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Suresnes, France-based Dassault Systemes SA has been a leader in the creation of 3-D design software. As companies scale back on technology spending and push into the new area they call product life-cycle management, Dassault and other 3-D design software companies like Autodesk Inc. and Parametric Technology Corp. will be facing increased competition from established software and services companies like SAP AG, EDS and Oracle Corp. as software and service providers fight for limited technology budgets. Dassault's software, developed to help design and build aluminum airplane models for wind-tunnel testing, has been used in the design of products as diverse as bras, golf clubs and guitars.

Sun Microsystems became the first large PC maker to make a commitment to use the Linux operating system in a new line of desktop computers. They will be targeted toward business users in customer service centers, stores and factories. A coalition of companies, including Red Hat, SuSE Linux, Ximian and Lindows.com, are hoping to take advantage of business resentment over changes in licensing policies by Microsoft to promote usage of Linux.

Microsoft Corp. and Sony Corp. are both racing to get their console games to have links to the Internet and online gaming. Microsoft is considering a 'closed' network which would manage the game servers and control everything down to matching players for online competitions and signing up users. Sony Corp., on the other hand, is opting for an 'open' system where the game developers can manage their own networks online and decide how much to charge. Sony would only require that users buy the adapter for the PlayStation 2 console for $39.99.

IBM Corp. is competeing with BEA Systems Inc. in making and selling Web-application servers. In this server maket, IBM has a share of 31% coming closely behind BEA System's 41% share.

The free Linux operating system is quickly becoming popular. Royal Dutch/Shell Group, Home, Depot, Amerada Hess are using Linux supercomputers and IBM plans to spend $1.3 billion on the product. Linux is gaining support as a foil to Microsoft and Sun Microsystems software while gaining a 27% share for computer servers in 2001. Windows 2000 had a 41% share. Company programmers can modify Linux fro their own purposes. California Pizza Kitchen has adapted Linux databases for real estate acquisitions and Musicland and Burlington Coat Factory Warehouse have also joined the Linux club.

As part of the merger deal, consumer advocates and competitors won some promises from AOL Time Warner. One point of contention was AOL's dominance of the online instant-messaging market. AOL Instant Messager has 23.3% of the market. MSN Messenger Service follows with 13.4%; Yahoo has 11.7%. AOL has refused to open its system to competitors, citing security concerns. It agreed to do so, under terms of the merger, for what is touted as the next step in instant messaging: instant video conferencing. However, many feel that consumers will be slow to adopt video messaging, since the current text system is fast and convenient. So whether AOL will have to share its software and network is still a question.

Although Symbian Ltd. was first in line to become a major provider of operating systems for cell phones, it now appears that it will have heavy competition from Microsoft Corp. Microsoft's first version of an OS system for cell phones was clunky and unmanageable, but it has developed a better one called Stinger. Pearl, Symbian's operating system has not yet been revealed while Microsoft, jumping ahead of the competition, has already shown a prototype for Stinger.

Microsoft Corp. is trying to convince companies that its network software is capable of handling large amounts of data like the server-software produced by Sun Microsystems and Oracle Corp. Microsoft is also attempting to cater to the customer service quality that huge businessess demand from a network software system.

i2 Technologies Inc. is ready to become a market leader in supply-chain software. Following partnerships with IBM and Ariba Inc. and an upcoming acquisition of Aspect Development Inc., i2 is positioning itself to compete against Oracle Corp. Oracle, once a reseller of i2's software, considers its former partner a bigger competitor than Microsoft Corp., SAP AG or Baan Co.

Microsoft Corp. is planning to intensify its marketing campaign for its Windows Media Player. A Nielsen/NetRatings survey showed 4 times as many Web users played back music with RealNetwork Inc.'s RealPlayer. And Apple Computer's QuickTime has twice as many users as Media Player. However, a PC Data Online survey in October showed Media Player's share grew 34% from September, compared to 5% for RealNetwork and 8% for Apple.

Numerous software companies should meet their Sep 1998 qtr forecasts, but analysts are concerned about an industry slowdown in 1999. One problem stems from the international financial crisis, as corporate customers are reducing their capital spending. This trend probably will subject corporate software vendors to additional analyst scrutiny on their 1999 forecast. Second, the Year 2000 computer problem is forcing IT departments to concentrate on existing systems instead of purchasing and developing new systems. Microsoft will report net income of $1.3 billion, or 50 cents a diluted share, for the 1st qtr 1999 ended Sep 30, according to Montgomery Securities. By comparison, the world's largest software vendor earned $959 million, or 36 cents a share. Sales of Office, Windows 98 and a switch from business users from Windows 95 to the more lucrative Windows NT workstation fueled Microsoft's revenue growth. Other companies mentioned are PeopleSoft, Siebel Systems, Computer Associates International and BMC Software.

Parametric Technology is at the top of the industrial-design software industry but has not yet dominated the automotive-design market. Winning an automotive-design contract is extremely desirable because the makers of automobiles usually want software that is long term, as to not interfere with the product cycles or manufacturing. Parametric is anxious to gain more auto business, with the hopes that it can leverage its success into obtaining design challenges that are even more complex and challenging. Parametric's sells totaled $600 million for its fiscal year ended Sept 30, 1996 and increase of 52% over the previous year. Analysts are predicting $825 million in sales for 1997.

Silicon Graphics Inc is being forced to defend its current position as the market leader of special effects and animation systems in the entertainment industry against the combined efforts of Intel and Microsoft. The offerings of Silicon Graphics are both superior and more varied than those available through Intel's new multimillion-dollar 'media lab,' but the prices are also much higher. While animation and special effects account for approximately 15% of Silicon Graphics' sales, those sales have steadily declined from 35% to 50% in earlier quarters to the mid-20% range in more recent quarters. Although Silicon Graphics is expected to remain the primary source of entertainment computing for several years, it is not discounting the threat of the combination of Microsoft's Windows NT software with Intel's Pentium Pro chips. Silicon Graphics' pending strategy includes promoting its improved high-end technology in high-volume, low-end, products.

The battle between Netscape Communications and Microsoft for control of the Internet is now focusing on intranets. These are private corporate networks that use the Internet for business purposes. Netscape has found that the majority of its users employ the company's software to develop internal intranets, rather than to establish Internet sites. About 80% of Netscape's income is currently derived from these companies. Microsoft also reports that about 80% of its Internet servers are employed on intranets. The Internet software market is expected to reach $8.5 billion by 1999. Netscape is changing its focus to business applications and has made agreements with many vendors, including IBM, who are now distributing its intranet software along with their products. Microsoft is countering by distributing its intranet server software with its Windows NT operating system.

Microsoft's Windows 95 operating system sold 40 million copies in its first year, but sales have not met the expectations of some industry observers and applications developers. Corporations and users have not migrated from their Windows systems as expected and most Windows 95 sales are related to the purchase of new systems. Dataquest Inc has lowered its 1996 sales projections for Windows 95 by 27 percent to 45.7 million units. The market-research company originally estimated Windows 95 sales for the last four months of 1995 at 30 million, but just 18.5 million copies were actually sold. Microsoft says the sales met its own projections, but the media frenzy accompanying Windows 95's introduction escalated expectations beyond their control. Many third-party developers gambled on the operating systems' success and suffered disappointing sales as a result.

Macromedia's Shockwave translation software allows content developed for CD-ROMs using Macromedia authoring tools to be served over the World Wide Web. The product may give the multimedia powerhouse a head start in the race for Web authoring tool market share. High profile competitors in this market include Microsoft and Sun, but their respective products, Blackbird and Java, have yet to ship. Both companies concede that their products will support Shockwave technology. Macromedia presently claims 70% of the market for tools that create special effects and animation for CD-ROMs. Browser market leader Netscape Communications will bundle Shockwave with its next browser. Macromedia stocks rose from $36.25 per share the day after Shockwave's Oct 29, 1995 announcement to $46.50 per share on Nov 30, 1995.