Charles Schwab Nears Decision On Next-Generation Quote System, Demands Unbundling Of Hardware From Data

Charles Schwab & Co. could decide by the end of November who is to provide its next-generation quote service. The Schwab contract, which involves more than 100 branches, is the latest example of the growing industry trend to unbundle hardware from the software and data components of the service.

"It's our intention from an architectural standpoint to keep these two issues separate," says Schwab executive vice president Woodson Hobbs, "to keep the hardware that's required both at the host and the branch separate and apart from the services that are provided of an information delivery nature. That way we won't have to buy one. We can always buy the best from whoever's got it."

Schwab currently maintains two quote systems -- Quotron for its branches and a home-brewed ticker plant to support its audiotex and PC-based consumer information services, Schwabline/Schwabquotes and Equalizer. "Our motivation to change our branch systems," says Hobbs, "is based on trying to do some distributed processing and trying to get better response time and better equipment for our branch employees."

The reason for replacing its ticker plant is even more direct. Hobbs doesn't think firms of Schwab's size should be in the business of running ticker plants. "We're here to make money and not to build quote systems," he says. Schwab was forced into it in 1984, however, when it couldn't find a vendor willing to provide data for the consumer services at a consumer-sized price.

Attitudes have changed in the intervening years. Schwab split the RFP for its new quote system into two pieces, one for hardware and the other for data/software. "Seven or eight" out of the "nine or ten" vendors invited to bid on the data RFP did so, says Hobbs, and almost all of them omitted hardware from their bids. "If they were deaf and continued to couple their delivery and distribution methodologies then they've already been eliminated or warned that they better separate them or they'd be eliminated," he says.

Bidders include ADP, Quotron, Reuters, S&P, and a few smaller vendors like Canada's Stardata. The field for the hardware RFP has already been narrowed to IBM, AT&T, and IT&T, says Hobbs, and a hardware vendor may be selected before a data vendor is finalized.

Hobbs hopes to have a working prototype of the new system ready by the end of March. Following a three-month beta test, it would be ready to roll out sometime during the third quarter.