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Compaq woos ISP market

Compaq comes out with server, workstation bundles for Internet.

Compaq has released a series of servers and workstations bundled with Internet software from Microsoft, Adobe, and others in an attempt to woo more of the small to medium-size Internet service provider market.

The deal reflects the increasing importance of small business for computer makers.

The Compaq ProLiant Web Servers are essentially the ProLiant 850R 6/200H and ProLiant 2500 servers with Microsoft's Windows NT 4.0, IIS (Internet Information Server), and Site Server. ProLiant servers are generally designed for small businesses and departmental use. The 850R comes with a Pentium Pro 200-MHz microprocessor, while the 2500 comes with a Pentium Pro running at 180 or 200 MHz. Both can accommodate dual processors and start with 32MB of memory and a 1GB hard drive.

Pricing for the Web servers starts at $8,000. Unbundled, the ProLiant 850R 6/200H starts at $3,200.

The Compaq Professional Workstation Web Series, on the other hand, consists of the Compaq Professional Workstation 5100, the low-end model in the company's workstation line, bundled with one of five software packages. Among the software included in the five bundles are Adobe's Photoshop and Illustrator, NetObjects' Fusion, and Microsoft's Visual Studio.

Small business has lately become one of the buzz words for major computer makers, including Compaq, especially with the growth of the Internet. Industry pundits and executives believe that server sales will skyrocket as small organizations move to the Net.

The server hardware-software bundles cost the same as if the customer purchased them separately, while the workstation bundles offer a 10 percent discount, said Mary Christ, product marketing director for Compaq's Internet solutions business unit. The idea behind the bundles is to ease the decision-making process.

"If you don't want to mess with it, here's the solution," she said.

Still, serving this market has never been an easy task, according to Eric Lewis, an analyst at International Data Corporation. These customers are fairly cost conscious and harder to reach than large enterprise customers. As a result, profit margins tend to be lower.

Large vendors, he added, do not enjoy the same brand-name cachet in this market.

The deal in some respects also reflects the increased competition among software providers to seal OEM deals. It's noteworthy that Compaq did not announce a similar bundle with Netscape software, although Netscape has entered into similar server deals with Compaq in the past. Yesterday, Microsoft announced that 50 computer vendors have chosen to bundle Internet Explorer 4.0 on upcoming desktops.

"Competition for that channel has been fierce lately," said Abishek Gami, Internet analyst at Nesbitt Burns Securities in Chicago.