Toshiba to enter server market

Toshiba is set to make its long anticipated entrance into the PC server market at next week's PC Expo trade show.

Best known for its portable computers, Toshiba will try to extend its reach into corporate settings with new servers based on Intel's Pentium II processor.

The company will announce Pentium II servers at the New York show, and then later this year Toshiba is expected to release more advanced four-processor servers based on Intel's next-generation Xeon processor. The first Xeon chips, thought to be due later this month, will run at 400 MHz and will contain extra high-speed memory to increase performance.

Toshiba is at a disadvantage when compared with companies like Compaq, which can go to large customers and sell cheap desktop PCs while making money on sales of high-margin servers and workstations.

For Toshiba, adding the ability to sell servers comes at a critical time, as PC vendors are suffering lower profit margins on desktop and even pricier notebook computers. The market for sub-$1,000 personal computers is predicted to continue to expand rapidly through the year 2001, according to by International Data Corporation, with severe ramifications for PC vendors that lack the higher profit margins supplied by strong server and workstation product lineups.