Tech Industry

Compaq offers free Pentium IIs

Compaq will upgrade server customers to the Slot 2 technology, possibly to keep sales from drooping before Intel's next-generation chips arrive.

Compaq today announced that qualifying ProLiant server customers can upgrade to Intel's next-generation Pentium II server technology for free.

The free upgrade represents a change from business as usual, but may be taking place to keep sales from falling off between now and the release of the next generation of Pentium II chips for servers, which will come out in the second half of 1998.

The Pentium II "Slot 2" Upgrade Program is available for customers who have or will purchase and register a ProLiant 7000, 6500, or 6000 server between May 1, 1997, and August 31, 1998. ProLiant servers currently feature Pentium Pro processors with speeds ranging to 200 MHz.

The Slot 2 Pentium II is a next-generation technology for server and workstation computers. Among other new features, the Slot 2 architecture is expected to allow more processors to be strung together, in chains of as many as eight on standard architectures. The more processors a server has, the more horsepower it can deliver. Most Pentium Pro servers now top off at four processors.

The new Slot 2 architecture also offers more high-speed "cache" memory and processor speeds up to 450 MHz.

While Compaq and other server vendors typically use a processor upgrade to milk more money out of customers, the Houston manufacturer may be offering the upgrade for free to boost server sales, speculated Jerry Sheridan, server analyst at Dataquest.

"Probably the sale of these systems are somewhat slowed by the upcoming release of Slot 2," he said. "They are motivating people to buy these servers."

Slot 2 chips are expected to be priced high at around $2,000 or more in volume, partially because they face no competition in the market right now. The upgrade program, worth $8,000 altogether, covers the cost of four "Deschutes" Slot 2 processors and the upgrade kit, which includes on-site installation.

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Compaq ranked first in the PC server market for the third quarter of 1997, according to market research firm International Data Corporation, with 32 percent market share. However, the study found that Compaq was losing ground to IBM and Dell.

Compaq has been slashing prices on some of its lower-end servers in an effort to cement its lead and prepare for the arrival of the high-end Deschutes chip, made according to an advanced manufacturing process and capable of higher speeds. Compaq reduced prices earlier this month on lower end ProLiants and ProSignias by 22 percent.