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Unisys adjusts to life without Compaq

The seller of business computers and related services is revamping its strategy for selling high-end servers in the wake of Compaq Computer's cancellation of plans to sell the machine.

Unisys is revamping its strategy for selling high-end servers in the wake of Compaq Computer's cancellation of plans to sell the machine, but the company expects sales of the product to be unchanged this year.

Unisys is beefing up its sales force by about 200 and now will be able to target Compaq customer accounts it previously would have left alone, said Peter Samson, general manager of technology sales development at Unisys. And Dell Computer now is Unisys' top partner for selling the 32-processor systems, which cost hundreds of thousands of dollars.

The company had $100 million in revenue from the servers in 2000, and it hasn't changed its plan to triple that amount this year, Samson said. But the company is being forced to revise its plan to have more than half of the 2002 server revenue come from sales partners, he said.

"The support we had around us is thinning," Samson said. "Obviously, we're disappointed, although we bear no malice toward Compaq."

Servers are powerful computers that handle chores as simple as storing files and as complex as managing the inventory of department stores. Small servers are often just ordinary desktop PCs, but powerful ones are stuffed with dozens of CPUs, gigabytes of memory, and multiple network connections.

Unisys' 32-processor "Cellular Multiprocessing" (CMP) server and CMP2, its 64-processor successor, are the most powerful servers based on Intel chips and that use Microsoft's top-end Datacenter version of Windows 2000. It's a key product supporting the aspirations of Intel, Microsoft and Unisys to steal away high-end server business currently dominated by Unix servers from Sun Microsystems, IBM and Hewlett-Packard.

Unisys had made major headway in a plan to make its CMP server part of the product lines of other companies, but the company was dealt a major setback this week when Compaq canceled its plan to sell the systems.

Compaq, a company grappling with financial difficulties, said the vast majority of its customers use its own eight-processor servers, and the company prefers to spend its energy on its own eight- and 32-processor designs.

HP had canceled

Gartner analyst Andrew Butler says Unisys may be great at building high-end servers, but it has a lot to learn about cultivating partnerships with other hardware vendors.

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a similar plan with Unisys weeks earlier, leaving Dell as the main sales partner. The arrangement is tighter than what Unisys had with Compaq: Dell relies on Unisys for some services, and Unisys sells lower-end Dell servers to its customers.

Dell plans to begin selling the Unisys machine in August or September, spokesman Matthew Boucher said Tuesday. "We're still committed to selling that machine," he said.

The other companies selling the Unisys system are Hitachi and Fujitsu subsidiary ICL.

"We'll going to rely a lot more on Dell and the other partners," Samson said.

Unisys also sells the CMP systems under its own name, the ES7000.

"We're investing more heavily in our own sales channel," Samson said. "Now, with Compaq out of this marketplace, we are much more free to go into the Compaq client base without fear of damaging the (now defunct) relationship" between Compaq and Unisys.

Though some believe the new version of Windows isn't ready for heavy-duty use, Unisys disagrees. "We fervently believe it is a wonderful operating environment and will solve a lot of financial issues" for customers, Samson said.

The cost of the Datacenter license--less than $100,000--isn't deterring customers, Samson said. "It's a small percentage of the cost of the hardware," he said. The average ES7000 costs around $500,000.

"We did have high hopes that Compaq, one of the market leaders, would put their (marketing) muscle behind this and drive high-end (Windows) Datacenter," Samson said.

Windows 2000 Datacenter supports 32-processor servers and comes bundled with extensive hand-holding services from the company that sells a Datacenter computer.