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Gateway makes its way into workstations

Gateway 2000 becomes the third PC vendor in three weeks to enter the market for personal workstations.

Gateway 2000 (GATE) has entered the market for personal workstations, making it the third PC vendor in two weeks to announce its first workstation.

Earlier this week, Dell (DELL) announced it will enter the workstation market; a week before that, Micron (MUEI) announced its first personal workstation product.

Gateway and Dell are following the lead of companies such as Compaq Computer, IBM, and Hewlett-Packard, all of which now offer workstations that run Microsoft's Windows NT operating system. IBM and Toshiba will announce new workstation-class systems next week.

A personal workstation is a high-powered system based on Intel's Pentium Pro processor or the upcoming Pentium II. These systems come with high-end 3D graphics chips and are aimed for use in engineering, science, and financial services. These new machines compete with the Unix workstations from Sun Microsystems and HP that have traditionally dominated these markets.

Gateway's G6-2002 can be configured as a dual-processor system but the base model comes with a single 200-MHz Pentium Pro processor with 64MB of memory, a 4GB hard disk drive, a graphics accelerator card, and a fast CD-ROM drive. A second Pentium Pro can be added for $599. The G6-2002 with a 17-inch monitor costs $3,849.

All of the major PC companies want to join the market for personal workstations because they see it as a natural extension of their existing high-end PCs.

But the market for workstations is quite a different beast than the desktop PC market, according to Peter ffoulkes, an analyst with market research firm Dataquest. Systems used for activities such as CAD typically use a limited number of programs that an engineer, for example, has to use. These customers tend to look for a machine that is designed specifically to run the programs they use, ffoulkes says, and vendors have to offer higher levels of customer support.

"In a nutshell, I'm underwhelmed by workstation announcements from a Dell or Gateway. As a high-end PC, it might be a fine product. But for somebody used to buying Sun or SGI, then fundamentally what [PC vendors] are doing is building a box and throwing it over a wall," ffoulkes said. "I suspect what [traditional workstation] customers will do is let it fall to the ground."

Gateway concedes that point. While it is calling its new machine a "personal workstation," the company admits it isn't fully qualified to compete yet with Sun or HP in this market. "There are still some benefits of Unix systems that you can't get on a PC...but the point where the choice between systems is blurring," said Craig Marzolf, product manager for the enterprise systems division of Gateway. "We're really not ready to do something like form a different division. We are always evaluating business opportunities, but there is nothing [planned yet]."

The company is instead planning to establish itself in specific niches. "We have a strong base in architecture and engineering kinds of companies. This is a good platform for [using] AutoCAD and those types of applications. It can also be used for statistical and financial applications, as well as databases for small businesses," according to Marzolf.

PC vendors expect the performance of their personal workstation to come more in line with that of low-end traditional workstations with the arrival of the upcoming Pentium II processor. That's why some vendors are holding back from announcing workstation-class machines. Gateway itself says a number of other key components for offering a true workstation running NT are not yet in place.

"The feature set and architecture to support the Pentium II takes a little longer development cycle than for other desktop PCs because you're dealing with higher speeds and bandwidth issues," Marzolf said. "As the technology matures, the Pentium II is definitely applicable in the workstation space. It's certainly something we'd look at."