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Technology Stocks : Compaq

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To: Night Writer who wrote (88796)1/11/2001 7:14:09 PM
From: hlpinout  Read Replies (2) of 97611
 
HP fights criticism of Superdome

A prominent financial analyst calls
Superdome Unix server performance 'tepid.'
Hewlett-Packard fires back.

By Stephen Shankland, Special to ZDNet
January 11, 2001 7:00 AM PT

Hewlett-Packard disputed unflattering remarks
made by a prominent financial analyst regarding
HP's new Superdome Unix server, the spearhead
of HP's effort to win back the No. 1 Unix server
ranking from Sun Microsystems.

Performance-measuring benchmarks showed
Superdome to be "tepid," Thomas Kraemer of Merrill
Lynch said in a research note Wednesday.



Superdome: Mother of all
computers?

"It did not beat the high-end servers that IBM (NYSE:
IBM) introduced a year ago and it was more expensive
than Sun's (Nasdaq: SUNW) on a price-performance
basis," Kraemer wrote of Superdome, which HP
(NYSE: HWP) began shipping in December. "As such,
we do not think that this product will be a strong
catalyst to produce a turn in HP's Unix business."

HP acknowledged losing out to IBM on the Transaction
Performance Council's TPC-C benchmark--a widely
watched measurement of database transaction
performance. IBM's performance was higher, with
221,000 transactions per second to Superdome's
197,000 and a cost per transaction 71 percent of HP's
price.

However, HP beat Sun and IBM on a real-world
benchmark running SAP's business software, and HP
expects its TPC-C benchmark will increase to about
300,000 this summer, said Mark Hudson, marketing
manager for HP's Unix servers.

Benchmarks often improve as companies tune the
hardware and software, Hudson said, and the
Superdome benchmark was set using only 48
processors; the computer accommodates as many as
64. For example, when IBM's S80 was introduced, its
TPC-C benchmark was about 105,000, less than half its
current 221,000.

"I don't think (Kraemer) grasped the amount of tuning
and learning that goes on" when measuring
benchmarks, Hudson said. Over the course of
Superdome's life, HP expects to quadruple its TPC-C
score, Hudson said.

Unix market booming
The Unix server market has been booming with the
arrival of the Internet, the increasing computerization of
Old Economy companies and the slower-than-expected
growth of Windows into higher-end servers. Sun is the
top Unix server seller, with HP in second place, IBM in
third and Compaq in fourth, according to IDC.

Sun's power in the Unix server market has led it to loft
over HP and Compaq to reach second place in the total
server market, which also includes mainframes,
Windows systems and other models.


But corporate spending for servers appears to be
scaling back. Sun and HP both are concerned about
declining revenues due to reduced corporate spending.
In December, each company sent cautionary memos to
employees about fiscal austerity measures to adjust to
the harder times.

Buckingham
Research Group
analyst Jay Stevens
predicted Tuesday
that IBM, HP and Sun
will aggressively cut
prices in an attempt to
win as much market
share as possible.

Also on Wednesday,
IBM made a little
progress in its effort to
dislodge Sun,
announcing that it persuaded Ultramar Diamond
Shamrock to switch the computers at the center of its
oil and convenience store business from Sun to IBM.
The company bought two top-end IBM S80
12-processor servers and eight M80 four-processor
servers, IBM said. In addition, Ultramar Diamond
Shamrock will use IBM's relatively new Shark storage
systems, Big Blue said.

Kraemer also had rosier news for HP on the storage
side of its business, where customers don't appear to
be slowing down spending.
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