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Selling servers on Main St.

Compaq, HP, and other PC vendors engender new low-cost, user-friendly server computers for more mainstream customers.

Compaq (CPQ), Hewlett-Packard (HWP), and other PC vendors are engendering new low-cost, user-friendly server computers in attempt to bring this heretofore arcane technology to more mainstream customers.

Servers have traditionally been the charge of information systems personnel, who are up to date on a mind-numbing array of technical particulars and tricks that keep these sophisticated computers up and running.

But Compaq, HP, Digital Equipment, Dell, and others are trying to change all of this by taking servers out of the mystery-enshrouded, corporate IS "back rooms" and placing them in small businesses staffed by not-so-technical people. In order to pull this off, these vendors have to make servers easier to use.

Compaq's ProSignia 200, announced early January for under $2,000 (an almost unheard of price for a server), was designed for people with limited computer expertise. For example, it ships with applications that guide users with a step-by-step procedure to set up and manage the server. It also includes backup tools to help unsophisticated users recover from computer failure.

Hewlett-Packard has also entered this market with its low-cost E30 servers and accompanying software for server management. Moreover, HP is preparing to launch a new line of second-generation servers that address this market. Like the Compaq servers, HP's new systems will be targeted at "one person on site who's not necessarily an information technology expert," according to HP.

The reasons for this newfound interest in the small and medium-sized businesses are borne out in market figures. The market for these businesses is growing almost 50 percent faster than the total server market and already represents 32 percent of the overall market, according to Compaq. Some analysts believe that the percentage of the overall market is even higher. "The Compaq number is on the low side," said said Jerry Sheridan, an analyst at Dataquest.

"This is a big market. These [vendors] are now trying to get to first-time server buyers...small companies trying to do things such as centralize accounting or printing," said Sheridan.

Compaq says there are about 165,000 medium-sized businesses, 770,000 small businesses, and 6,300,000 very small businesses that are potential customers. Medium-sized businesses have fewer than 1,000 employees, small businesses have fewer than 100, and very small businesses fewer than 20.

Dell is also pursuing this market. But unlike Compaq and HP, which sell very inexpensive Pentium servers as well as more expensive Pentium Pro servers, Dell has decided to stop selling the lower-end Pentium-based servers. "We're going 100 percent Pentium Pro," said Mike Lambert, head of Dell's server business.

Lambert took issue with Compaq's low-end Pentium strategy, saying "many businesses in that segment are actually buying [Pentium Pro systems] at the $4,000 price point."