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HP sweetens high-end server deals

Hewlett-Packard is looking to lure IBM and Sun customers to its top-end Unix server, offering to top competitors' trade-in offers.

Hewlett-Packard has begun a program to lure IBM and Sun Microsystems customers to its top-end Unix server, offering to top competitors' trade-in offers.

Under the offer, HP will pay customers 10 percent more than the trade-in value IBM and Sun offer for customers looking to upgrade their high-end Unix servers, HP said Tuesday. The offer applies to Sun's older top-end E10000 "Starfire" server and IBM's current top-end S80 or p680 Unix servers, HP said.

Sun last week unveiled its Sun Fire 15K "Starcat" server, a 72-processor behemoth costing a minimum of $1.4 million. And IBM will formally unveil its competitive 32-processor offering, "Regatta," on Thursday.

But HP has its work cut out defending its No. 2 position in the Unix server market--after top-ranked Sun and ahead of up-and-coming IBM.

"Sun and IBM both have very compelling stories to tell," said Sanford Bernstein analyst Toni Sacconaghi. Sun has an argument of a strong vision, the best support from server software companies, and a good relationship with programmers, he said, while IBM has permanence and the ability to sell complicated systems.

"Unfortunately, HP and Compaq really have neither of those value propositions," Sacconaghi said. "I'm not sure a 10 percent price change really changes that."

But HP has had some success with Superdome, a 64-processor machine. In addition to major new customers such as BMW, Cisco Systems, American Airlines and General Mills that the company already disclosed, HP representatives said GlaxoSmithKline, Mitsubishi Electric, Porsche and Alcatel also have bought Superdomes.

HP's high-end Unix server revenue increased 37 percent from the second quarter of 2000 to the second quarter of 2001, according to research firm IDC. IDC defines "high-end" servers as those that cost more than $1 million.

The trade-in offer is good through Jan. 31, HP said.