Compaq takes on Sun with new AlphaServer

Compaq Computer launched a new line of powerful "Wildfire" Unix servers that run under the control of the company’s latest powerful RISC-based Alpha microprocessors. Compaq said it has already received more than 200 orders for the machines and expects to sell $1 billion worth of the servers this year.

Compaq inherited the Alpha processor line with the acquisition of Digital Equipment. Alpha-based computers had never caught on despite their superior performance. Now, Compaq hopes the demand for next-generation servers will create a new opportunity for the Alpha processors. The machines, officially known as the AlphaServer GS series, can support eight to 32 Alpha-based CPU nodes. The servers can run different operating systems at the same time and components can be replaced without shutting the computer down.

The machines will be able to handle tens of millions of transactions per second simultaneously, making them suitable for e-commerce sites, telephone companies, airline ticketing services and brokerage houses. Compaq hopes to position the Wildfire systems against similar machines from market leader Sun Microsystems. Sales from the Wildfire systems should help Compaq more than double its share in the server market. "The new AlphaServers are building a new foundation for the most demanding e-business environments," said Compaq president and chief executive officer Michael Capellas. Capellas said Compaq would target the new line at three markets where it already enjoys a strong position — transaction-processing for electronic business, billing systems for wireless providers and scientific number crunching.

Compaq is getting help from Oracle in marketing the machines as the software firm has pledged to use its sales force to push the machines. Compaq said the prices of the new computers would range between less than $100,000 and over $1 million. Research company Celera Genomics Group is already using an AlphaServer GS to help crack the human genetic code, and Amazon.com uses one to process orders.

While the Compaq machines offer price-performance advantage over Sun’s Sparc processor-based servers, analysts say the machines would probably take more sales away from Sun rivals, such as HP and IBM, than from Sun. Sun’s leadership position in the market for Internet servers appears insurmountable at this point, despite being a late entrant with its next-generation high-performance servers.

Gartner Group analyst George Weiss said delays by Sun in turning out its next generation rival machines give Compaq a six- to nine-month lead in the high-performance Web server market. "Sun could have really neutralized Compaq, but now Compaq can introduce this product into the competitive field, with headroom for two to three generations, while Sun is yet to take their users into the next generation."