Compaq takes wraps off 8-processor server

The No. 1 PC maker aims at the Sun with a new powerhouse server and an e-business strategy.
Written by Lisa DiCarlo, Contributor

Compaq Computer Tuesday announced its eight-processor ProLiant server -- the machine on which the No. 1 computer maker is pinning its NonStop eBusiness solutions hopes.

Enrico Pesatori, newly appointed senior vice president and group general manager of the Enterprise Solutions and Services Group, said at the product launch here that the ProLiant 8000 and 8500 servers will help the company expand its role in Web and application hosting. "This is our main strategy for driving forward," Pesatori said. "We invented the PC server with the SystemPro, and now these products are at the centre of our e-business strategy."

Enterprise products and services accounted for 53 percent of Compaq's revenue in the first half of this year, he said, with commercial and consumer PCs making up 33 percent and 14 percent of revenue, respectively. Mary McDowell, vice president and general manager of industry-standard servers, predicted that the eight-way servers will catapult the company from the No. 2 to the No. 1 application service provider spot by 2001.

"We are striking at the heart of the Sun (Microsystems) product line," McDowell said. "Customers should think long and hard about why they need a Sun solution."

The servers will cost between $20,000 and $80,000 depending on configuration. The two are very similar, except that the 8000 supports up to 21 disk drives, while the 8500 supports up to four drives.

Digex, a growing Web hosting company, said it will buy five of the new ProLiant servers, mainly because of their easy serviceability. "Our engineers say they can almost service these things blindfolded," said Bobby Patrick, vice president of strategy and marketing at Digex.

However, Patrick added that Digex also uses Sun servers.

Although Compaq announced its NonStop eBusiness strategy in April, the program was sidetracked by distractions such as the ousting of CEO Eckhard Pfeiffer and several senior vice presidents, as well as a corporate restructuring that placed responsibility for all enterprise products and services under Pesatori. McDowell said the restructuring has brought the product and service divisions closer together: "In the past, there was some friction between the groups as to who owned the (profit and loss), but we are now on the same team."

She also said that Compaq has recently realigned its compensation for field salespeople, where they must hit sales targets across all product segments, from notebooks to Himalaya servers. "It helps us reach company-wide profitability goals."

Compaq is one of several hardware companies that will announce eight-way servers this month. For example, Hewlett-Packard will ship its LXr 8500 late this summer.

Other than the server announcement, Compaq did not give any specifics on further restructuring plans, including layoffs, or any other e-business initiatives. Compaq announced earlier this month that it would lay off about 8,000 people by year's end but didn't say from which areas the layoffs would come.

Despite the lack of details, the event did manage to draw Compaq Chairman Ben Rosen, whose office is nearby. Rosen said he was on hand because, though he's relinquished control over the weekly operations, he wants to stay informed.

"I'm playing a lot of golf," he said.

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