Reuters Launches Art 2000, High-End Equities Terminal

It's a tough time to be launching any product into the North American equities information market, let alone an upscale rethink of the less than fabulously successful Equities 2000. But that isn't stopping Reuters from rolling out the production version of ART 2000.

The product looks very much as expected (TST, Aug. 3, 1987), a high-powered Equities 2000 with a mouse-driven Mac-like user interface accessing all the quote retrieval features of Equities 2000 in addition to Instinet's electronic trading network, and Reveal, the portfolio management application.

ART 2000 will also connect to Dow Jones News Service, Standard and Poor's MarketScope, and historical databases from Textline and I.P. Sharp.

A rudimentary tick-by-tick graphics function is standard with ART 2000, but it's only capable of charting one parameter of one instrument at a time. Reuters plans to add a more versatile graphics functionality as part of its premium service tier in a later release.

Users can customize their screen display and quote lists. ART 2000 includes statistical analysis software with 24 pre-formulated sorts -- such as 10 largest price gainers -- which can be applied to incoming stock data.

The ART 2000 terminal is manufactured by Reuters and runs on an Intel 80386 microprocessor. Four megabytes of RAM and a 40-megabyte hard disk drive are used to hold a 300-security cache of price data and a 24-hour archive of news. The windowing environment is Microsoft Windows.

A big question mark for ART 2000, especially in volume installations, is telecommunications. Access to IDN is through a 9.6 kilobit/sec. interactive line. Reuter Monitor is delivered at 1200 bits/sec. and requires another phone line. Additional communication lines are necessary for access to additional services.

Twenty-five ART 2000s, each with access to IDN, Monitor, Instinet and Dow Jones News Service, for example, would call for 100 dedicated phone lines -- four per terminal. A Reuters spokesman was unable to say whether telecommunication costs are included in the service price.

The need for multiple telephone lines for each ART 2000 terminal will complicate roll-out in Europe, where dedicated phone lines are harder to come by.

The first-terminal price of ART 2000 will be about the same as that for Equities 2000 -- $950/terminal/month -- according to Smith. But that's where the similarity ends -- additional ART 2000 terminals are $550/month, while additional Equities 2000 terminals are $150/terminal/month.

The ART 2000 base price includes IDN, Reuters news, Reveal, and the basic charting software. Monitor, Instinet and other services are a la carte.

Reuters is not prepared to unbundle ART 2000 except perhaps in volume installations "where we have assurances that there is adequate protection for our software," says Buford Smith, senior vice president, marketing and development Reuters North America.

Customers wishing to supply their own terminal equipment will have to apply for special permission. The ART 2000 software is independent of the Reuter hardware platform and will run on standard 386 products including the Compaq 386.

Two years ago, Reuters announced a major thrust into the North American equities market, estimated at 200,000 screens by Smith's rough reckoning. Reuters believes that 50% or 100,000 of these are retail brokerage screens while the other 100,000 are split between professional investment managers and trading rooms.

"The retail brokerage market," says Smith, "is of the least immediate interest to us. It's the most competitive and one where in many cases one is required to sacrifice margins for market share and we're not prepared to make that tradeoff."

Equities 2000 may not be a retail brokerage market product, but at $150/additional term/mo., it certainly has a retail brokerage market price. One wonders if Equities 2000 isn't being retrospectively repositioned to avoid being tagged a loser.

Equities 2000 and ART 2000 are both targeted primarily toward professional investors, according to Smith, who sees the two products as complementary. "We think they'll coexist nicely. The Equities 2000 is a simpler, more basic service for the cost-sensitive... If they want the ease of access, speed and integration of other functions, then perhaps they'll want to pay the extra money for the ART 2000." Test marketing of the ART 2000 was conducted in Switzerland.

But Equities 2000, the lower-tier companion product to ART 2000, has captured only 1,224 North American screens (10,211 worldwide) in the 18 months since its May 1987 launch. Is there any reason to expect ART 2000 to do better? "I don't think there is a silver-bullet product that suddenly vanquishes the competition," says Smith, "We have targeted our market and we hope to make steady progress. This company's over 100 years old; it doesn't have to achieve its goals overnight."

Smith says he'll be satisfied if ART 2000 turns in a performance similar to that of Equities 2000. That may be satisfactory in North America where ART 2000 replaces an aging Instinet terminal, but in Europe, ART 2000 is the swap-out product for 40,000-odd Reuter Monitor terminals now taking equities information.

The carrying costs associated with maintaining network and processing facilities for both IDN and the Reuter Monitor network has made elimination of the Monitor network "a corporate priority," according to Smith. Reuters hopes to make a subset of Monitor data available through IDN by the end of the year.

Although ART 2000 has been in beta test for several months, no major purchase orders were announced at the North American debut. Both Merrill Lynch and First Boston were mentioned as beta sites.

Coincidentally, First Boston was mentioned as a beta site by Quotron Systems Inc. at the Open Windows product introduction. Sources at First Boston confirm that both Quotron's Open Windows and ART 2000 are under review. First Boston is apparently considering alternatives to the internally developed Compaq 386-based sales and trading workstation.

First Boston's computer-aided software engineering tool, known as HPS (High Productivity Systems), will currently support a Microsoft Windows environment on IBM or compatible personal computers. Both Open Windows and ART 2000 meet those criteria.

Reuters has yet to reach an accommodation with the International (London) Stock Exchange on the use of the yellow-strip feature of SEAQ Level 2. The strip displays the best bid and offer and the acronyms of the three marketmakers quoting the best prices in bright yellow relief at the top of the Level 2 page display. The ISE also reportedly withheld Level 2 service from Instinet terminals in the U.K.

ART 2000 has access to SEAQ domestic (U.K.) Level 2 through IDN and SEAQ International in page format through Monitor, and can display either service on the same screen with Instinet prices. Without the yellow strip, however, SEAQ quotes are of limited utility to traders.