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EMC to scrap low-end Data General computers

Storage company EMC, having completed its acquisition of Data General, plans to eliminate desktop computer and low-end server lines in an attempt to make the unit profitable.

LAS VEGAS--EMC, having completed its acquisition of Data General, will eliminate the low end of its Aviion server line in an attempt to make the business unit profitable.

In coming months, the company will gradually eliminate its desktop PC and low-end and mid-range servers, said Bob Dutkowsky, who took over Data General's Aviion server line about a month ago. "We'll get rid of...the low end of the product line," Dutkowsky said in an interview. "We can't compete with high-volume desktop" computer sellers, he said.

Instead, the company will focus on its high-end Windows NT servers, Dutkowsky said. As previously reported, EMC chief executive Mike Ruettgers said the company will aim the systems at customers looking to consolidate the large numbers of Windows NT servers that have sprouted up across large companies and turned into a major headache for corporate computer administrators.

The changes are key to how well EMC can digest the Data General products and quickly turn the server line into a profitable unit.

Other changes in the works include a shift away from selling the DG-UX version of the Unix operating system that Data General licenses from Santa Cruz Operation and a retreat from some parts of the global marketplace, Dutkowsky said.

These changes will be accomplished with a minimum of fuss for customers, he said. "It will be graceful," with Data General continuing to sell the products through the next year for those who need them and plans to set up alliances to provide an alternative.

The server and desktop products being cut from the line accounted for about 15 percent of Data General's revenues. Though 2000 revenues from the Data General server line will be about $750 million, compared to $1 billion for this year, the business unit will be profitable, he said.

Some Data General employees will lose jobs, although it's not yet clear how many. EMC is growing fast and is trying to match Data General employees to open positions, Dutkowsky said.

EMC acquired Data General in August and is integrating the company's Clariion storage product into the EMC product line. Data General's Aviion server line, however, is being run as an independent unit. Due to the nature of the acquisition, EMC isn't allowed to spin off the Aviion line. Also, Ronald Skates, the former chief executive of Data General, is retiring.

The Aviion machines include an architecture called non-uniform memory access, or NUMA, that is technically well regarded but that hasn't proven a magic bullet for those manufacturers selling NUMA systems. NUMA allows many processors to be tied together with a collection of high-speed networking chips. Near each processor is a small piece of the computer's memory system for more efficient processing.

NUMA systems also have been developed by Sequent, which IBM acquired in July, and by SGI, which is in financial trouble.

Included in the Aviion line are machines using up to 32 processors, far more than were supported by Microsoft's popular Windows NT operating system. Although Microsoft initially wasn't inclined to support NUMA, that has changed, said David Flawn, vice president of Windows NT marketing at Data General. "NUMA used to be a dirty word for Microsoft," he said. But with Windows 2000, the successor to Windows NT, Microsoft changed the way Windows addresses memory to make NUMA feasible, he said.

In fact, Data General had hoped to demonstrate a 32-processor system running Windows 2000 at the Comdex show, but various hurdles derailed the plan. The 32-processor machine, which Data General has working in its lab, will likely debut along with the Data Center edition of Windows 2000, expected to ship in six to eight months.

In the nearer term, the company will release a thinner, rack-mountable server using one to four processors and measuring only 3.5 inches thick, said Flawn. Data General previewed the product, called the 2400R, at Comdex.

For now, though, others who sell Windows NT machines will indirectly help sell Aviion computers, Dutkowsky argued, since Data General ultimately hopes to sell the big systems that consolidate all the little servers that are too numerous to manage. "The more servers Dell sells, the more opportunity is created for us," he said.

Data General will take a "high-touch" approach with customers, keeping in close contact and helping to customize and configure servers. The approach differs from other companies that keep costs lower by minimizing such interactions, but it's necessary when selling high-end machines, Dutkowsky said.

About half of Data General's revenues come from product sales and half from services such as customizing, installing and supporting those products, he said. Data General doesn't expect to change that proportion, he said.

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