After The Vote: HP/Compaq Intel-Based Server Plans

In the Intel server space, Compaq is still holding on to the No. 1 spot with U.S. revenue of $1.8 billion in 2001, dwarfing No. 4 HP with its $261 million, according to research firm Gartner Dataquest.

Both companies offer one-way to four-way Intel-based servers, but Compaq also provides eight-way Xeon-based models, and was first to market with Intel-based blade servers, said Hugh Jenkins, vice president of marketing for the company's Industry Standard Server Group. All Compaq's Intel-based servers plug into HP's OpenView network application, he said.

HP just recently revamped its entire Wintel server line with seven new systems in what Marc Joulait, director of HP's North American IA-32 server business, called the largest IA-32 announcement in the company's history.

The new models include one-way Pentium 4 and two-way Pentium III tower servers for the SMB space, two-way Pentium III and Xeon tower and rack-mount servers for the workgroup and departmental space, and four-way Xeon MP tower and rack-mount servers for the enterprise.

Most of the new products are expected to be available by the end of this month or early April, with the enterprise-class servers expected to start shipping in early May, said Joulait.

When comparing HP's Intel server line to that of Compaq, Joulait said Compaq does not play in the very entry-level $649 space, nor does it have a Pentium 4-based model in the sub-$1,000 space.

In the midrange space, the two vendors' product lines are more comparable, said Joulait. "The Intel processors are pretty much the same because everyone has access to the same technology at the same time," he said. "It comes down to how much flexibility, expandability, manageability and redundancy are built into the products. Compaq has not refreshed their product line in a while in this space. . . . [In the four-way Xeon MP space, Compaq actually hasn't even announced products based on the new Intel processors."

However, Compaq is planning to release two-way and four-way Foster-based servers as well as a new eight-way server in the near future, Jenkins said.

Compaq has already shipped over 1,000 front-end, single-processor server blades and is getting ready to start shipping midtier, dual-processor blades, said Jenkins. Four-way models for back-end processing are also on the way. "Last year, there was a lot of talk about blades, including from us," he said. "Now we are ahead of the competition."

Joulait said he is not privy to what the post-merger combined product line will look like, noting that it would be illegal for him to even have such knowledge.

However, he said HP understands that IT managers do not want uncertainty. "Any combination, merging, whatever you want to call it, of the product lines will not be an overnight, shoot-this-product-keep-that-one, type of activity in the server space because that makes no sense," he said. "So you can expect smooth transitions, smooth migrations. We're committed to that. We have done it historically across all of our product lines to ensure that IT managers don't suffer too many headaches when they move from one generation of product to another, even within HP's product lines. Assuming the merger vote gets certified, this will be no different for customers."

Jenkins also would not comment on how the combined Intel server entity would look. "But we will execute our 'adopt and go' strategy," he said. "Adopt the successful models, and go quickly with them. This strategy signifies the speed of execution and speed of communication we expect to put in place once this thing has been decided."

Should the merger be certified, Compaq has guaranteed clients they will receive a minimum of five years of service on any ProLiant server starting from the end of life of a particular model.

HP is not making any trade-in or money-back guarantees on its Intel-based servers related to the merger, said Joulait. However, the company has a standard business practice of allowing trade-ins of older equipment from HP or other vendors on new products. "It's a part of HP's DNA to work on smooth transitions with tools, processes, resources, financial incentives like trade-ins," he said. "That's something customers expect, and it's obviously done on a specific case-by-case basis."

Looking at the server market in general, Joulait said the drop in server revenue and sales vendors experienced in 2001 were a result of a number of factors unique to that year, especially the slowdown in the dot-com and service provider market.

"A lot of their equipment has ended up in the after-market, in the broker market," Joulait said. "A lot of it [was brand new, not even taken out of the box. The overall market has actually done OK, if you exclude the service provider and the dot-com space. The SMB space has continued to grow, the midmarket continues to grow, and you're seeing a lot of server consolidation activity and, unfortunately since Sept. 11, a lot of disaster recovery, redundancy, high-availability projects coming out of large corporations. . . . I think the market's in good shape."

Most solution providers agree Compaq will come out on top, but say it will not make much difference.

"ProLiant is the strong brand," said Rich Baldwin, president of Nth Generation Computing, a San Diego-based Compaq partner. "I suspect [HP's servers will become ProLiant. But the ProLiant line will take some HP features."

Steven Manteros, general manager for GST/Micro City, a Cerritos, Calif.-based solution provider that partners with both vendors, said the Compaq Intel-based server line is a little stronger than that of HP, with better market penetration and more entrenched in customers' sites. "We've met with HP and Compaq people to try to do forecasts, but they're not saying anything now," he said.