Microsoft Corp.'s fast Windows NT networking software is winning over the investment management community, and the Internet is becoming Wall Street's Autobahn for data and sales information transmission.
The 32-bit operating system appears to have grabbed a 60% to 70% market share among large to midsized money managers, said Peter Chargin, director of product management for Advent Software Corp., San Francisco.
Mr. Chargin's estimate was based on surveys of Advent's 4,000 clients. Advent is a vendor of portfolio management and accounting and trade order management systems.
The trend toward Windows NT and Windows 95 has accelerated, said Erik Anderson, manager of business development and support for Russell Data Services of the Frank Russell Co., Tacoma, Wash.
Among hundreds of money managers installing NT Server software are: Pacific Investment Management Co., Newport Beach, Calif.; Alliance Capital Management L.P., New York; Barrow, Hanley, Mewhinney and Strauss Inc., Dallas; and Franklin Research & Development Corp., Boston.
Windows NT also is making significant inroads among securities dealers, where Unix software is dominant. Windows growth among dealers is expected to increase 10% to 12% each year. Novell Inc.'s NetWare program and various Unix products are losing out to NT.
The switch to NT will give money managers a less crash-prone environment, the ability to work on several tasks simultaneously and accomplish them faster. It also will improve security, limiting who can see or use files, and improve monitoring of computer systems.
As security dealers install Windows systems, transmission of computer models, spreadsheet data and documents from the sell side to the buy side should grow and lessen the need for fax, telephone and face-to-face communication.
The wide-spread adoption of Windows NT gives Microsoft a new dominance in networking and software applications in the financial community. Microsoft is a safe choice for the money management community in server software because of its ability to grow with a business, consultants say. Makers of Unix-based software are readying Windows NT applications of their own.
Smaller money managers aren't moving as fast to convert from slower 16-bit network software and applications, mostly likely because of the cost. However, they are expected to eventually make the conversion.
Software makers like Wilshire Associates, Santa Monica, Calif.; Ibbotson Associates Inc., Chicago; and Advent that already have 32-bit applications ready are hoping to increase their market share.
"NT is faster," than older, slower 16-bit software, said George Allan, a vice president at PIMCO. PIMCO has NT on five servers and Windows 95 on desktop machines, a combination used by many money managers. But PIMCO continues to use Unix for trading.
One reason Alliance uses NT is its security features, said Stephen Chang, a marketing support specialist. The information technology department can better control who can use certain applications and files, he said. Alliance has about 800 computers.
Barrow, Hanley installed NT partly because of its ability to use fast 32-bit applications from Advent and partly because its multitasking capabilities allow users to run several applications at once, said Ron Cooper, an information technologist.
"Windows NT doesn't crash, it multitasks and it handles streams of information so much better," said Michael Henkel, a managing director at Ibbotson.
A spokesman for Novell said Windows NT Workstation is becoming the preferred application for desktop computers. But NT Workstation works better with Novell IntranetWare or Netware server applications than with NT Server, the spokesman said.
Many smaller money managers might be delaying conversion to Windows NT because of the cost.
Still, consultants and investment management software vendors believe most money managers eventually will adopt Windows NT for their servers.
New 32-bit software can take advantage of NT speed. With Ibbotson's new 32-bit optimization program EnCorr, performing an optimization can take two or three seconds instead of 12 to 15 seconds, said Mr. Henkel.
Barrow, Hanley's Mr. Cooper said his firm switched to NT mainly because Advent's portfolio management and accounting software, Axys 2, and trade order management software, Moxy 2, offer 32-bit versions.
Wilshire has Windows 32-bit versions of Atlas, an equity analytics program, and Axiom, its fixed-income analytics program.
BARRA Inc., Berkeley, Calif., and Capital Management Sciences, Los Angeles, have 16-bit programs compatible with Windows NT and Windows 95. They plan to offer 32-bit versions.
But some software and hardware vendors have some catching up to do. Some programs have to be "tweaked" to run under NT, said Mr. Cooper. There also are problems with software drivers.
Meanwhile, "NT Server software is taking off" on the sell side, said Larry Tabb, technology analyst at Tower Group, Newton, Mass. Tower Group is a financial services, information technology and research and consulting firm.
Five years ago, said Mr. Tabb, virtually every server at large securities dealers ran Unix. Now, he expects the number of securities dealers using NT to grow 10% to 12% a year.
The speed of Windows NT and the power of Intel Corp. microprocessors have made Windows virtually as fast as Unix, at one quarter to one-half the cost. Securities dealers also can save on training costs by using Windows and avoid software customizing costs required by Unix.
Morgan Stanley Inc., New York, is one securities dealer that has begun to install Windows NT in some departments.
Another major change in cyberspace among securities dealers is their increasing use of the Internet, said Mr. Tabb.
Securities dealers are sending models of how securities perform, spreadsheet information and documents to money managers over the Internet.
Use of the Internet is "finally enabling people to look, touch and manage the same information," said Mr. Tabb. Before, he said, such information had to delivered by fax, telephone or in person.
Lehman Brothers Inc., Salomon Brothers Inc., Merrill Lynch Inc. and Morgan Stanley, all based in New York, are some of the securities dealers making increasing use of the Internet to stay in touch with clients.
Through direct Internet connections, information can be sent at the rate of 10 megabytes per second, said Paul Green, manager of strategic marketing for BARRA.
BARRA and Capital Management Sciences are finishing software that will allow money managers to receive huge data files over the Internet.
Wilshire has even put a working model of its asset allocation software Horizon on the Internet.