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Compaq to ship new servers

Compaq releases a new PC server using one of Intel's fastest chips, as it continues to grapple with an inventory surfeit.

Compaq released a new PC server using one of Intel's fastest chips, as it continues to grapple with an inventory surfeit.

The ProLiant 3000 comes with a 333-MHz Pentium II processor and is able to use up to 3GB of memory, according to Steve Keilen, director of server marketing in North America for Compaq. Typically, PC servers cannot handle more than 1GB of memory.

Starting at $4,499, the server is available immediately from resellers.

Within a month, Compaq will also announce more new servers that will feature the 350-MHz and 400-MHz Pentium II processors, said sources. Last week, Compaq cut prices on selected ProLiant server models.

One of the key features of the new system lies in the ability to use more memory. In order to boost memory capacity--crucial for servers--Compaq employs what it calls the Highly Parallel System Architecture (HPSA), a technology embodied in the chipset, the companion chips to the main Pentium II processor. The technology creates two separate data paths between main memory and the CPU. Most servers in this class only have one data path and therefore can control less memory.

"It's not another line of traffic. It is more like a new freeway," described Keilen.

While Compaq continues to be the market leader in Intel-based servers, the company has recently struggled with an excess of product.

Compaq saw server shipments drop 10 percent from the fourth quarter of 1997 to the first quarter of 1998 while revenue dropped 28 percent, according to a report released earlier by International Data Corporation.

IDC also found that Compaq's U.S. market share dropped from 36.9 percent in the first quarter of 1997 to 35.4 percent in the fourth quarter of 1997, then to 34 percent for the first quarter this year, although worldwide market share went up slightly year over year. Compaq's unit shipments were up year over year, but down from the fourth quarter.

"This is the first time [Compaq has] had a double-digit decline in a long time," said IDC's Amir Ahari. "The first quarter is more often than not flat. The channel is stuffed with servers and they had nowhere to put them."