Compaq wants inside track on NT

The PC giant is elbowing past its competitors in corporate computing via a technology alliance with Microsoft.

Michael Kanellos
Michael Kanellos Staff Writer, CNET News.com
Michael Kanellos is editor at large at CNET News.com, where he covers hardware, research and development, start-ups and the tech industry overseas.
3 min read
Compaq Computer effectively elbowed past its competitors in corporate computing today via a technology alliance with Microsoft, giving the Houston-based PC vendor a stake in the future development of Windows NT.

Under a technology sharing and development deal unveiled earlier today, Compaq and Microsoft will work on a variety of engineering efforts that will culminate in a future version of Windows NT containing components of technologies that Compaq acquired from Digital Equipment and Tandem.

Through this alliance, Microsoft will gain the tools it needs to make NT robust and reliable enough for highest levels of the enterprise sector. At the same time, Compaq becomes a significant operating system developer, which in turn could help the company gain server market share. In the end, the PC giant will seemingly have an inside track on the future of NT.

"Microsoft's strategy is to make everyone feel that they are on the inside track, but if Compaq can influence the direction of NT, that is significant. That is more than the others are getting, " said Roger Kay, computing analyst with International Data Corporation.

What the overall effect on the market will be is unclear. Compaq is the market leader for servers based around Windows NT but enjoys a far smaller presence in the high-end Unix arena. It acquired Digital's Unix server business, but Digital only controls around 5 percent of that segment, according to various estimates.

While the exact terms of the alliance have not been revealed, Compaq is making it clear that its technology will be adopted into future versions of Windows NT.

"Some [of our technology] will be implemented in total and some will be implemented in parts," said Steve Kirchoff, vice president of strategic marketing for Compaq's enterprise computing group. "There will be one version of NT, not a version of NT for Compaq customers."

Kirchoff compared the alliance to the one between Hewlett-Packard and Intel for Merced, the upcoming 64-bit processor.

In the first phase of the software alliance, the two companies will work to make the Unix operating system Compaq acquired from Digital broadly interoperable with NT. In the longer term, Microsoft will begin to incorporate software components from Compaq into NT. Microsoft, for instance, will include advanced clustering capabilities and the NonStop kernel from Tandem.

The second phase of the agreement, however, occurs over a long period of time. Compaq's technology, for example, will not be incorporated into Windows NT 5.0, said Paul Maritz, group vice president for Microsoft.

Is Compaq's involvement with Microsoft enough to encourage customers of other vendors to jump ship? Probably not in the near term, but it could have an influence years from now.

"Compaq will be able to say, 'We have what will be standard in the future now,'" said Kurt King, computing analyst with NationsBanc Montgomery Securities. "But if it's NT 6.0, what decade are we talking about? That's not going to be around until 2003."

Added Daniel Kunstler, an analyst with JP Morgan Securities: "I don't think that they can come out with a declaration that Digital is Unix-friendly and that everybody is going to flock to it."

System integrators, on the other hand, say that the message could be attractive.

"At some point, Unix is going to become a much smaller player. NT will take a huge part of that business," said Craig Froelich, senior technical consultant for NovaQuest, a Southern California integrator. At that point, the Compaq message will be compelling to a certain degree. "For Compaq, it's a coup."

If anything, it gives Compaq an advantage over competitors. "Microsoft has really done a good job of playing the neutral party up to this point," noted Dwight Davis, analyst with technology consulting firm Summit Strategies. "This no doubt leaves a lot of other parties hanging.

"Ultimately, this is just a clear signal of the new reality of Microsoft partnering," Davis added.