Alpha era ends with Itanium

Compaq Computer Corp.’s decision to phase out its Alpha and NonStop Himalaya technology shouldn’t worry current users, according to the company and an analyst.

The Houston-based computer maker Monday announced it had agreed to a multi-year technology and marketing deal with Santa Clara, Calif.-based Intel Corp.

Compaq said it will consolidate its entire 64-bit series of servers on the Itanium processor family in stages by 2004. As part of the agreement it will also transfer the Alpha chip technology, the tools that have allowed it to build that, and specific engineering resources to Intel.

Financial terms of the agreement were not disclosed. Compaq acquired the Alpha chip technology when it bought Digital Equipment Corp in 1998.

Compaq CEO Michael Capellas promised users there would be two performance increased before switching over to Itanium, and “our core systems today either will be supported directly through a recompilation or there will be binary code compatibility.”

Alan Freedman, servers and storage research manager for Toronto-based IDC Canada, said tools and applications will be provided to help with the migration to Itanium, but added it is a bit of a hassle.

The government of Quebec, for one, can expect to endure the hassle. It signed a $10 million deal with Compaq in September 2000 to overhaul its IT infrastructure, part of which included using the Alpha system to power it e-business suite.

According to Freedman Intel is the winner in this deal.

“They wanted to be not just known as an enterprise player, but actually participating in the enterprise market. This is really a boost into that space,” he said.

While Compaq will save on resources and costs, and simplify its corporate strategy, Freedman said the decision comes at a strange time.

“They had done quite well with the Alpha servers lately and they did put a lot of marketing dollars and lot of R&D dollars behind the Alpha chip in the past few years. And Compaq is seeing some pay off in that in gaining some market share over the past number of quarters,” said Freedman.

Dave Boulanger, however, may have the answer for the move. The analyst with Boston-based AMR Research said the deal combined with Compaq’s recent announcement of new Linux initiatives is the PC maker’s strategy for getting into the services business.

“They want to be more like IBM,” he said and added Compaq is where Big Blue was five to eight years ago.

Compaq is looking at its core businesses that are technology-oriented and evaluating the future capital requirements, said Boulanger, and the Alpha business is both saleable and one that would require more investment.

Even though going into services means going up against IBM, Boulanger said there is lots of room in the market, and Compaq won’t be the only player. Hewlett-Packard, for instance, is very much a services company, even though they don’t play it up, he said, and don’t discount Microsoft, especially in the wake of its Great Plains acquisition.

With files from Gary Hilson.

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