MS, NEC form alliance

Microsoft (MSFT) and NEC will team up on a series of server and mainframe projects that may help NEC build a brand in the U.S. market while boosting Microsoft's Windows NT efforts in Japan.

As part of the alliance, the companies have agreed to jointly develop technologies and/or support each other's independent server products in virtually every segment of the business computing market.

The two companies, for example, will jointly develop 8- and 16-way symmetric multiprocessing technology that will be incorporated into NEC's as-yet unreleased Express Server for Enterprise. They will also work together on technology for 64-node clustering.

Symmetric multiprocessing involves stringing together two or more processors in the same box to improve overall productivity. Currently, Windows NT can take advantage of standard servers with four-way, or four-processor, symmetric multiprocessing. Clustering allows corporations to build in fail-safe backup systems. Corporations have been steadily clamoring for improvements in both areas.

While Express Server for Enterprise is aimed at larger organizations, NEC will also release the Express Network Server, a hardware and software server bundle targeted at small- and medium-sized businesses that want to run business functions on the Internet.

Both servers are slated to come out in the third quarter of 1998, and will appear first in Japan.

Another key part of the alliance will be developing technology that will more seamlessly integrate NT and BackOffice, Microsoft's server application suite, into NEC mainframe environments. In addition, the two companies will attempt to create service and support programs around the technologies to smooth the path toward adoption.

The deal is similar to other alliances Microsoft has struck with hardware vendors to promote NT as a corporate computing platform, according to John Oltsik, a senior analyst at Forrester Research, and on that score it's actually a bit late. Still, NEC's presence in the Japanese corporate arena, which U.S. vendors have strained in vain to crack, could boost NT's presence in that market. NEC and Microsoft have enjoyed a cozy relationship for years in Japan, the world's second-largest computer market, with regard to desktops.

"Microsoft is already working on high-end servers with Compaq, Digital, you name it. NEC is coming to the party late," he said. "But I don't think NT is doing particularly well in Japan and this could help them."

The deal could likewise give a similar boost to NEC in the U.S. Although a recognized brand, NEC is not one of bread-and-butter names for servers in corporate America. As an example, Eric Castillo, a vice president at IKON/Waldec, an integrator in Tampa, Florida, reports that NEC ranks 11th in brands of servers his company sells.

Interestingly, the decision of NEC Computer Systems, the U.S. subsidiary of the Tokyo-based NEC, to sell computers directly to customers could undercut the server effort. The direct effort has raised the ire of computer resellers because it takes away from their revenue stream. Unfortunately for NEC, resellers often advise corporate customers on their server and enterprise computing plans, and many have dropped any loyalty to the brand.

"NEC made a huge mistake with their distribution strategy," said Steve Cohan, president of Entre Computer Center. "I think this server thing could fall on its face."

Oltsik concurred that NEC will need to build relationships with this group to succeed. "The easy part is making servers. The hard part is coming up with a channel partner and it's going to take a significant loss in the short term to get a channel," he said. "They are going to have to give marketing dollars, discounts. [Resellers] already have relationships with Compaq and Hewlett-Packard."