NCD’s Three-Year Strategy To Rescue Thin Client Products Crumbles

Thin client vendor NCD has stopped development of its server-side software, which will affect 180,000 current users.

Thin client vendor NCD has stopped development of its server-side software, which will affect 180,000 current users.

NCD has dropped plans to add advanced load balancing to the product due to financial difficulties, leaving customers that want to upgrade to turn to more expensive products such as market-leading Citrix Metaframe.

David Perry, NCD marketing director, said, "We will support current Thinpath users and continue to develop our client-side management tools but I'm telling our sales guys we are not competing with Citrix in any shape or form."

The announcement marks the end of NCD’s three-year plan to make its hardware products more tempting by including competitive management and load-balancing software. The aim was to undercut Citrix, which specialises in thin client software and to attract customers who want to buy a complete hardware and software solution from a single vendor. The strategy was also aimed at customers who would otherwise have chosen thin client hardware from Wyse, which does not produce its own server-side software, instead it licenses Citrix Metaframe.

NCD's sales were boosted by a Gartner thin client report published in 1999, which compared Citrix MetaFrame and NCD Thinpath. The report said NCD's Thinpath offered a substantially lower total cost of ownership than Citrix Metaframe but due to its lack of features was only suitable for simple thin client installations.

After the report, NCD admitted its Thinpath tools were not nearly as comprehensive as Citrix Metaframe but announced plans to build on its success and improve Thinpath to address the needs of larger, more lucrative enterprise customers. The planned improvements included software to create application portals and load-balancing tools needed to handle varied servers and operating systems. Citrix's response was to bar NCD from the Citrix sponsored development communities, forums and working groups.

Throughout 1999 and the start of 2000, NCD continued to add features and upgrades for ThinPath to capitalise on the expected boom in thin client sales that had been predicted by analysts on the basis of growth in previous years. However, the predicted thin client boom of 2000 failed to materialise due to a general slowdown across the technology sector.

The company’s share price then dropped to the point where it was about to be eliminated from the Nasdaq technology stock index in the US. According to an NCD insider, the company’s cash reserves were all but dried up and several key staff jumped ship. By last November, the company realised that its strategy would have to change if it were to recapture the market share.

In December of 2000, NCD started a major restructuring. With the help of venture capital investment from long-time customer GTS-Graal and staff reductions the company announced its first positive cash flow in several quarters and its share price doubled to just under $3.

NCD’s position now looks more solid as even hardware rival Wyse Technology’s chief executive John Stringer commented "It's been a hard year for everyone but it's widely recognised that we [Wyse] won the thin client wars. We have no desire to see these guys die. It’s not good for our industry."

However NCD points out that it still has more than 1 million thin client terminals in use by customers and a recent decision by Motorola to expend its thin client installation with NCD suggests that the hardware war is still on.

While NCD’s financial troubles had mounted, the company realised that competing with Citrix was no longer a viable option. NCD decided to stop competing directly with Citrix and the two companies ended their conflict. NCD is once again involved in the Citrix-dominated developer community and is planning to bring an embedded Windows NT product to the market. It has launched a version of the ThinpathX client-side software with local printing, floppy drives and bi-directional sound.

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