Tech Industry

Compaq pins Internet hopes on new server line

The PC maker's CEO, Michael Capellas, releases a line of intricate, expensive servers that the company wants to integrate into the backbone of the Internet.

Compaq Computer CEO Michael Capellas today released a line of intricate, expensive servers that the company wants to integrate into the backbone of the Internet.

Announcing the launch of its AlphaServer, code-named Wildfire, Capellas outlined the Houston-based PC maker's transformation into an Internet infrastructure company capable of taking on Sun Microsystems and others.

The new servers, priced between $100,000 and $1 million, stand at


Gartner analyst Tom Henkel says that for Compaq's new server line to substantially boost its competitive standing in the midrange server market, the company must successfully leverage the AlphaServer GS to capture the attention of new server accounts.

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the center of Compaq's attack on Sun, the leader in the $32 billion Unix server market. Compaq is also betting its broader product portfolio and its restructured approach to delivering Web-based products and services will give it an edge.

"The AlphaServer GS today, the product we are announcing, really has been built to handle that middle tier of the most demanding of e-business solutions," Capellas said during this morning's launch event in New York. "We will be in an absolute leadership position in availability, scalability and in just pure raw performance."

Despite Wildfire's impressive performance--the 32-processor model boasts benchmark figures on par with or better than Sun's 64-processor E10000, or Starfire--Compaq has a tough road ahead of it, say analysts.

"While Compaq's Wildfire servers do appear impressive, there is no guarantee that the company will be able to take away a large share of the Unix server market from its formidable competition," said Merrill Lynch analyst Steven Fortuna. "Customers that use one brand of server will often stay with future server generations from the same vendor to minimize software upgrade difficulties and to reduce the need to port programs (i.e., to move and recompile programs) from one brand of server to another."

Compaq eventually will offer three Wildfire models--the eight-processor GS80, the 16-processor GS160 and the 32-processor GS320--but only the GS160 initially will be available. The GS320 will be available later this quarter, and the GS80 is expected to ship in the third quarter.

The GS80 will cost around $100,000, the GS160 around $500,000, and the GS320 more than $1 million. The high-end servers initially will come with OpenVMS or Tru64 Unix. Linux systems will be available later.

The computer maker has, as of today, 237 preorders for Wildfire, which it expects to bring in about $1 billion this year. But the majority of preorders are by existing AlphaServer customers. Only about 8 percent are from new customers.

Compaq spent five years developing the AlphaServer GS, which Capellas emphasized is a new computing architecture and not just a server built around an updated processor. As such, Compaq has applied for almost 50 patents on the server's design. It will use Compaq's 700-MHz EV67 Alpha processor and will support the faster EV68 when it becomes available.

The server is designed for about five years of service, which, being at the beginning of its life cycle, could be an advantage over competitors, Fortuna said.

"Compaq does, however, have the advantage of being positioned at the beginning of the five-year life cycle of the Wildfire, which should make future versions easier to roll out," he explained. "Compaq could take advantage of any missteps or significant delays in the introduction of upcoming generations of servers by its competitors."

While Wildfire was the showpiece of Compaq's event, it was not the centerpiece of its message. Capellas made it clear Compaq will increasingly focus on Internet infrastructure and cede nothing to rivals.

"Internet infrastructure" is to hardware makers what "business-to-business" is to software developers: an all-encompassing expression du jour used to describe an opportunistic expansion of their historical businesses.

Dell Computer CEO Michael Dell recently delivered a similar message, shifting his company to becoming a deliverer of Internet infrastructure products and services. But unlike Dell, which is building on its PC heritage, Compaq is tying a wide range of products, from big-iron servers to handheld PCs.

Capellas believes the nature of the Web is changing, and computer manufacturers and their customers must rethink how they deploy e-commerce and other Web-based systems. Part of the problem is demand, which the Compaq CEO said has been grossly underestimated.

International Data Corp. estimates there are about 200 million Internet users today, with the number expected to reach 500 million by 2003. But with 850 million to 1 billion wireless users, many with Internet access capability, industry watchers have underestimated the demand for non-PC devices connecting to the Web, such as handhelds, email machines or cell phones capable of conducting financial transactions, Capellas said.

"This whole new next-generation of mobility, wireless Internet access and new devices continues to put pressure on moving control to edges of the Web through caching and to create huge volumes on the back end," he added. "The way we've built systems traditionally cannot support this."

While rivals such as Sun have focused on big-iron servers, Compaq is betting successful computer makers must find new ways of delivering content quickly. That means larger servers on the back end supported by a lot of storage and intermediary servers, such as Wildfire, in the middle, plus smaller servers for caching Web content for quick delivery.

Compaq's strategy will encompass all three server lines: ProLiant, running Windows NT, Windows 2000 or Linux; AlphaServer, with OpenVMS, Tru64 Unix or Linux; and Himalayas servers.

Compaq will focus on a "layers of the Web" approach, with content going from big-iron servers on the back end to caching servers at the front. It will emphasize interoperability between different kinds of computers and operating systems.

"The whole way the Web is being deployed is starting to change, and the megatrend is the access devices having more power, caching moving to the edge of the network, and huge server consolidation as demand explodes," Capellas said.