First Union Ahead of Curve with Sun's "JavaStation"

[Copyright Violator <dildo@americanbanker.com>]

When Sun Microsystems unveils today what it is touting as a radical advance 
in business computing, First Union Corp. will be in the vanguard of those 
adopting it.

The announcement, at a media event in New York, will center on a hot trend 
that Sun reduces to three words: Java Enterprise Computing. Sun invited First 
Union, which has already deployed the technology in its capital markets 
operations, to share the spotlight with other Java innovators such as CSX, 
Federal Express, and British Telecom.

Rarely has a bank company been so much a part of high-tech hype, which makes
the First Union case and what it says about the potential impact of Java 
computing that much more noteworthy.

Based on a programming language -- Java -- that came out of Sun Microsystems
but is for practical purposes in the public domain, this new approach 
exemplifies what technologists call "network-centricity." It is widely seen 
as an antidote to the difficulty and expense of upgrading and maintaining 
vast numbers of personal computers in large organizations.

First Union bought into the idea long ago and views Java computing as "a 
natural evolution," said Peter Kelly, senior vice president of the company's 
lead bank in Charlotte, N.C. After about five months of development and use, 
he reported "a dramatic reduction in both time and cost for training, 
administration, and maintenance."

Participating in the announcement today, he said, First Union is less 
interested in glory or in endorsing Sun Microsystems -- the bank is drawn to 
Java because it is "vendor-neutral" -- than it is in "supporting a good 
business solution."

In the network-centric model, processing and programming power reside away
from the desktop on computers known as servers. Today's personal computers
can be reduced to, or replaced by, less expensive "thin clients." These rely 
on "fat servers" for what analyst Jean S. Bozman of International Data Corp. 
calls "the heavy lifting."

The computer press has recently given much attention to thin client 
opportunities in the home, such as an inexpensive appliance for Internet 
access that Oracle Corp., a leading advocate, dubbed the Network Computer, or 
NC.

Sun's initial appeal is decidedly to the corporate community, where it 
believes revolutions happen first. "This may be the beginning of an 
incredible 10-year change in the way we do computing," Sun Microsystems 
Computer Co. president Edward J. Zander said in an interview last week.

A thin client called JavaStation, along with an "easy administration" server, 
is to be included in Sun's announcement today. First Union is using the 
station to link a variety of desktop equipment with numerous data bases and 
files; Java breaks down the barriers between previously incompatible systems.

Mr. Kelly said the bank would likely explore the technology's applicability 
outside of capital markets.

Mr. Zander, who is based in Mountain View, Calif., said Java Enterprise
Computing is especially and immediately applicable to "what we call 
fixed-function applications." These include many back-office and 
customer-service activities in financial services that can be managed and 
administered centrally and delivered through specialized thin-client screens.

But what really attracts technologists' and business managers' attention is 
the economics. Sun projects 50% to 80% reductions in "the cost of ownership" 
of PCs, which can be tens or even hundreds of millions of dollars, depending 
on the size of a corporate network.

Hype it may be, but it is hard to find anybody to argue against it.

International Business Machines Corp., Microsoft Corp., Oracle Corp., and
Netscape Communications Corp. -- technology leaders often at odds with one
other and with Sun Microsystems -- have each jumped on this bandwagon in some
way. (In other NC-related developments Monday, Oracle and Netscape announced 
a strategic alliance, as did an opposing group that included Microsoft,
Intel Corp., and Hewlett-Packard Co.)

Sun's ebullient Mr. Zander will talk a blue streak about almost anything on 
the leading edge, as he did last week in declaring, "Java computing is ready 
for prime time." But he was also careful not to oversell.

Given the huge and entrenched population of PCs, he said, network computing 
is more evolutionary than revolutionary. Regarding Oracle chairman Lawrence
Ellison's vision of $500 NCs' replacing virtually all PCs, Mr. Zander saw a 
lack of realism because PC-based spreadsheet and graphics applications, among 
others, are likely to persist.

"We're not telling people to give up the power of the PC," Mr. Zander said, 
but to "put the complexity on the server, where it belongs . . . . It will 
take a couple of years, but it will happen."

Mr. Kelly, who is responsible for First Union's capital markets technology 
and support, described JavaStation as a logical extension of the bank's work 
with object-oriented computing -- the programming approach that relies on 
reusable objects, or building-blocks of code -- and C++, the standard 
programming language from which Java was derived.

Investment banking and capital markets gave Sun Microsystems its first major
inroads into financial services, which may explain why Mr. Kelly's department 
has been looking into Java opportunities for more than a year. The stations 
have recently replaced "fat client" terminals in trade reconciliation, 
settlement, and clearing.

"The redesign of an interface took only two to three weeks because we were
already on the server-centric model," Mr. Kelly said.

"This won't be the only client equipment we deploy . . . ," he added. 
"Interoperability is also our goal."

The pricing does have a revolutionary ring to it. Sun said it would begin 
shipping the entry-level JavaStation in December, with miniSparc chip and 
eight megabytes of main memory, for $740. With keyboard, mouse, and 14-inch 
color monitor, it will go for $995; with double the memory and a 17-inch 
monitor, $1,495.

A business PC installation rarely costs less than $3,000. And that is only 
part of what has come to irk corporate technology bosses. System maintenance, 
upgrades, and other expenses can amount to $12,000 per desktop per year. Java 
technology allows changes to be "written once and run anywhere" -- meaning 
"locally" on thin clients with powerful RISC (reduced instruction-set 
computing) processors embedded.

A large corporation with JavaStations, which don't need hard or floppy or
CD-ROM drives or moving parts because they depend on fat servers, "can save
millions of dollars and deliver the same or better functionality, even if 
this is implemented by just 10% of your work force," said Gene Banman, 
general manager of Sun's desktop systems group.

Sun executives expect JavaStation sales and related software applications to
flourish -- they already count 450 of the latter -- because of the cost 
factor and the Internet and intranet boom. Java is "a secure universal 
interface language" designed specifically for broad distribution over such 
open networks without regard to hardware and operating-system choices, said 
Jeffrey P. Morgenthal, research analyst at D.H. Brown Associates, Port 
Chester, N.Y.

Chief information officers can install Java "in phases without jeopardizing 
the existing infrastructure investment," he said. "I'm hard-pressed to 
believe that somebody is going to come up with an architecture in the near 
future to wipe this one out."

Ms. Bozman, the International Data analyst in Mountain View, said alternative
ways exist to shift the PC-support burden to central sites. But Java is 
gaining momentum. It burst on the Internet scene in the form of simple 
"applets" such as moving stock tickers but is evolving toward 
mission-critical corporate and packaged software.

"This is not just happening in the Sun world," she said. "Even Microsoft is 
selling Java toolkits."

Sun financial services vice president Rob Hall said he anticipates a rapid 
spread of Java computing because of the "dramatically lower total cost of 
ownership while providing flexible, platform-independent solutions.

"We are seeing strong interest in our thin-client JavaStation for 
process-heavy and repetitive tasks such as trade settlement back-office 
operations and customer service applications in retail banking call centers," 
Mr. Hall said.