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Compaq catching Sun in Web servers

A survey of national ISPs shows that 40 percent of new Web servers purchased in 1998 will be Compaq systems running the Windows NT operating system.

Compaq (CPQ) is making a run at Sun Microsystems (SUNW) in the market for Web servers, one of Sun's strongholds.

National Internet service providers (ISPs) surveyed say that 40 percent of new Web servers purchased in 1998 will be Compaq systems running the Windows NT operating system, according to research from Infonetics. By comparison, ISPs expect 38 percent of their new Web servers will be Sun systems running the Unix operating system.

Web servers are computers that are generally dedicated to hosting large Web sites, but can also be used for handling email.

Backed by the report's findings, Compaq claims this is the first time that ISPs are planning on purchasing more Compaq systems than Sun servers--in a market that is expected to double in volume this year.

But this doesn't mean Sun will be displaced anytime soon in the upper segment of this market, where powerful Unix computers--mostly those from Sun--are practically a requirement.

As exponentially increasing numbers of businesses open up shop on the Net, they are looking to service providers such as CompuServe,UUNet, and Netcom to store and maintain information needed to present a Web site to users.

Many ISPs are adding large numbers of dedicated Windows NT-based Web servers for the purpose of hosting sites, but analysts say it's not necessarily because Windows NT is a better operating system than Unix.

"Microsoft has so much influence and so much promise that [ISPs] may feel left out if they don't move that way," says Larry Howard, vice president of Infonetics. There is a lot of marketing muscle and resources going in to developing Windows NT, he says, and ISPs are basically starting to bet that Microsoft will win the battle of the operating systems.

But while Compaq and Windows NT are clearly gaining ground, there is still a long way to go. Overall, Windows NT accounts for only 26 percent of the planned purchases, with the various "flavors" of Unix offered by Sun, Hewlett-Packard, Digital, and Silicon Graphics comprising the remaining Unix majority.

And as far as hosting services for Web sites, Windows NT so far hasn't proven itself to be as reliable or high performance as Unix, says Todd Haedrich, an analyst with Jupiter Communications. For instance, he says many ISPs are still using Unix systems for managing subscription and billing information on up to 2 million users, while NT is more limited in its capacity.

Jeff Edwards, ISP marketing manager for Compaq, disagrees, saying that the registration database and "chat" functions of the Motley Fool investment information Web site are all run on Compaq servers. At the same time, he notes that ISPs aren't replacing Unix systems, but augmenting them with new Windows NT servers.

"All these ISPs are not dropping Unix boxes where they already have Web hosting services working, but they are placing NT on Compaq systems next to those systems, allowing customers to choose," Edwards says. He claims that 50 percent of ISPs hosting business will be on NT-based systems because the lower cost of the Compaq servers results in the hosting service being priced lower.

There are questions about how long Windows NT can offer a cost advantage over Unix, though. "Remote administration is a serious weakness of Windows NT," says one system administrator in charge of a large network of servers. When something goes wrong, Windows NT often requires the user be present to restart the system, he says, and it's harder to figure out what caused the problem in the first place.

"The initial cost of the system is not going to be a large part of the overall cost. If you have to hire people to go administer the system at night and physically be present, that's an expense that'll never go away," says the manager, who asked to remain anonymous.