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Technology Stocks : Sequent -- Ignore unavailable to you. Want to Upgrade?

To: van wang who wrote (735)	1/8/1998 11:26:00 AM
From: Paul Dieterich	Respond to of 1229

Lehman interprets Sequent/DEC collaboration: * On January 6, Sequent and Digital Equipment announced a collaboration whereby Sequent will migrate to a future version of Digital's 64-bit Unix for Intel Merced systems (IA-64 architecture). We project product availability at mid 99 at the earliest. * Sequent, which is currently using their own Unix version (DYNIX/ptf), has determined that strategically the company needs to migrate to a more industry standard version of Unix. This should help increase application availability for a Sequent/Unix platform. * After reviewing the other major Unix versions, Sequent believes that Digital provides the most robust Unix and the best partnering opportunity. We estimate that DEC's Unix currently has about 4,500 application software packages available. * Digital will benefit as the company tries to leverage their $100M annual Unix R&D budget by licensing the operating system to others. Sun and SCO have been the two other companies aggressively pursuing licensing agreements. * In the short term, the announcement is not materially significant financially for either company. Longer term it is a positive first step for both companies as Sequent tries to become more industry standard' and DEC tries to grow their Unix market share. ---------------------------------------------------------------- Partnering of Industry Players Many of our companies have announced partnering strategies in order to better compete in an increasingly standard' world. Although no one has yet been able to build critical mass behind their version of Unix, the current leaders are Sun (Solaris), HP (UX), IBM (AIX) and Digital (DEC Unix). A few Unix operating system partnerships and a few who still operate independently are: Company/ Unix Operating System Digital & Sequent/ DEC Unix Sun Micro & NCR/ Solaris Hewlett-Packard & Stratus/ HP-UX Data General & SCO/ DG/UX, SCO Unix IBM/ AIX Silicon Graphics/ IRIX Most likely the two next vendors to partner in the Unix operating system area are Data General and Silicon Graphics. Sun Microsystems has been working harder than others in trying to build support behind their Solaris operating system, but with this announcement is seems that a clear consensus Unix operating system standard' might not appear. IDC estimates that for servers HP-UX, Sun Solaris, IBM AIX and SCO Unix all had market share of more than 10%, but no company has over 40%, based on 1996 data. Sequent Benefits Enterprise companies can lower their support structure costs by standardizing on a few key platforms versus supporting a wide range of hardware and software platforms and vendors. This strategy has represented a problem for Sequent as the company tried to increase penetration of the high end Enterprise marketplace. Sequent believes that the Digital Unix announcement will allow them to eliminate this concern by adopting a more industry standard Unix than their own DYNIX/ptf operating system. An additional benefit will be reduced R&D expenses which are derived by eliminating the constant need to upgrade and maintain a complex support structure for the operating system. The benefits from the announcement will not be material for years, but the important item is that Sequent will have time to work with their customers and plan for the migration. Digital Benefits With over 1,000 employees, and a budget of over $100 million, Digital's Unix development and support operation will gain some additional leverage from incorporating another vendors sales under the DEC Unix umbrella. It will be incumbent upon DEC to try to maintain momentum here and sign-up additional vendors. Currently no money is changing hand between Sequent and Digital, and actual specifics about licensing still need to be worked through. Digital will also gain access to Sequent's version of Unix and we believe incorporate many of the features of DYNIX that make it one of the most scalable and Enterprise class Unix operating systems on the market today. Digital will also be working to ensure good compatibility and integration between Unix and NT.