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Compaq's low-cost workstations

The AP200 is a stripped-down, single-processor system beginning at $2,350 for the bargain segment of the market.

Last week, Compaq Computer focused on the high end of the workstation market, and this week the PC giant brought out a stripped-down, single-processor system aimed at the growing bargain segment.

The AP200 is a scaled-down version of the AP400 workstation Compaq released last month. The two machines share several features, but the AP200 can use only one 350- or 400-MHz Pentium II processor--as opposed to the two processor options of the AP400.

The AP200 also contains the Elsa Gloria Synergy + graphics subsystem as standard equipment, whereas a variety of graphics boards, both more and less powerful, are available with the AP400. Further, the AP200 can handle up to 384MB of memory, less than the 1GB capacity of the pricier machine

The AP200 will cost less too. A basic configuration with a 350-MHz Pentium II, 64MB of memory, and a 6.4GB hard drive will sell for $2,350. A similarly configured AP400 sells for $2,600.

"We can get a lower price point by making it [single processor]," said Anne Moore, director of product planning and launch at Compaq. "The [mother]board is less dense so it is less expensive to build."

Like the PC market, the workstation sector is experiencing an explosion of growth in less-sophisticated, lower-cost machines. The $2,500 to $3,999 segment will account for roughly 28 percent of units sold in 1998, according to International Data Corporation, making it the largest segment by number of units sold.

Heavier-duty workstations priced $4,000 to $5,999 will account for 18 percent of units sold, while $12,000-plus units will constitute 17 percent of sales.

Some say these low-end systems resemble PCs more than real workstations.

Growth in this segment comes primarily from users with workstation envy, said Moore. Those who could not previously justify a workstation can now buy because the price is lower.

Lingering excess inventory also appears to be contributing to growth in low-cost segments. Resellers have begun to hold clearance sales on workstations based on the aging Pentium Pro processor. For instance, Microwarehouse is currently offering a Compaq 5000 Workstation with a 200-MHz Pentium Pro with 32MB of memory for $799.

Compaq will take a three-pronged approach to the workstation market. The AP line will constitute the value segment of the Compaq lineup and consist of machines based around Pentium II chips. In the third quarter, Compaq will start to ship its SP workstations, which will contain Intel's Xeon chips.

The top of the line will consist of XP workstations, to be based around Alpha processors running Windows NT, said Moore. These machines will come out in the fourth quarter and be the first desktop machines containing the Alpha chip and marketed under the Compaq name. It's unclear how Compaq will market Alpha-based workstations running Unix from Digital, she said.