HP unveils ‘blade’ computer servers

Peter Henderson

SAN FRANCISCO: Hewlett-Packard Co. unveiled on Tuesday "blade"
computer servers that fit onto cards and stand like books on a shelf, aiming to
replace the racks of machines and tangles of cable now standard for many
corporations.

HP's systems, the first by a major network computer maker, could be cheaper
to run and house more than current low-end servers. Analysts say they may become
a multibillion dollar offering in a matter of years but caution the slow economy
could stifle early demand.

The blades, each a separate server computer, storage system or other network
part, slide into slots in a chassis which provides power, connections and
protection, shedding weight and complexity and replacing rack-mounted boxes as
the trimmest computers on the block.

Vendors say blades will make networks easier to manage and take up less space
at companies that devote small computers to individual tasks, like
telecommunications companies or Internet Web-hosting centers.

The slow economy and Hewlett-Packard's planned merger with Compaq Computer
Corp., which plans to bring out its own blade system next year, raise questions
about how fast corporations may adopt the technology, analysts said.

But they said HP's blades, priced at about $1,925 per server, would be a
strong opening entry in a market which International Data Corp. estimates could
reach $2.9 billion in four years.

Competitors Compaq Computer Corp., Dell Computer Corp. and International
Business Machines Corp. all plan to introduce blade products next year, and Sun
Microsystems Inc. has said it is working on a response, as well.

Hewlett-Packard plans to start shipping blade servers with Intel Corp.
Pentium III microprocessors running the Linux operating system in January and
will offer blades running Microsoft Corp. Windows two or three months later.
HP's own HP-UX operating system and PA-RISC processors will be adapted to blades
toward the end of the first half, executives said.

HP is expected to announce a string of technology companies that support its
standards and could turn out blades or components that hook into HP systems.
Those include chip makers Advanced Micro Devices Inc., Intel and Transmeta
Corp., storage networking provider Brocade Communications Systems Inc., and
software developers Microsoft, Oracle Corp. and RealNetworks Inc., among others.

"Building that kind of partnership base is going to be key for getting a
share of that market as it begins to take off in the 2003, 2004 time
frame," said Mark Melenovsky, an analyst at IDC, who saw the partners as
one of HP's main advantages in being first to market.

He said that the low-end server market was beginning to come out of a slump
and that corporations would be lured to blades by their ease of use and low
costs, including space and power requirements. "Hardware represents a
really small percentage of the outlay for all this infrastructure," he
said. "What the blades really talk to is people costs." Mark Hudson,
an HP worldwide marketing manager, said the simplicity was intuitive for
potential buyers. "You can sort of see this click with customers," he
said. "They get it."

Yankee Group analyst Jamie Gruener also gave HP credit for building support
for its standard but said corporations were still skittish of buying new
technologies in the weak economy. "You really face the challenge of getting
customers to deploy this new architecture, and I think in the short term it is
going to be an uphill battle for anyone," he said.

It is also unclear how much blades will cut into sales of other low-end
server systems -- an area in which HP is relatively weak -- and what would
happen to HP's blade servers if it merged with Compaq. "It is going to be
an interesting dynamic to watch how the integration occurs between HP and
Compaq, especially in light of the fact that Compaq has been a market leader,
especially in the Intel space," said Gruener.

HP executives, forbidden by antitrust law from commenting on products at this
stage in the merger process, said customers would be taken care of in any case.