New Compaq "skinny" servers take aim at Sun, IBM

The computer maker's long-awaited server puts new pressure on competitors in the race to cram as many processors into the thinnest server possible.

Stephen Shankland principal writer
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Stephen Shankland
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Compaq today released its long-awaited "Photon" server, putting new pressure on IBM, Sun Microsystems, Network Engines and VA Linux Systems in the race to cram as many processors into the thinnest server possible.

The Photon server, officially called the ProLiant DL 360, holds two 800-MHz Pentium III chips in a server just 1.75 inches thick, a measurement called 1U among those who spend their time bolting hundreds of such servers into racks in air-conditioned rooms.

Service providers typically have limited floor space in which to stack their servers, so they're willing to pay a premium for designs that pack as much horsepower into as little space as possible. That's good for the profit margin of server sellers. "The margin is typically higher. People pay a premium," said Mary McDowell, head of the company's Intel server division.

Compaq is a little late to the game with the two-way 1U server. But McDowell argues that Compaq will win out because of its thin server design and expertise in manufacturing large quantities of servers, which are often customized for a particular task.

First with a two-processor, 1.75-inch server was a start-up called Network Engines. The company has licensed its Intel-based system design to IBM and VA Linux Systems, but both of those licensees have plans for their own two-processor 1U systems, sources have said.

Sun also is a major competitor with its single-processor "Flapjack" Netra T1 server, which debuted a year ago and has sold by the thousands to companies such as Enron.

Compaq's Photon machine holds 4GB of memory, twice Network Engines' 2GB. The Photon also supports disk drives that can be swapped without shutting the machine down and has room for higher-performance 64-bit, 66-MHz PCI slots. In addition, it runs cooler, requiring only four fans to Network Engines' seven and therefore consuming less electricity.

The Compaq server design also is easier to mount into racks, argues Keith McAuliffe, vice president of Compaq's service provider business unit. That speed is essential for the service providers who need to respond quickly to customer demand. "The difference between me and the guy next door is how fast I can provision a new customer," he said.

Compaq is aiming the Photon at Internet and application service providers (ISPs and ASPs), companies that need lots of computers to house Web pages and provide the army of servers that accommodate incoming Web traffic.

The service provider business is increasingly important for server makers. Service providers include Internet behemoths such as Yahoo; small companies that provide Internet access to dial-up companies; telecommunications giants such as AT&T; and software companies using the Internet as a new way to deliver software. This wide range of companies means there's not only room for many companies, there's also room for many types of servers, from super-thin models such as the Photon to heavy-duty Unix servers.

Compaq expects to sell 9 percent to 10 percent of its servers to service providers, McAuliffe said. Overall, the company had $7.9 billion in revenue from Intel servers in 1999, McDowell said.

Dell, Compaq's biggest competitor, has its own service provider program, chiefly a place to house basic Web pages but eventually a more sophisticated ASP. Compaq, like Sun, derides the concept of a server company entering the service provider business.

"We find it odd you want to compete with some of your biggest customers," McDowell said.

The Photon uses Intel's new "flip-chip" packaging, a design well-suited to thin servers. Prices begin at $3,580 for a one-processor model and $4,200 for a two-processor model.

Compaq expects 75 percent of Photons to run Windows NT or 2000, 20 percent Linux and the rest Novell NetWare. The Photons are well-suited to Web hosting, file and print services, streaming audio and video, email and other specific jobs, said Paul Miller, a marketing director at Compaq.