Risc workstation vendors respond to Compaq Pentium Pro challenge

Compaq's first entry into the midrange workstation market two weeksago sparked counter-moves from three of its top four rivals. CarolineGabriel reports.

Compaq has aggressively targeted its Pentium workstations at the technical user base currently dominated by Risc-based machines.

'We have created the infrastructure necessary to compete in environments that were once the exclusive domain of companies like Sun, Hewlett-Packard, IBM, Digital and Silicon Graphics,' said John Rose, general manager of enterprise products at Compaq.

It seems that Compaq's new foray into workstations may be better fated than its previous attempt, when it joined Mips, Digital and Intel in the ill-starred Ace consortium - the company's only serious sign of interest in Unix - three years ago. On that occasion it pulled back rather rapidly from this sector but now, with a firmer market base and stronger financial performance to back it up, and with the growth of NT on its side, it is having another go.

If it is to double its sales by 2000, Compaq needs to broaden its base as far as its Intel technology will take it. The Internet and other networking strategies, subnotebooks, personal digital assistants and prepackaged vertical solutions for customers such as banks, will all broaden its range.

Workstations present one of the highest margin opportunities, one that the more established workstation vendors will be keen to deny the new pretender.

What Compaq will not do, Rose said, is get into the Risc-based Unix market itself. He denied the rumours that Compaq might renew its Ace consortium alliance with Digital and license the Alpha processor. 'We will not expand where the ducks are dying,' Rose said, claiming that Risc/ Unix was a combination with 'no future at all'.

All those companies which, like Compaq, are building machines around the Pentium Pro processor are likely to face delays in implementing their plans as shipments of Intel processors remain behind schedule. Several PC vendors say they are waiting up to two months for Pro shipments. Dell last week referred to a six- to eight-week delay, while Gateway reported hold-ups of four to six weeks. Considering these are high-volume Intel customers, it can be reasonably supposed that the likes of Digital might wait even longer.

Digital, IBM and Sun all responded to the Compaq declaration, the first two by announcing their own Pentium Pro machines running NT, similar in specification to Compaq's, and the other by slashing prices on its Risc range which is directly targeted by Compaq.

Digital managers said their new models were designed partly to fend off the challenge in the mid-range sector. Howard Elias, vice president of Digital's PC division, said the Prioris range aimed to increase the proportion of high-margin products sold by the unit, improve profitability and 'be very competitive in features and price' with other Pentium Pro servers and workstations, such as those from Compaq.

Digital perhaps has the most to lose if Compaq makes a splash in the scientific and engineering sector. Although its ranking among the top three suppliers to that sector tends to fluctuate, it is more dependent than its rivals on the scientific and engineering community where it has strong roots.

IBM, on the other hand, tends to keep its Pentium-based models for commercial users and target its RS/6000 Unix boxes at the scientists.

It made moves in both ranges last week. Into the PC 340 line it launched the 325 Pentium Pro, with a 200MHz processor and expandability to multiprocessing - like Compaq's Professional Workstations.

An insider at IBM indicated that new RS models would debut in the next few weeks, saying: 'We don't see Compaq as being in the same league of functionality. Our Pentium machines compete with Compaq's as servers or mainstream desktops but I don't think they have the necessary reputation in the technical market.'

Sun, also heavily dependent on technical markets, bit back at Compaq with swingeing price cuts. Its entry-level Ultrasparcs, the Ultra 1 range, are half their introductory price a year ago yet boast memory doubled to 64Mb.

The resultant price/performance tussle between Sun and Compaq marketing and sales folk is sure to run and run. Compaq's Rose said the Professional Workstations outperform Risc systems 'at prices up to 75%', while Sun's Gene Banman, general manager of desktop systems, claimed the Ultra line is now offering 'blazing 3D graphics, processing and networking highly optimised for power users, at PC prices.' This matches NT workstation prices, said Banman. Another Sun spokesperson claimed Compaq had just 'plugged a few third-party boards' into a standard Pentium Pro box.

A 200MHz Compaq workstation with 128Mb of memory, 2D graphics support, Fast Ethernet and a 4Gb hard drive costs #6,650 - up to #2,000 more for 3D graphics - while Sun's Ultra 1 Model 140 costs #6,500 with 64Mb RAM, 2Gb disk and 2D turbo graphics. In other words, there's not much to choose between them.

The analysts are divided, too. Dataquest, which has seen Sun's number one market share in this sector grow from 36% to almost 42% in the past year, does not see such a lead being dented 'for a good while yet'.

Tom Copeland, director of workstation research at IDC, said: 'Compaq is well-positioned to become a significant player in this market'. He believes NT machines are starting to make an impact on traditional Risc/Unix territory.