BUSINESS/SPECIAL REPORT

THE NEW REVOLUTION IN COMPUTERS

D’ARCY JENISH January 25 1988
BUSINESS/SPECIAL REPORT

THE NEW REVOLUTION IN COMPUTERS

D’ARCY JENISH January 25 1988

THE NEW REVOLUTION IN COMPUTERS

BUSINESS

SPECIAL REPORT

John Anderson was there when Toronto-based Sun Life Assurance Co. of Canada became one of the first Canadian companies to acquire a mainframe computer. Anderson was a 21-year-old computer operator for Sun Life, then based in Montreal, when the mammoth Univac II arrived on May 30, 1958. It weighed 24 tons and measured 20 feet in length, 20 feet in width and eight feet in height. The computer was shipped from St. Paul, Minn., to Montreal in four transport trailers. Anderson, now 51 and assistant vice-president of information systems services for Sun Life at its Toronto headquarters, recalls that the Univac II allowed the company to review each of its insurance policies once every two weeks, a vast improvement over the existing manual system. Said Anderson: “It was state of the art.”

But Sun Life’s current generation of mainframes, which are a fraction of the size of the Univac II but considerably faster and more powerful, process close to 30,000 policy reviews daily. Anderson and hundreds of other executives who manage corporate information systems are hardpressed to keep pace with rapid developments in computer technology. Indeed, industry analysts say that a new generation of desktop personal computers, driven by a remarkably powerful device called the Intel 80386 microprocessor chip, will revolutionize the way most companies—and individuals—use their computers. It makes individual PCs so powerful, the analysts note, that in most cases it eliminates the need for large, expensive mainframes (which provide a centralized source of computing power for a network of interconnected terminals) or even the smaller version of

mainframes known as minicomputers. Said James Grant, executive vice-president of operations and systems for the Royal Bank of Canada: “In my 25 years in banking, this is one of the biggest breakthroughs I have seen.”

Power: The advent of PCs with unprecedented power, speed, memory and versatility means the end of an era in which mainframes were the dominant machine. Mark Stirling, president of Toronto-based International Data Corporation (Canada) Inc., a computer market research firm, argues that the revolution is well under way, even before PC software taking full advantage of the new, powerful chip has become widely available. Stirling said that corporate users have already started spending more money on PCs than on mainframes because the smaller machines are not only more economical and flexible, but almost as powerful as the larger models.

The remarkable Intel 80386 is already available in North America in computers produced by more than 100 companies. And computer suppliers including James Yeates, president of Brampton, Ont.-based Computer Innovations Distribution Inc., the country’s largest microcomputer sales and service chain, say that the new PCs are displacing minicomputers. Small businesses are using the powerful machines as substitutes for mainframes by connecting several smaller computers together. Said Yeates: 5 “We see the 80386 changing the computer g world. It’s the most powerful machine that ^ has come along.”

3 But revolution in the making will not just change the shape of business. It will also transfer the power of office mainframes to PC work stations in the home and in the field. Indeed, the new chip will add momentum to another major change that has swept through the computer world recently—the development of increasingly powerful but small and portable computer models known as laptops. Among those who have embraced laptop technology: a group of cave explorers in British Columbia who carry one with them to record their findings and Auditor General Kenneth Dye uses his to write reports during business trips.

Advances: In fact, the scientific advances have occurred so quickly and dramatically that many experts resort to imaginative analogies to describe what has happened. In the jargon of the computer world, the Intel 80386 contains 64 terabytes of memory capacity. That, according to Sandra Duncan, spokesman for Santa Clara, Calif.-based Intel Corp., which manufactures the chip, means that it has enough room to store an eight-page biography on every human being now alive. The new chip contains 275,000 transistors; a predecessor that Intel introduced in 1979, which is still in use in many modern computers, contained only 29,000. Malcolm MacTaggart, general manager of Toronto-based Microsoft Canada Inc., a subsidiary of the world’s largest software developer, said that the development in computer performance in just nine years is equivalent to the revolution in human flight from the Wright brothers’ Kitty Hawk in 1903 to the fictional Millennium Falcon spaceship of the movie fantasy Star Wars.

Meanwhile, industry sales figures reflect the rising popularity of personal computers over all other computer products. According to International Data, more than 3.9 mil-

lion PCs, worth $7 billion, were sold worldwide in 1982. By last year sales were up to an estimated 10 million units, worth $30 billion, an increase of 328 per cent. By comparison, during the same period the value of mainframe purchases grew by just 69 per cent. In 1982 computer makers sold 2,280 mainframes, worth $14 billion; last year they sold 3,400, worth $23.6 billion. But Canadian sales of personal computers have not followed world trends—they have dropped to 453,000 units last year from 672,000 in 1984, but sales are now expected to grow through to 1991.

But the current revolution, based on what is known in the industry as the wonder chip, is one of the most dramatic. The 80386, a quarter-inch-square piece of silicon that Intel introduced in October, 1985, possesses 6,250 times as much memory capacity as its nine-year-old predecessor, the 8088. The new wonder chip’s only major competitor is Motorola Inc.’s 68020. Introduced in May, 1984, it has almost as much power as Intel’s, and Schaumberg, Ill.-based Motorola has sold more than one million of them to customers, including the prominent manufacturer Apple Computer, Inc. of Cupertino, Calif.

Dominate: For its part, Intel has sold fewer than 800,000 of its 80386 chips for prices averaging less than $380 each. Still, the Intel chips should dominate the PC market, according to most industry analysts, because it is the choice of International Business Machines Corp. of Armonk, N.Y., the world’s largest computer company. Last April IBM unveiled a new series of PCs called Personal System/2. The top-end model, the PS/2 model 80, which retails for $10,900 to $21,800, contains the Intel 80386. Houston-based Compaq Computer Corp. was already marketing two PCs incorporating the Intel chip, with the firm claiming that they were the fastest desktop computers ever produced. Company

spokesman Robert Beach says that the new Compaq products, which retail for as little as $12,000, can produce complex architectural or engineering drawings on a normal computer display screen.

Unleash: Still, most industry experts agree that it will be years before software can be developed to fully unleash the incredible powers of the 80386. And it will take users several years beyond that to discover the limits of their new machines. Microsoft Canada’s MacTaggart said that the latest generation of PCs will run on existing software programs written for previous generations of IBM and IBMcompatible machines.

Late last year Microsoft Corp. of Redmond, Wash., the parent of Microsoft Canada, released the first piece of mainstream software developed exclusively for computers built around Intel’s 80286 and 80386 chips. Called the Microsoft Excel for Windows, the program allows a user to split a computer display screen into various panels in order to perform several tasks simultaneously.

Because of the rise of computer networks within large companies, the ability to communicate between different brands of computers has become critical. When PCs first entered the workplace in the early 1980s, the desktop computers used by individual employees usually were not connected to company mainframes, minicomputers or other personal computers.

But now a computer network can be built around the new chip.

Hooked: One major firm to go that route is the Royal Bank, which, according to Grant, has committed $2 billion over five years to upgrading its information systems with personal computers containing the Intel 80386 chip. PCs in each of the Royal’s 1,467 branches are currently hooked up to mainframes located in three regional data centres across the country. The branch PCs constantly draw on the mainframes to process 4.1 million cheques and 700,000 credit card transactions daily. Grant said that the Royal may install PCs with 80386 chips at the branch level and connect them to four or five smaller PCs.

With such networks, individual branches could process and store far more information.

Although the new technology will have an enormous impact on huge corporate users, it has also revitalized the other end of the scale, the portable or laptop market. Compaq has introduced a 20-lb. portable that contains the Intel 80386 chip. Laptops are popular with executives, accountants and other pro-

fessionals who take work home with them at night or on weekends. In fact, some computer analysts predict that portable computers will cut into the PC market by the end of the decade. Still, personal computers have not become a common household tool as industry analysts once predicted they would. John Winter, a retail analyst with the Toronto-based consulting firm Clayton Research Associates, said that only 10 per cent of Canadian households have a PC, which, he added, makes them about as popular as pianos in the home. And a recent United States Bureau of the Census report, based on 1984 data, found that only 8.2 per cent of American homes had a PC. Said Winter: “Home computers did not live up to their triumphal entry.”

Marvels: But by any measurement, the personal computer has emerged as one of the technological marvels of the 20th century. But even more startling, said MacTaggart, is the fact that there are no horizons in sight to limit further incredible advances. Indeed, with the development of each new microchip, the computer industry reaches a new plateau and opens up vast, uncharted possibilities.

SUSAN FLORY

ANNE GREGOR

HEATHER KNEEN

GEORGE FERZOCO

SUSAN JOHN DALY

—D’ARCY JENISH with SUSAN FLORY in Ottawa, ANNE GREGOR in Los Angeles and JOHN DALY, GEORGE FERZOCO and HEATHER KNEEN in Toronto