Unisys draws up a new server plan
The Blue Bell, Penn., company introduced two new mainframes based on its Cellular Multiprocessing (CMP) design, which accommodates 32 Intel CPUs. CMP systems already sold by Unisys, Compaq and Dell running Windows 2000, but now Unisys has begun remaking its mainframes on the new design, said Eric Jensen, a program manager in the mainframe group.
The midrange CS7102 and the high-end CS7802 models can cost between $1 million and $10 million, not including the annual maintenance contracts that typically accompany mainframe sales. The two lines extend the mainframe lines of Burroughs and Sperry, respectively, the two companies that merged to form Unisys in 1986.
With the Clearpath mainframe design Unisys launched in 1996, the company began incorporating Intel servers into its mainframes to make sure the current crop of programmers and software could take advantage of the system. The Clearpath Plus systems introduced Monday have the Intel servers built into the mainframe instead of merely joined with a high-speed connection.
But mainframes, the powerful servers still at the heart of many companies' computing operations, aren't as lucrative a business as they once were. Unisys' revenue dropped from $7.5 billion in 1999 to $6.9 billion in 2000, in part because of declining mainframe sales. In 1999, mainframes accounted for 48 percent the company's gross profit, but that figure dropped to less than 45 percent in 2000, according to the company's annual report.
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"It's a declining market for Unisys and will continue to be," said Meta Group analyst Rob Schafer. On the bright side, though, many mainframe customers aren't in a rush to switch to other servers, he said.
IBM, the biggest mainframe company, is faring somewhat better but still faces declining revenue. While the server market overall grew 7 percent, from $56 billion in 1999 to $60 billion in 2000, IBM's mainframe sales revenue dropped from $3.9 billion to $3.3 billion, according to research firm IDC.
"IBM is raising prices on the mainframe side," Schafer said. "That's going to be good news for Unisys," not so much because customers buy one or the other but because Unisys pricing will look more attractive in comparison, he added.
There still are mainframe customers, though, Jensen said. "When you look at the industry, our customers are very concerned about maintaining their databases," he said. These customers do not believe that Unix or Windows systems are powerful enough to run very large databases, he said.
In addition, the company is gaining new customers, not just upgrades from current customers. Some of those new sales come with the help of software companies that sell mainframes for small banks or for large corporate voice mail systems.
Though most mainframe programming is still done in the decades-old COBOL language, Unisys also offers on both its mainframe lines the ability to run software written in the more modern Java language, Jensen said.
Elsewhere in the server market, things are livelier. IBM and Hewlett-Packard are trying to win back the Unix server business they lost to Sun Microsystems, while Microsoft and Intel are calling upon their allies to create more powerful and less crash-prone Windows servers.
For PCs and lower-end servers, Unisys sells Dell Computer products under its own name. Under the deal, Dell agreed to sell Unisys CMP machines under its name.
Compaq has a similar deal to sell the Unisys CMP machines. Hewlett-Packard announced in September that it, too, would sell the systems, but the company has changed its mind.
Duane Zitzner, head of HP's computing division, said the company chose to focus instead on developing its own servers using the Itanium series of high-end CPUs expected later this year from Intel.
The new CS7802 provides about twice the performance of the older IX6800 mainframe, Unisys said. Though much of this system is the same as the Intel-based CMP systems, Unisys ships the hardware with up to 16 of its proprietary CPUs, Jensen said. It uses the Unisys 2200 operating system.
The system can accommodate Intel CPUs as well, running operating systems such as Windows simultaneously on a different partition within the mainframe. This feature is useful for customers running heavy-duty database software on the mainframe with Windows software that taps into it, he said.
The new CS7101 uses the Intel chips, but they emulate the computer language of the CPUs that powered the older Burroughs computer line, Jensen said. The new model can accommodate as many as 32 CPUs.