After The Vote: HP/Compaq Unix Server Plans

Hewlett-Packard Compaq Computer

While that eventually might be the case--if the final results of Tuesday's shareholder vote on the HP-Compaq merger end up supporting the deal--the two companies aren't on top in the Unix server arena. In the latest report from research firm Gartner Dataquest, Sun Microsystems and IBM take top billing in the Unix server market, followed by HP at No. 3 and Compaq at No. 4.

HP's Unix server revenue in 2001 was $1.3 billion, down 28 percent from 2000, and Compaq shipped $391 million in Unix servers last year, a 35 percent fall from the year before, Gartner Dataquest reported.

Both HP and Compaq have decided to phase out their Unix processor development to focus their server offerings on Intel's Itanium processor, a move that would free them to combine their forces on Itanium before either had established much market momentum for that platform. And if the merger is ultimately approved, HP and Compaq expect to quickly integrate their Unix operating systems into a single OS.

HP's Unix server family, based on its PA8700 RISC processor, includes single-processor 1U rack-mount models, one-way to four-way entry-level models, eight-way and 16-way midrange models, and the 64-way Superdome. Compaq's AlphaServer Unix line includes two-way entry-level models, four-way midrange models, and high-end models with up to 32 processors.

HP's PA8700 processor is scheduled to be replaced by the PA8800 next year, with the final version of the processor, the PA8900, scheduled to be released 12 to 18 months later, said Mark Hudson, worldwide marketing manager for HP's Unix server business.

Compaq has similar plans for its Alpha processor, said Rich Marcello, vice president and general manager for the company's High Performance Systems Division. The AlphaServers now use the EV68 processor. But early next year, production of the EV7--code-named Marvel--is expected to begin, and that model will be replaced by the EV79 18 months later, he said.

HP and Compaq already have unveiled plans to migrate from their RISC processors to Itanium. HP now offers two first-generation Itanium-based servers, the four-way rx4610 and the 16-way rx9610, said Hudson. The company plans to start adding new Itanium-based servers to its line next year, continue production of its PA-RISC servers until 2005 and fully support its PA-RISC server lines until at least 2015, he added.

Compaq's road map calls for Marvel-based AlphaServers to become available next year, with new servers based on the EV79 processor following in mid-2004, said Marcello. The company plans to sell the Alpha-based systems until 2006 or 2007, with support expected to be available for at least five years after that, he said.

Compaq's Itanium-based server production is expected to start in 2004, which would entail a three-year overlap between the Alpha and Itanium processors, Marcello said. "Customers can decide when to move," he said.

Last month, Compaq reiterated its offer of investment protection for customers that purchase AlphaServers. The protection includes money-back satisfaction guarantees, product continuity guarantees, technology refresh incentives, guaranteed trade-in values and a transition lease program.

Marcello said Compaq plans to follow this road map regardless of whether the merger is approved or not. If the merger goes through, Compaq's Itanium server plans will probably fall under HP's Superdome program, he added.

HP's Unix server plans won't be affected if the merger is eventually shot down, Hudson said. "Our Unix server product line to date is the strongest it has ever been since the inception of the product line," he said. "We believe we have the plans in place to continue to take us into new places. For example, one of the places that we will be supporting PA-RISC in the middle of this year is in the [server blade architecture."

While HP and Compaq are Unix server competitors, their rivalry isn't very intense, said Hudson. "Certainly, we do compete with Compaq, but not extensively," he said. "When you look at the market spaces that the Compaq offering goes into, it's more the technical computing market spaces, and with their installed base. So one of the things we will iron out as the merger goes through is exactly what those road maps are. And what I'd say to our customers--and potential customers--out there is stay tuned, and you will have a clear understanding of that in the near future."

Hudson and Marcello said HP's HP-UX and Compaq's Tru64 Unix operating systems would be unified if the merger deal is approved. "Assuming the merger goes through, which we are, we'll be able to bring out the best of both capabilities, which ultimately is the best for our customers--and best for our channel partners," Hudson said. "By doing that, not only will we strengthen our ability to be successful as one company in HP, but bottom line we'll have a better chance of and do a better job of meeting our customers' and our channel partners' requirements."

Both companies plan to continue development of their own Unix operating systems if the merger gets shot down. Hudson said HP-UX has the best support of all the Unix operating systems from ISVs, with 1,200 to 1,300 applications already available for HP's new HP-UX 11i. "That's something that our competitor IBM cannot say with their latest generation of AIX 5L," he said. HP-UX also scales to 64 CPUs and is expected to scale to the 128-way Superdome servers next year, he added.

Marcello said Compaq's Tru64 has solid clustering technologies, which could be easily put on top of HP's Unix kernels. And regardless of the merger outcome, Compaq will work to port its OpenVMS operating system to the Itanium platform, he said.

Meanwhile, Sun executives see opportunity amid the merger. Shahin Kahn, chief competitive officer at Sun, called the proposed HP-Compaq merger a short-term opportunity for all competitors.

"It distracts the industry and confuses customers. In the long term, we'll wait and see," Kahn said. "What is certain is this: In such a large integration task, there's certain to be a few missteps, even though both are good companies."

Rationalizing the product lines of HP and Compaq will be the biggest challenge, said Kahn. Though customers likely won't throw out existing HP and Sun servers, they could be reluctant to make new purchases, he said.

And Sun is ready for customers to move to the Solaris platform, Kahn said. "Both [HP and Compaq are moving from their own processors to Itanium, forcing customers to retrain and recertify anyway," he said. "So while this is happening, they might as well consider an alternative."