NetFrame To Announce Deep Price Cuts NetFrame To Announce Deep Price Cuts (04/21/97; 11:00 a.m. EDT)
By Martin J. Garvey, InformationWeek
MILPITAS, Calif. -- NetFrame Systems will announce next week deep price cuts for its enterprise servers as part of a critical strategy to compete in the volume PC server market.
According to Steve Huey, VP of marketing, NetFrame servers priced at $65,000 and $70,000 will be reduced to $25,000 and $30,000, respectively. By opening up distribution to more resellers and, for the first time, certifying third parties to provide components such as storage, the $75 million NetFrame said it plans to compete with Compaq Computer, Dell Computer and IBM.
The enterprise server vendor will continue to market its own products, but it has also signed up several vendors, including the Clarion business unit of Data General, Digital Equipment Storage Works and Unisys as storage providers. To implement fully integrated NF9000 server solutions out of the mix-and-match strategy, NetFrame will increase and authorize its reseller channel. Just last year, 95 percent of NetFrame servers were sold direct.
"With what Intel has done with Pentium Pro, other servers are getting into the NetFrame space," Huey said. "We have to play in a higher-volume market." Huey said he believes NetFrame will continue to distinguish itself by providing 16 PCI cards per sever, with load sharing, balancing and failover between redundant cards. "We'll jump right into the shark tank," he said, "and will sell the features of a super-server at a price point that's never been seen."
Analysts said they don't believe that will be enough. "NetFrame has been hurt by having double the price of servers relative to Compaq, but you didn't get twice the availability or scalability," said Joe Barkan, research director at Gartner Group, an IT advisory company in Stamford, Conn. "Now they're getting the price down, but they're not selling a server like Compaq does."
Barkan said he believes customers may be skeptical. "There are certain warm fuzzies customers get when they buy a whole server, including storage subsystems," he said. Barkan has clients who show interest in NetFrame as is, but they turn away when it comes down to vendor viability.
"NetFrame must reach volume business this year," Barkan said. "They're hurting financially and haven't had a profitable quarter in quite a while. Rumors are that NetFrame is shopping around, looking for a buyer."
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