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Pssst ... wanna buy a server?

Hewlett-Packard Australia makes a baffling bid for a larger share of the Intel-based server market.
Written by Diane Jardine, Contributor
An aggressive marketing strategy by Hewlett-Packard Australia has resulted in red faces at the company's head office, irritated competitors, and left one chip giant scratching its corporate head.

PC Week Australia was approached last week by a representative of HP claiming that, while Compaq and IBM are experiencing shortages in Intel-based servers, HP has plenty of stock.

And according to its competitors, HP has been approaching resellers to pass over their Compaq and IBM server orders, which they would fill by June 30. HP says it has 500 NetServers ready to ship.

But according to Compaq (cpq), the claim of short stocks is a month late. A spokesperson claimed that it will have shipped 1,200 servers this week, and shipped 1,000 last week.

"The usual seven to 14-day waiting period was extended to four to five weeks in May," according to Terry Steer, industry standard service marketing manager at Compaq. This backlog came after a huge month where the vendor took orders for 3,000 units, Steer said, "but at the moment we are shipping".

"May is our biggest month every year," Steer said. "We planned ahead, but the Intel shortage got us."

Intel Corp. (intc) is also puzzled over the claimed shortages. According to Philip Cronin, area sales manager for Intel, there is no chip shortage in the server area.

Locally they have an overabundance of stock of the PIII chips at 600MHz, 677MHz and 700MHz and onwards, and no issues with the supply of the purpose-built server chip Xeon.

There is "lots of product available for OEMs through normal distribution channels," Cronin claimed.

Large vendors manufacture offshore, "and we have little impact on that locally," Cronin said. However he stressed there is no problem with the supply of chips for servers worldwide, either.

A spokesperson for IBM Corp. (ibm) said the company manufactures its own chips for its mainframe, UNIX, and AS400 enterprise servers and so is not experiencing a shortage at the high end. However, due to strong pre-GST and end-of-financial-year demand, he conceded that it is experiencing a shortage in the mid- to high-end Intel servers. "We're working closely with individual customers to minimize the impact."

Christopher Greig, general manager, Business Customer Sales Organization for HP, said the company has no interest in attempting to mislead the marketplace.

"I absolutely, categorically reject that we have misled our customers," he said. "It's our understanding from people we take orders from that there is a shortage of server products in the marketplace," he said.

HP's national marketing manager for HP NetServers, David Booth, agreed with Greig, but added, "Our strategy is not to deliberately remove market share from IBM and Compaq, but that's what we aim to do. We are constantly striving for reseller mindshare."

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