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Compaq looks to spread its server vision

By 2001, the computer maker will spread its Windows-based machines into every niche of computing, chief executive Michael Capellas says.

!?EDS UPDATE 8:30AM: revises lede, graf 2 --> SAN FRANCISCO--By 2001, Compaq Computer plans to move beyond its PC roots to spread its Windows-based machines into every area of computing, chief executive Michael Capellas said today.

Capellas coined the end result of this plan "breakthrough enterprise economics." He said the plan would allow big business to use comparatively cheap Intel-based computers instead of proprietary hardware and software used today to host demanding applications, such as e-commerce databases.

Hardware geared for the plan will include a 32-processor Unisys server that Compaq will sell under its own name. The product line will use current Intel chips when it debuts midway through this year but will be available with Intel's new Itanium chip later this year, Capellas said at a keynote address here during the three-day conference for Microsoft's new Windows 2000 software.

Capellas' vision to push Intel to ever-greater heights in the computing market isn't surprising, given Compaq's affinity for what it calls the "industry-standard" computing philosophy. Intel sees several competitors selling very similar computers but invariably using Intel CPUs and usually the Microsoft Windows operating system.

But what is surprising is how little the vision depends on the old-school hardware designs Compaq acquired in the late 1990s when it was in a stronger financial position. Compaq bought Tandem Computer in 1997 and Digital Equipment Corp. in 1998.

Compaq hasn't always been successful in its long-running push to spread industry-standard computers into more demanding markets. Its partnership with Microsoft to boost Windows NT on computers with Compaq's Alpha chip crumbled last year, and its financial struggles also led it to cancel plans to bring its own version of Unix to Intel's Itanium chip.

In addition, most analysts agree that a 32-processor Intel server doesn't deserve the "industry-standard" appellation, because such systems require a specialized design. Standard designs for Intel servers top out at eight processors, where many companies ship computers built around Intel's Profusion chipset.

But Compaq has done well with the eight-processor machines, Capellas said. The company has 90 percent market share for the servers. It shipped more eight-ways than some projected the entire market to be, he added.

In the future, Compaq will rely on clusters of multiprocessor servers connected over high-speed lines, Capellas said. Compaq, IBM, Hewlett-Packard, Intel, Sun Microsystems and others are working to create the "Infiniband" technology that will make this interconnection possible.

Also at the keynote, Capellas said the company has high hopes for its iPaq, a PC that discards older connection technology and is intended to be easier for corporations to manage than today's comparatively complex desktops. The company expects to sell $1 million worth of iPaqs by year's end, a company representative said.

Capellas also disagreed with a Gartner Group projection last week that about a quarter of companies would experience some problem upgrading to Windows 2000.

"I do believe the rollout will be a lot smoother than Gartner Group indicated," he said.