Commentary: Dell becomes key to Unisys

By Andrew Butler, Gartner Analyst

Unisys may be great at building high-end servers, but it has a lot to learn about cultivating partnerships with other hardware vendors.

Last month, Hewlett-Packard bailed

	See news story: Unisys adjusts to life without Compaq

out of its OEM (original equipment manufacturer) agreement with Unisys, and now Compaq Computer has hit the silk as well. Of the remaining partners--Dell Computer, Hitachi, and Fujitsu subsidiary ICL--Dell is clearly the most important in preserving Unisys' original sales strategy. It's essential that Unisys maintain its OEM relationship with Dell.

When Unisys began marketing its CMP server late last year, the new technology quickly gained acceptance, causing vendors such as HP and Compaq to sit up and take notice. At that time, it was still unclear what the market for large Intel-based servers might be, but these other vendors didn't want to be left behind, so they partnered with Unisys--even though, in the case of HP and Compaq, they make competing enterprise-class RISC/Unix servers.

But Unisys evidently failed to nurture its relationships with its new OEM partners. Part of the problem may have been that Unisys neglected its relationships with its OEM partners' sales forces. That was possibly to allay anxiety among Unisys' own sales force that HP or Compaq salespeople would steal their thunder. Unisys has always sold to a small, well-defined customer base--banks and government agencies, for example. Compaq, HP and Dell sales reps sell to huge, heterogeneous customer bases, giving them a clear advantage in marketing their companies' versions of CMP.

With HP already gone, Hitachi, ICL and Dell will view Compaq's defection with alarm. Unisys surely doesn't want to lose any of the remaining three partners, but keeping Dell is crucial, because only it has the necessary market presence to promote the CMP platform effectively. Hitachi's agreement is only for the Far East, while ICL will typically offer CMP hardware only to its installed base of customers.

As Windows 2000 Datacenter takes off, Unisys has an early-mover opportunity to make CMP-based platforms dominant among large Intel-based servers. Among its remaining OEM partners, Dell is the vendor with the most market leverage to help Unisys accomplish this goal. Unisys needs to put more time, money and management into preserving this all-important alliance with Dell.

On the plus side for Unisys, Dell has more to gain by sticking around because unlike HP or Compaq, it has no alternative Unix-based products. In the end, Unisys may end up with a small but more motivated OEM sales force. With no OEM competitors, Dell could become the top sales channel for Unisys.

This is not to say that Unisys and CMP will necessarily have serious problems even without Dell. CMP is a breakthrough technology that has defined a new market, and the early sales successes achieved by Unisys' own efforts have been promising so far.

But if its OEM partnership strategy falls apart completely, Unisys will have missed an opportunity to exploit Dell's market clout to make bigger sales for CMP. With IBM's Summit servers waiting in the wings, that missed opportunity could be very damaging.

(For related commentary on the Microsoft Windows 2000 Datacenter Server, see TechRepublic.com--free registration required.)

Entire contents, Copyright © 2001 Gartner, Inc. All rights reserved. The information contained herein represents Gartner's initial commentary and analysis and has been obtained from sources believed to be reliable. Positions taken are subject to change as more information becomes available and further analysis is undertaken. Gartner disclaims all warranties as to the accuracy, completeness or adequacy of the information. Gartner shall have no liability for errors, omissions or inadequacies in the information contained herein or for interpretations thereof.