Hambrecht & Quist Recharges Macintosh-Based System It Pioneered

Hambrecht & Quist Inc. last month completed a re-write of the software used to power its 120 Apple Computer Inc. Macintosh workstations. The San Francisco-based broker/dealer is now poised to embark on a series of network and server upgrades.

But as H&Q enters its fourth year of enhancing and supporting its mostly homegrown market data platform -- called Phoenix -- the plummeting costs of vendor-provided service may soon overrun the value of keeping it all in- house.

The workstation software upgrade is the first phase of a four-part project led by H&Q technology head Gary Teplitz. The firm is also porting its quote server software to run on Sun Microsystems Inc. SPARCstations, upgrading to an Ethernet local area network, and rewriting its feed handler for a faster data feed. Telerate Systems Inc.'s CMQ/Telerate unit is slated to boost the transmission speed of the Telerate International Quotations feed to 56 from 19.2 kilobits/second next month.

H&Q is undertaking the systems upgrade to handle trade volumes that have nearly tripled since the firm installed its quote-terminal system in spring 1989. With its over-the- counter equities market-making operations and retail and institutional salespeople generating more data requests, H&Q aims to boost its Phoenix system to three times current capacity, says Teplitz.

Teplitz's group last month finished rolling out upgraded workstation software to users in the firm's San Francisco and New York offices. The software was rewritten, among other reasons, to migrate away from the now-extinct Dow Jones & Co. Scrolling News service (IMD, Aug. 5, 1991).

Using a MIPS Computer Systems Inc. server, H&Q allows its users to tap internal H&Q news and research with the same application that distributes seven newswires from Dow Jones' X.25-based DowVision feed. Users now retrieve Dow Jones news stories via a separate local application, replacing the 3270 terminal emulation previously required to access the news database on CMQ/Telerate's IBM mainframes in Toronto.

Over the past three years, the H&Q system has evolved from a primordial all-Apple configuration to include Sun and MIPS workstations and servers. Most recently, H&Q has been using Macintosh communications and applications servers for quotations, handling the 19.2 kilobit/second feed from CMQ/Telerate, and MIPS Computer Systems servers to handle news. The servers are linked via an Appletalk local area network (LAN) that supports Mac IIs as clients.

Since last December, server software has fallen under the knife. Unlike the workstation software, which was written in a combination of the MacApp, C and PASCAL languages, the server is exclusively C. As a result, a single H&Q programmer was able to port the server software to run on a 20+ million instructions per second SPARCstation in about one month, says Teplitz. Testing will begin this month.

The current Appletalk network is admittedly slow, says Teplitz, but stable and simple enough to support 300 nodes without a network administrator. However, in line with its plans to adhere to more open standards than those originally selected, H&Q has prewired its sites for a twisted pair Ethernet LAN and is already standardized on TCP/IP.

While the current system was largely developed by H&Q's own staff, it began with code written by the would-be market data vendor Aria International (Trading Systems Technology, May 22, 1989). In 1989, Aria fell short of both funds and staff, and failed to meet delivery dates imposed by the contract with its premier customer, H&Q.

Prior to 1989, H&Q had been using dumb terminals from Quotron Systems Inc. in its San Francisco, New York and Boston offices. The firm -- a market-maker in such over-the- counter equities as Apple Computer -- elected to complete the Mac-based platform itself. H&Q hired developers that had been let go by Aria and guided a less-ambitious system to production release.

While questions remained about marketing rights to the product, Aria and H&Q jointly canvassed the industry for prospective customers for the system. Despite what impressed many at the time as an advanced user interface, no buyers materialized and the two abandoned their marketing effort. With Aria defunct, H&Q proceeded to use the Phoenix system -- sans the links to NASDAQ, Reuters Holdings PLC's Instinet and Thomson Corp.'s AutEx that Aria had planned.

While allowing the planned upgrades to proceed, H&Q in the near future will be reevaluating the costs and benefits of keeping control of its market data systems in-house.

Next to test the firm's commitment, says Teplitz, will be the costs associated with swapping the now long-toothed Mac IIs that sit on 120 desktops throughout the firm. While H&Q's system is currently capable of supporting any Macintosh microcomputer, at $3,000 to 4,000 apiece the hardware investment will be substantial.

With the new workstation software in place and the planned network and server upgrades proceeding apace, the desktop processing power of the Mac IIs may soon begin to lag. Already, insufficient central processing unit (CPU) power has prevented H&Q from offering its users dynamic links between its market data service and other applications, such as spreadsheets and word processors.

Although Teplitz declines to name a figure, he confirms that H&Q's monthly market data bill is "substantially" below the $100 per terminal deals that larger firms have wrested of late from market data vendors (IMD, Dec. 9, 1991). With a total systems staff of eight and the already-low data costs, Hambrecht & Quist could already have a tough deal for vendors to beat.