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Compaq makes move on Unix market

Compaq adds two new lines of high-performance Windows NT personal workstations designed to steal buyers away from Unix machines.

Compaq Computer's (CPQ) two latest Windows NT personal workstations, which use the fastest Pentium II chips, pose an increasingly serious threat to the likes of Sun Microsystems and Silicon Graphics.

In order to highlight the performance of the systems, Compaq today introduced a system which can use up to two 300-MHz Pentium II processors, Intel's fastest chip offering.

The Compaq machines are further evidence of the erosion of the traditional Unix workstation market. New boxes from several PC vendors based on lower-cost Intel chips and Microsoft's Windows NT operating system have invaded the market until now dominated by Unix vendors such as Sun Microsystems (SUNW).

Compaq's message has two compelling themes: Intel compatibility and lower prices. The "Professional" workstations start in the $4,000 range. The low price messge is already taking root, said observers.

"If you are in the Unix market, it's not good news," said David Wu, technology analyst with Amro Chicago Corp. "They are already stonger than SGI in terms of units. If you're a software developer, it's pretty obvious who you are going to report to."

Compaq is now working to eliminate one of the most compelling advantages of the Unix market by addressing the architectural constraints of Intel machines.

Compaq says it is using a new "Highly Parallel System Architecture" technology in both systems unveiled today. The computer maker has incorporated two independent PCI buses, or data paths, to eliminate data bottlenecks between peripherals such as hard disk drives and the system's memory and processor.

So far, financial institutions, especially those with large foreign exchange operations, have been the most active market segment to move toward Compaq, according to Peter Vescuso, director of marketing in the workstation division. Most of Compaq's success stories with its workstations revolve around foreign exchange.

Similarly, the supporters of Compaq's initiative in many ways could pass for a convention of financial software vendors : A sizeable number of the developers backing Compaq today came from financial exchange.

Infinity Financial Technology Inc. said that it will come out in the Fall with an exchange package written natively for NT, the company's first. "We work with a number of developing nations. We have Turkish clients, a client in Russia. They need lower end NT workstations. They couldn't afford Sun," said Tom Widberding, senior product analyst at Infinity.

Compaq also announced a "Multiprocessing Initiative" to work with Intel and software developers to optimize applications to take advantage of high-powered multiprocessor systems such as the 8000 series system with four Pentium Pro processors.

The Compaq Professional Workstation 6000 with a 266-MHz Pentium II processor, 32MB of memory, and a 2GB hard disk drive starts at $4,200. The Professional Workstation 8000 with two 200-MHz Pentium Pro processors, 128MB of memory, and a 4GB hard disk drive costs $11,400 and up. Compaq says that 3D models of the existing Professional Workstation 5000 are being reduced by up to 18 percent.

Compaq says the Professional Workstation 6000 is available immediately and the Professional Workstation 8000 will be available on June 16.

Compaq, not surprisingly, believes that Sun Microsystems will be hit hard by these new systems. Robert Fernander, vice president of enterprise marketing at Compaq, claimed that outward indications imply that Sun will get out of workstations to concentrate on servers and storage devices.

"They are questioning how to exit the workstation market. There are two parts to their business- workstations and servers," he said. "They are trying to base their future in column B, servers, because all the indications show that column A (workstations) will go away."

"That might be overstating it," responded Kurt King, an analyst at Montgomery Securities, "It's half their revenue, but they will emphasize servers."

"How long will they (Sun) dance on the edge of the razor blade?" asked John Rose, a vice president and general manager at Compaq.

Reuters contributed to this report