Microsoft to Purchase Softway Systems

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Event Summary

Microsoft Corp. announced on September 20, 1999, that it will purchase privately held Softway Systems Inc., a developer of Unix/NT interoperability software. Microsoft said this move will strengthen its position in the interoperability market, and help Unix users migrate to Windows NT.

Market Impact

This acquisition will provide Microsoft with a stronger position in the Unix market, since Unix applications will be able to run natively on Windows NT. Softway also intends to develop a version of its Interix software that will support 64-bit Unix applications on the upcoming (mid-2000) 64-bit Windows, which we believe will further add to Microsoft's strength. Although this will not increase overall market growth, it should lead to market consolidation. Market share for Windows NT is increasing, and the ability to run both types of applications will accelerate that growth.

It is less clear whether this move is a direct response to Linux's increasing market presence. Softway's Interix supports the Linux operating system, and this move may be a move to assimilate the growing Linux market into the Windows market.

User Recommendations

Those affected will be: (1) those customers who have mixed (i.e. both Unix and Windows NT) environments, (2) those who are having difficulty deciding whether to migrate from Unix to Windows NT, and (3) those who are unable to choose between Unix and NT but are unsure why. ("Traditional" Unix purchasers and Unix-only users will not be affected by this acquisition.)

The acquisition will be beneficial for the first group, since Softway will now have Microsoft's corporate stability. The Unix/NT flexibility will make the decision easier for the second group. Those in the third group will not benefit as much. There are clear reasons why an organization chooses Unix over NT, including platform stability, security, and scalability. If a customer does not understand these reasons, then interoperability will not be high on the decision-factor scale, although we do believe that these customers will gravitate to NT over time due to its increased market momentum.

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