Some industry observers believe today's acquisition of Digital Equipment Corporation by Compaq is the last nail in the coffin for Digital's Alpha chip, but other analysts are saying that it serves as a strong placeholder for Digital until Intel's next-generation "Merced" processor is released and able to prove itself as a worthy competitor.
Alpha, Digital's high-end 64-bit processor used in its servers and workstations, has faced an uncertain future since last October, when Digital sold its chipmaking plants to Intel as part of the settlement of its patent infringement lawsuit against the processor giant. Under the terms of the deal, Intel said it would continue making the Alpha chips for an undisclosed amount of time.
Many analysts then concluded--and still believe--that the settlement was the beginning of the end for Alpha. As part of the deal, Digital agreed to begin making servers based on Intel's forthcoming Merced technology, and many analysts say that it is only a matter of time before Digital folds its products into a platform based on Merced, the first generation of Intel's 64-bit chip technology.
At the time, Ashok Kumar, an analyst for Lowenbaum & Company said, "This will accelerate the demise of Alpha, but it won't happen right away. The transition has to be done slowly."
"This will definitely accelerate the demise of Alpha," Linley Gwennap, vice president of publications for market researchers MicroDesign, said today. "While it's possible that Alpha could have some superior performance, it's about how many R&D dollars Compaq wants to invest in a technology that's not the standard."
Compaq could reinforce this transition since it is a company that has always supported the Intel "X86" chip architecture almost exclusively across its computer products.
Nathan Brookwood, an analyst at Dataquest, thinks the Alpha chip will help Compaq with its high-end corporate computing strategy and has a couple of years to prove itself before Intel rolls out its competing IA-64 Merced architecture.
Brookwood says that today's merger should have no effect on the previous settlement with Intel. A spokesperson for Digital agreed, saying that the two deals were "mutually exclusive."
"The Compaq-DEC deal won't have any effect on the Intel-DEC deal. Let's assume that the FTC blesses them," Brookwood said. "Compaq has said that they see Alpha as an asset, and I'm willing to accept that statement."
Compaq's pronouncements about Alpha's future are upbeat for now. In a statement today announcing the acquisition, Compaq CEO Eckhard Pfeiffer said that Compaq is committed to supporting the Alpha architecture.
Digital Chairman Robert Palmer agreed, saying: "Alpha's future is brighter than ever," in a conference call this morning.
Such assertions didn't sway Gwennap, who pointed out, "They don't want to have people stop buying Alpha systems until IA-64 systems are ready. They need to have the deal approved."
Brookwood noted that Alpha's enterprise computing niche makes it especially attractive to Compaq, especially until Intel rolls out Merced. "DEC does have products that the [corporate] customers find accessible for high-end applications. IA-64 may be there someday, but it's not today," he said.