InformationWeek

December 21/28, 1998

Thin Clients Offer Savings

Advances promise lower ownership costs, but Microsoft prices remain high

By Mary Hayes

handful of prominent thin-client vendors are working on technologies that should continue to lower the total cost of ownership of these systems, by providing more administration advantages. But there's a sticking point among some IT managers interested in thin-client networks: The cost of client licenses for Windows Terminal Server.

Network Computing Devices Inc. says it will deliver management tools for its Windows-based terminals by early next year. The tools will improve remote administration features, enabling users to more quickly and easily determine systems' configurations and capabilities, says NCD. Hewlett-Packard will introduce Windows-based terminals that are compatible with popular management systems, such as Computer Associates' Unicenter and HP's own OpenView. IT managers with a mixed environment of PCs and thin clients will be able to manage all systems with one software solution. Also, NCR Corp. introduced PerforMunt, load-balancing software thatlets companies increase the number of clients per Windows Terminal Server, meaning that users can buy fewer server licenses.

Sun Microsystems is continuing its Java NC push. Last week, Sun reduced the price on its JavaStation from $699 to $499. More technology advances are on the way, too. Early next year, IBM will introduce a JavaOS system that should provide a more stable platform for Java apps, which some companies are developing to ease development and administration costs. IBM is tuning that platform for Intel processors, rather than its own PowerPC chip; using the industry-standard Intel platform should offer cost-savings through economies of scale.

But there's scant help in sight for users who complain that Microsoft's pricing doesn't fit with thin clients' TCO benefits. Companies using Windows NT 4.0 Terminal Server generally pay at least $240 per user because Microsoft requires an NT Workstation license for each seat. Thin-client vendor Wyse Technology Inc. recently began offering a per-seat license as low as $179. Some IT managers insist Microsoft should price licenses for Windows-based terminal users substantially below that for NT Workstation 4.0 users, rather than at the same figure.

"The pricing model for users of Windows Terminal Server is still too high and will create barriers to rolling out the product on a widespread basis," says Robert Carter, chief technology officer of FDX Corp., FedEx's parent company. FDX is rolling out 1,100 Windows-based terminals, but is evaluating how many more of its estimated 40,000 desktops would realize benefits by accessing applications from Windows Terminal Server.

Price Cuts Coming?
Some companies buying into the thin-client model, such as the Guardian Life Insurance Co., are convinced that software licensing prices will drop as the industry matures. "We think Microsoft will come to its senses," says Tom Baker, CIO at the New York insurer. Baker says he plans to replace up to 4,000 desktops, primarily dumb terminals, with IBM Network Stations to access IBM S/390, Windows, and, potentially, Java applications.

Baker says there are many companies that want to upgrade their terminals but won't replace them with full-fledged PCs. He says Microsoft will likely make its pricing more attractive once it realizes these companies may look to non-Windows thin clients. Microsoft says it will lower some client pricing for Terminal Server in early 1999-but that will offer only minor savings to companies with casual Internet users and part-time telecommuters.

Companies such as Guardian Life say the savings offered by thin clients go beyond the initial hardware and software costs. "Hardware savings wouldn't be enough to justify a wide-scale deployment," says Baker. "It's really a maintenance issue." Robert Haley, a network manager with Collom & Carney Clinic, a medical facility in Texarkana, Texas, agrees. "It's hard to see a lot of up-front savings," says Haley, whose company uses 150 Network Stations. "But once we got the environment set up, it was easier to install and maintain than PCs."

-with additional reporting by Stuart J. Johnston

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