Compaq names new leader for high-end servers

Elias, who previously led Compaq's storage group, now is general manager of Compaq's business-critical server group. These computers--with their power, lofty price tags and accompanying services revenue--are a key part of Compaq's years-long effort to expand beyond its roots as a PC company into an all-purpose computing giant such as IBM.

The effort to boost high-end hardware sales is critical in light of lagging PC sales. Faltering PC sales led Compaq to warn in December of lowered profit expectations.

Along with picking up PC revenue slack, Elias will inherit several sticky issues. Chief among them is dealing with Sun Microsystems' dominance in Unix servers, but he also will oversee the Alpha chip line, the solid but low-profile OpenVMS operating system, and the extremely demanding customers who buy Tandem Himalaya servers.

Elias agreed his division is central to the future of the company. "It is dead center to the strategy of Compaq building out next-generation business-critical Internet," he said in an interview. He declined to comment on potential changes to the group until he becomes more familiar with the operation, but said anything is possible.

Heil, who will stay on for several weeks to help during the transition, left the post to spend more time with his family, Elias said in an interview. "He's got five kids. He really wants to take some downtime," Elias said. Heil has no other employment plans, Elias added.

Terry Shannon, author of the Shannon Knows Compaq newsletter, said Heil isn't departing under a cloud, unlike former chief executive Eckhard Pfeiffer or former high-end hardware chief Enrico Pesatori.

"He has for the past year been on the road virtually 100 percent of the time. Even Mr. Nonstop himself has got to slow down every once and awhile," Shannon said, alluding to the NonStop Himalaya server and software line Heil managed.

Compaq once just sold Intel-based servers, but that changed in 1997 with the acquisition of Tandem and in 1998 with the acquisition of Digital Equipment.

Tandem builds super-reliable machines that run such computing operations as the trading systems of the New York Stock Exchange and Nasdaq. Digital gave Compaq the OpenVMS software, the Alpha chip line, lucrative telecommunications customers, and a solid services business helping customers select, install and support higher-end computing systems.

However, the digestion of these companies hasn't been easy for Compaq. For one, an alliance with Microsoft to support Windows on Alpha systems collapsed. And Compaq's "NonStop eBusiness" strategy to rejuvenate its server sales foundered.

The integration of Tandem and DEC "took them a lot longer than they said it would," Shannon said. "I think they lost at least five months going in circles, working on PowerPoint slides and org charts."

Another challenge

Meta Group says the change in leadership at Compaq's high-end server group is a reminder of the challenges that the company faces in the server market. see commentary

Intel server technology guru Paul Santeler consulted extensively with Unix server designer Dave Fenwick when designing the innards of Compaq's upcoming 32-processor Intel server, Shannon said.

But it'll be awhile before Intel servers catch up, Elias said. "As good as the Intel and Microsoft combination of technologies has gotten, they are still quite some ways from having the kind of scalability and availability" that big businesses need at the high end, he said.

Elias, like his colleagues at Hewlett-Packard and IBM, argue that his company's diverse product line is an asset. "When you have a hammer, every problem looks like a nail. We have a broader toolbox. We can understand our customer requirements," Elias said.

Sun, which has a hammer made of its UltraSparc chips and Solaris operating system, hasn't had any troubles with its decision to avoid Microsoft Windows and demote Intel chips to second-class status. Sun is the No. 2 server seller overall, ahead of Compaq and HP and trailing only IBM, according to research firm IDC.

Elias reports to Mike Winkler, executive vice president of Compaq's global business units. Replacing Elias as general manager of the enterprise storage group is Mark Lewis, previously vice president of the enterprise storage software group.