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Undaunted Toshiba sells servers

After a late start in the desktop business, the Japanese hardware maker formally introduces its first PC servers.

NEW YORK--After a failed attempt to break into the U.S. consumer computing market and a late start in the desktop PC business, Toshiba formally introduced its first PC servers.

The new Magnia PC servers ship with either 350- or 400-MHz Intel Pentium II processors and a 100-MHz system bus for increased performance, as previously reported.

For Toshiba, adding the ability to sell servers is crucial, even though it comes at a less-than-opportune moment. The company needs to sell servers because PC vendors are suffering from lower profit margins on desktop PCs. In addition, notebook computers are getting cheaper, even though the sector had been relatively immune to price cuts.

With continued price erosion, analysts say PC vendors that lack the higher profit margins associated with strong server and workstation product lineups will not compete effectively in the overall market.

At the same time, research firm International Data Corporation indicates that the server market is now facing an oversupply. Excess supply already is hurting the profitability of big name vendors such as Compaq and IBM, as companies slash prices and clear out inventory.

Moreover, buyer attention is focused on newer processor technology. Compaq, IBM, Dell, and Gateway already are preparing to release new servers that use Intel's next-generation Pentium II chip, dubbed Xeon, and they are showing them off at this week's PC Expo trade show here.

Toshiba is expected to release more advanced four-processor servers using the Xeon processor later this year.

For now, the Japanese hardware maker is hoping to attract attention by offering features that make servers more reliable, such as redundant power supplies and removable hard drives in a lower-priced server. Toshiba says the system chassis is designed for easy service and maintenance.

Some systems can be converted from a tower version to a rack-mount system later as companies expand operations. Also included is software for easing system set-up and installation of peripherals and software that helps diagnose potential hardware malfunctions, potentially minimizing system downtime.

Estimated prices for the Magnia 3000 series workgroup servers start at $3,000 and will be available starting in July. Estimated prices for the Magnia 5000 start at $4,000 and will be available starting in August.