Jumpy computer executives weigh up the options

Information technology: Mathew Horsman in Paris takes the pulse of an industry facing a radical change in direction

The computer industry is hovering on the edge of a crisis of confidence, to judge by the mood at the European IT Forum that winds up today.

The 600 executives are content, of course, that their sector is performing so much better of late. Sales have recovered from the slow times of 1990- 93, and the excitement generated by Windows 95 is expected to power computer equipment and software sales into 1996.

International Data Group, sponsor of the Forum, predicts that the information technology industry will be worth $1,000bn a year by 2000.

But like rabbits caught in the headlights of an oncoming car, the strategists are not sure which way to jump. There are grave doubts about the future, about the losers and winners in the age of multimedia and interactivity, the next stage of the information revolution.

Just who stands to gain is a subject of disagreement. The very speed of change, and the steep learning curves in "knowledge-based" industries, have meant that no company can expect to remain market leader for long. Re-engineering, nearly day by day, is not just recommended but necessary.

Speakers and delegates agreed that "networking" - the linking of many computer sites, powered by ever-cheaper and more reliable communications technology - would be the engine of growth.

"We are once again on another major change point, and that's the change to network-based computing," said Sheldon Laube, the chief technology officer at Novell, a software company.

But there remained widely divergent opinions about strategy. The stakes, moreover, are high: in fields ranging from health care and education to media and entertainment, the information revolution is expected to have a profound effect, generating huge profits for winning strategies and also-ran status for laggards.

According to David Moschella, the senior research consultant at IDG, there are two broad camps. Supporters of the "online service" model see the dominance of content suppliers and PC software manufacturers. In this version of the information highway, users will log on to an online service such as the Microsoft Network, and select information and entertainment products. The model provides secure, standardised access for consumers, and the prospect of efficient billing for suppliers. In the middle, the online service provider takes his commission, while software developers reap huge rewards as consumers upgrade.

A competing model, centred on the Internet, provides limitless content supply, a wide range of access methods and only a limited role for the consumer's PC or terminal. Users simply import "execution software" along with the content they require, using the power of networking to minimise the amount of computing power they require in their office or home. "These are not 'dumb' terminals," Mr Moschella said. "They are just smart enough to know how to find anything the user wants."

Oracle, the second largest software developer after Microsoft, already has a working technology based on this "Internet" model. Users can download video and audio from a computer network, along with the execution software needed to view or hear the content. Larry Ellison, the chief executive of Oracle, believes passionatly in the Internet approach.

He said: "Online services are the Club Med model. Once you enter the fortress, everything is there for you and you never leave. The Internet model may be a little more risky but it is richer culturally." One executive at a leading British computer company likened the near-dumb terminal to a high performance car. "Most people don't know how it works, and don't want to have to re-engineer it each time they take it for a spin. It is enough that the engine turns over at the turn of a key."

Not surprisingly, Bill Gates, the chairman of Microsoft, believes otherwise. His company's MSN is designed to "unlock" the potential of networking, in a secure and controlled environment, he told the Forum. Personal computers will continue to need significant power in order to provide users with maximum flexibility. For that they will require software - and Microsoft stands ready to develop it. The network also provides content suppliers with a reliable and secure way of charging for their products, he argued, reiterating that Microsoft would seek further alliances with content suppliers ranging from Hollywood studios to news agencies.

Whatever the level of disagreement about strategy, the IT industry seemed united in its disdain for the wave of media mergers in the US. And a blunt warning was issued by a British computer executive, who told his colleagues to keep the growth of the information highway in perspective. Richard Livesey-Haworth, the group executive director of ICL, said: "We have a golden opportunity to enable more people to do more of what they want to do." The computer industry should think as much about individuals and society as about their own businesses. The goal, he said, should be "wealth and a better life for all, not just wealth for Bill Gates".

Access to information, training and education were as important as generating profit."We must also give hope to many who thought they were on the employment scrapheap."

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