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HP plans "capacity on demand" chip plan

Under a program to be announced Tuesday--very similar to an initiative Sun Microsystems unveiled last week--HP will sell Unix servers with extra processors that customers don't have to pay for until they activate them.

Hewlett-Packard will announce a new program Tuesday to let people buy more computing horsepower than they need.

Under the program--very similar to one Sun Microsystems announced last week--HP will sell Unix servers with extra processors that customers don't have to pay for until they activate them, HP's Les Wilson said.

The philosophy: Give smaller companies room to grow without deterring them with steep prices. When the companies are big enough that they can make use of the extra processors, they can pay then. The programs at both companies are called "capacity on demand."

HP is trying to spur Unix server sales with a sales force reorganization in light of revenue warnings. Sun, HP's biggest rival for Unix systems, is implementing new incentives to lure Internet start-ups with low prices while the companies are in their early stages.

But Sun and HP are taking different approaches to the method. Where Sun charges a little extra at the time of purchase for the unused processors, HP will charge between $100 and $150 per extra processor per month, Wilson said.

Another difference is that Sun offers the program only on its highest-end computer, the E10000. HP, in contrast, offers it on its mid-range L-class, its higher-end N-class and its top-end V-class Unix servers. Those servers can accommodate up to four, eight and 32 PA-RISC processors, respectively.

Next year, though, Sun will add the feature to lower-end servers, Sun has said.

Getting extra processors that are activated adds significantly to the price tag of a server. For the L-class, each new processor adds about $5,000 to $6,000 to the price; on the N-class, about $10,000 to $11,000; and on the V-class, about $25,000.