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Compaq, HP rethink workstations

The giants are simultaneously reorganizing their workstation divisions in similar ways--splitting them by performance rather than platform.

Compaq and Hewlett-Packard are simultaneously reorganizing their workstation divisions in similar ways--splitting them by performance rather than platform--in an effort to catch up with a changing market.

Compaq is divvying its workstation unit into two, where previously all workstation models were under the same division.

The High-Performance Systems Division, which currently handles Alpha servers, will also control development of Alpha workstations. Less-expensive workstations, powered by Intel Pentium III and Xeon chips, will fall under Compaq's Desktop Division, according to Compaq spokesman Garry Frazier.

Hewlett-Packard, meanwhile, has folded development and control over its high-end Kayak XW workstations (based on a Windows NT-Intel platform) into the group that makes its Unix and RISC-based workstations. Until now that group concentrated solely on the latter platform.

The XW models will be relabeled Visualize NT to align with the Visualize B, C, and J Unix models, said Brian Jaquet, a spokesman for HP.

The changes evidence growing pains at the two industry giants as they try to adapt to a high-volume, commodity mentality without ceding the high-margin performance market. In the past three years, workstation sales have been turned upside down as systems with technology from Intel and Microsoft have been outselling their Unix-RISC brethren.

Workstations, powerful desktops favored by graphic artists and other technically oriented users, once cost $20,000 or more but now go for as little as several grand, since they can be built from standard components. Although early Intel machines couldn't match the power of Unix-RISC systems, the gap has partly closed, according to many, and Intel-based systems are now used in film work and semiconductor design.

For Compaq and HP, the opportunity presents a dilemma: How do you excite the performance-conscious buyer while still turning a profit with the larger pool of price-obsessed customers?

"There is a definite split happening in the workstation market in terms of buying behavior and the products customers are looking for," according to Aberdeen Group analyst Jay Moore. "It does make sense to have the resources focused on these two areas," he said.

The performance-conscious buyers of the workstation market are comfortable with the Unix/RISC systems, and they don't blink at spending $5,000, $10,000, or more for a workstation, Moore observed. On the other hand, there's the price-conscious crowd who don't need quite so much performance.

"As the NT-on-Intel workstation market matures, it will increasingly behave just like the PC market does," he said. "Customers there are looking for the best buy and are very comfortable buying direct."

"The driving force behind this is Dell," added Dataquest analyst Peter ffoulkes.

Firmly grounded in the high-volume market, the direct sales leader has been grabbing a larger and larger share of the workstation market, according to market research firms. That growth has come at the expense of HP and Compaq.

"The fact that these two companies are responding is good for them," ffoulkes said. "The question, I think, is whether they can actually do enough to catch up."

Compaq's strategy aims its Intel products at the market where lots of computers are sold. "Intel-based workstations are a volume play. That's the way you're able to win in that market," Frazier said.

Under the new system, the XP1000 Alpha-based workstations will be under the jurisdiction of Jesse Lipcon, an executive who came from Digital Equipment Corporation, which Compaq bought in 1998.

But Digital focused on servers instead of workstations, ffoulkes noted, so there's a danger that Alpha workstations will get only leftover scraps of funding, barely improving an anemic marketing push. "Alpha has failed to gain a lot of momentum in the workstation market," he said.

HP's reorganization aims the new Visualize NT machines at high-end markets such as digital content creation and scientific visualization. The Visualize NT uses the same high-powered but expensive graphics cards as HP's RISC-Unix workstations.

The lower-end Kayak line, shorn of the XW model, is intended for less strenuous tasks such as software development or financial analysis.

Coping mechanisms
While Compaq and HP reorganize, other companies are dealing with the split marketplace in different ways.

Notwithstanding its gains, Dell recently acknowledged there are customers it hasn't been able to reach by inking a deal to offer Interix software on its workstations, which will let Unix software run on Windows NT machines.

Sun Microsystems, which got its start selling workstations and still only offers Unix machines, has been selling more aggressively priced systems, some costing less than $3,000. In addition, Sun offers special computer-within-a-computer adapter cards that let users run Windows within a Sun Unix machine--although you'll have to go elsewhere to buy Windows itself.

More dramatically, Silicon Graphics embraced the "Wintel" world this year with its new Visual Workstation computers--the company's first foray outside of Unix/RISC territory. SGI opted to mix the mainstream nature of Windows and Intel with some of its own high-performance graphics system.

Linux joins the fray
Meanwhile, the increasingly popular Linux is further roiling the workstation landscape, particularly among software developers and scientific number-crunchers. The so-called open source operating system offers Unix power with NT prices.

Dell offers Linux-qualified workstations, IBM is considering it, and HP just announced Linux "optimization" for its lower-end Kayak machines. Though HP doesn't ship Kayaks without either the Windows or DOS operating system, resellers or customers will be able to install Linux on Kayak machines, Jaquet said.

Further, to enable Linux users to take advantage of some of the higher-end workstation features, HP has released technical specifications for HP hardware designs for detecting dead or missing memory as well as bad power supplies or fans.

HP is also getting help from CERN, the European Laboratory for Particle Physics, in writing installation procedures, and tweaking BIOS settings so that either Linux or Windows will run on its systems.

A cluster of 30 dual-processor Kayaks running Linux at CERN has been conducting a simulation of the physics of the early universe for nearly a year, running 24 hours a day, seven days a week without a hardware or Linux-related software failure, HP said.