for small businesses. "Believe me, [NT/Enterprise] will still be the 'meal deal' of the century," Tong said.
But even under the new pricing model, the difference between some Unix and NT machines may be negligible. For instance, Digital Equipment sells a basic, single-processor Alpha-based server with Unix for $29,900, while the identical machine with NT is $25,195. Adding another $2,000 or $3,000 to the cost of the NT machin
e by increasing the license fee for NT Server Enterprise Edition would leave a much smaller difference between the two.
Given Unix's nearly 30-year history and its legendary stability, NT could easily lose in many bidding situations. At the high end, NT will still have to compete with Unix on a feature-to-feature basis. "It's a big issue," says Aristotle's Xu, who uses NT 4.0 and SQL Server 6.5 to support an 80-Gbyte database of voter-registration information. But the database will eventually require a server that scales beyond the standard Windows NT. When that time comes, the price issue may come into play, says Xu: "I may look at alternatives."
Pete Starzewski, a network systems administrator with Green Bay Packaging Inc., a manufacturing company in Green Bay, Wis., recently compared NT and Unix to support an electronic data interchange application. Starzewski chose a $35,000 Unix machine from Sun Microsystems over a $15,000 NT box from Compaq. "It's an application we felt had to be running 24 hour
s a day, seven days a week, for months at a time," he says. Starzewski believes add-on costs make NT more expensive than it first appears.
Unix vendors are ready and willing to welcome any NT defectors. "This blows any claim that NT is cheaper than Solaris out of the water," says Brian Croll, Sun Microsystems' director of server software products. "Microsoft's coming out with Lexus prices, but they're selling a Toyota."
The perceived price difference between NT and Unix has already closed for some major applications. Companies such as Baan, PeopleSoft, and SAP charge the same to run their enterprise applications on NT as they do on Unix. Likewise, Oracle and IBM both have just one price for their database products, regardless of platform.
But that kind of pricing parity is the exception, not the rule. IBM sells more than 100 software products that run on both NT and Unix, but it doesn't attempt to price those products identically. IBM is guided more by what Microsoft and Oracle charge for competi
ng products when it sets its prices, marketing VP Attal says.
NCR also charges what the market will bear. The base-level price for the company's Top End Server transaction-management software costs the same ($2,700 per server) on Unix and NT, while its high-availability product, LifeKeeper, costs twice much on Unix ($3,000 per server) as on NT. The reason: LifeKeeper faces more competition in the NT market.
While the new versions of NT and SQL Server will let users do more enterprise tasks on Intel-based hardware, it may turn out that the cost savings from doing so are slimmer than users have come to expect. One of the major factors in NT's favor-its low cost-is about to get more complicated.
Tom Stein
,
Mary Hayes
,
Martin J. Garvey
,
Rich Levin
, and
Bob Francis
contributed
to this story.
Back to News in Review
Send Us Your Feedback
Top of the Page
ou've heard about Microsoft's plans to move into the enterprise systems market. Now get ready to pay the bill.
