DENVER -- Microsoft Corp., the fast-growing maker of computer operating software, extended its reach into the banking industry this week by announcing a potentially powerful alliance with major computer vendors.
Microsoft said it formed the Banking Systems Vendor Council with Fujitsu-ICL, NCR Corp., Olivetti, and Unisys Corp. They plan to develop technical standards that will allow for linkages among previously incompatible systems.
The move, one of the first developments coming out of an eight-month-old MIcrosoft division that specializes in marketing to banks, represents a competitive slap at International Business Machines Corp., the dominant vendor of bank computer systems.
Microsoft, based in Redmond, Wash., and the largest software company in the world, has become an increasingly bitter competitive rival of IBM. Microsoft's Windows operating environment is competing head-to-head with IBM's OS/2 system for personal computers.
Taking on Big Blue
"Microsoft is clearly attacking IBM," said Robby di Stefano, vice president of ISC-Bunker Ramo, a provider of branch automation systems. Based in Shelton, Conn., ISC-Bunker Ramo is a division of the Italian computer giant Olivetti.
IBM became dominant by selling the mainframe computers that large banks use to drive most of their operations. But IBM is having a harder time competing with newer distributed computing systems.
Mr. di Stefano said bankers are now spending more on distributed computing than on traditional, centralized, mainframe-based systems.
Microsoft officials characterized the Banking Systems Vendor Council as a key part of the software vendor's plan to increase its presence in the banking industry.
"This is our biggest financial services announcement ever," said Bill Anderson, Microsoft's financial services marketing manager.
According to Microsoft officials, the council will address a big problem bankers now face in building distributed systems around the Windows software.
Microsoft officials view Windows as playing a centrla role in distributed networks by making the systems easier to use. The Windows software accomplishes this by translating complex computer commands into easy-to-understand icons and colorful graphics.
Windows runs in conjunction with MS-DOS. Microsoft's flagship PC operating system software. MS-DOS controls basic functions of more than three-quarters of the world's personal computers, including IBM products, according to market researcher International Data Corp. of Framingham, Mass.
For Windows to play a key role in distributed computer systems, it must have electronic hooks to other vendors' software and hardware systems.
The Banking Systems Vendor Council aims to standardize the interfaces between Windows-based banking hardware and software, so that these links are cheaper to build and easier to install.
Jeff Raikes, a Microsoft senior vice president, said the first standards will debut this year. The group will also solicit new members at a meeting in June.
"I expect nearly everyone to sell products that supports them," said Dale R. Smith, president of Ampersand Corp., York, Pa., which sells branch automation software.
Mr. Smith said Ampersand will roll out software this year that supports the new Windows standards.
Mr. di Stefano said ISC-Bunker Ramo will support Windows in a similar time frame.
If widespread industry support develops, Microsoft's software will be a strong contender for use in new distributed computing systems, bankers said.
Choosing a System
"IBM had better watch out for this one," said a computer system manager at a major southern bank, who requested anonymity.
The banker said his company is currently deciding whether to use an IBM OS/2 operating system with graphical user interface or Microsoft's MS-DOS operating system with Windows interface in networks of more than 3,000 personal computers to be installed in several hundred branches.
Despite its push into banking - the first industry for which it set up a dedicated marketing force - Microsoft could find it difficult to convince multiple vendors to support Windows-based standards, because many vendors view Microsoft as a competitor.
One member of the Banking Systems Vendor Council who requested anonymity, warned that the group could be plagued by buckering about giving Microsoft too much power.
And IBM is expected to counter Microsoft's move by marketing technical standards for a more open system that could link bank hardware and software into distributed networks based on OS/2.