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Dell taps E&S for graphics cards

Sources: The computer maker will announce Monday that it will drop Intergraph graphics cards in favor of Evans and Sutherland cards in high-end workstations.

Dell will announce Monday that it will drop Intergraph graphics cards in favor of Evans and Sutherland cards to handle high-end graphics for its Precision line of workstations, sources familiar with the deal said.

Evans and Sutherland wouldn't confirm the deal today, but spokesman Ken Donoghue said the company expects to make a new customer announcement nearly next week. In addition, E&S said in an October earnings report that it entered into an agreement to deliver graphics products to Dell.

E&S benefited from a $24 million investment from Intel in July, when the chip giant bought an 8.2 percent stake in the company. The investment was part of an agreement in which E&S will develop high-end graphics systems with video support, with products to arrive at the same time as Intel's 64-bit Merced processor, Donoghue said.

Asked if Dell has notified Intergraph that Dell would no longer use its products, Intergraph's Steve Pesto said, "We are in business discussions with Dell."

"To our knowledge, we are not getting canceled," said Intergraph's Chandler Hall. "We still expect to receive orders from them on current-generation technology, and we'll see what happens on the next generation."

Intergraph is just beginning to ship its next-generation graphics system, the Intense 3D Wildcat cards, Hall said. Dell's current Precision workstations offer the earlier generation cards, the Intense 3D Pro series. Dell also offers less expensive video card options.

Intergraph cards also are offered in workstations from IBM, Fujitsu, and Compaq, Pesto said.

While E&S has gained from rosy relations with Intel, Intergraph has been on the other side of the fence, struggling with a lawsuit filed a year ago against Intel and a countersuit Intel filed against Intergraph.

Intergraph blamed some of its recent financial losses on supply problems stemming from the Intel dispute. Intergraph's stock has slipped from more than $11 a share a year ago to less than $7 today, and in October, computer manufacturer SCI Systems took over Intergraph's inventory, manufacturing, and its 300 employees.

E&S, a pioneer in graphics systems that's been active for 30 years, moved its products to the Microsoft Windows NT operating system platform in 1994, Donoghue said.

The cheapest E&S graphics card costs about $2,000, Donoghue said, but the company is planning on adding a card costing less than $1,000 in addition to new high-end systems, Donoghue said.