Stratus licenses server technology to NEC

Stratus Computer licenses its technology for building Intel-based servers to the chipmaker, which in turn takes a $10 million equity stake in the server designer.

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Stephen Shankland
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Stratus Computer has licensed its technology for building high-end Intel-based servers to NEC, which in turn has taken a $10 million equity stake in the server designer, Stratus said today.

The deal is a significant win for Stratus, which is moving from loftier proprietary systems into the down-and-dirty Intel and Windows 2000 server arena. Though NEC isn't as strong in the Intel server market as Compaq Computer, IBM, Hewlett-Packard or Dell Computer, it does have a brand name to protect.

Stratus makes machines in which every component, such as the CPU or memory module, has at least one backup running in lockstep so that a customer won't notice a failure of the primary component. The design has been carried down into the Intel server market from higher-end, more expensive proprietary Stratus systems.

As previously reported, Stratus expects that more than half the revenue from its upcoming ftServer, due in September, will be through original equipment manufacturer (OEM) deals. In other words, other companies will put their own labels and logos on the Stratus machines and be responsible for selling them.

OEM deals are a good way for a newcomer to gain a foothold in a market--and the Intel server market already has plenty of contenders. However, OEM deals also mean that a smaller fraction of potential sales revenue will flow to Stratus.

Stratus selected contract manufacturer Solectron to build the servers. NEC, however, will build its own using the Stratus technology, paying Stratus a royalty for each machine sold.

NEC will use Stratus technology in its new Express5800 servers, which come with the computing power of one- or two-processor systems. The machines will cost between $10,000 and $20,000.

Stratus' major rival is Marathon Technologies, which sells its equipment on its own and through Hewlett-Packard. HP recently upgraded its Marathon-based server.

Stratus also announced today that it will change its name to Stratus Technologies to mark its shift to licensing intellectual property instead of just selling servers, the company said.