These contracts seem to move around don't they. DGN says that the FC
Clariion div. will be twice its current size by Sept....
t wasn't long ago that Data General's
prospects looked grim. But that's changing.
Sales of storage systems tumbled last year, and more
powerful competitors were putting the squeeze on the
30-year-old company's server business. In June, Data
General abandoned some server lines and trimmed its
work force, and competitors were rumored to be
eyeing it as a takeover target.
Perseverence Up Its Sleeve
But the wizened company, which made its name in
minicomputers, has some tricks left. Data General is
gaining recognition for two cutting-edge technologies:
Fibre Channel storage, for sharing data at high
speeds over long distances; and Non-Uniform Memory
Access, which offers better scalability than symmetric
multiprocessing because NUMA's processors don't rely
on a single source of memory.
Although it made a premature push into Fibre Channel
last year, Data General now stands to benefit as IT
managers learn the advantages of the storage
technology. They are also learning the benefits of
NUMA, as larger hardware vendors enter the market,
including Hewlett-Packard and Sun Microsystems.
"Data General has been out front with new
architectures, such as NUMA and Fibre Channel, and
those technologies are for systems it builds based on
open platforms," said Jules Cohn, chief information
officer at Syms, a clothing retail chain in Secaucus, N.J.
Cohn is building Syms' first data warehouse on Data
General NUMA servers.
In its Jan. 20 earnings report, Data General posted a
profit of $16.5 million on revenue of $365.6 million, its
second consecutive profitable quarter after the second
and third quarters of fiscal 1998, when it lost money.
Wall Street analysts responded positively.
"We see encouraging signs on both the storage and
server sides," said Robert Montague, a financial analyst
with Morgan Keegan & Co.
Data General said it will leverage its clustering and Fibre
Channel know-how. It said it hopes to develop
Windows NT systems that can scale over dozens of
processors using NUMA, though that may take years.
In the next year, Data General said it plans to expand its
Aviion NT server line to accommodate parallel
applications that can scale beyond two servers; it will
soon offer clusters of specific database platforms on its
NT line, said Linda Mentzer, vice president of
marketing at Aviion.
The company is also working with application vendors
to offer 99.9 percent uptime guarantees of NT servers
running specific software. For example, a deal is in the
works with Baan for a money-back guarantee if Baan
applications on Aviion servers experience unplanned
downtime of more than nine hours per year.
Meanwhile, Data General said increasing interest in
NUMA has breathed new life into its Unix server
business. Although its Unix business isn't growing as fast
as its NT business, Data General plans to invest in and
support Aviion Unix servers at least through the next
decade, said Mentzer.
"We've embarked on a coexistence and interoperability
strategy," said Mentzer. "There's a real need for Unix in
the 32- to 64-processor space."
Syms' Cohn has decided NUMA is the most effective
way to scale the retailer's Unix data warehouse.
Because NUMA lets chips in linked systems share
memory, systems can be added efficiently, "NUMA is
expandable, and that's important," said Cohn. "We
want to be able to expand the system as our business
grows."
In its storage business, Data General's Clariion division
is working on management and connectivity software
for SANs based on Fibre Channel, said Joel
Schwartz, senior VP of the Clariion storage division.
SANs, which can reduce backup traffic on LANs by
taking over data movement, are a concept storage
vendors hope to make a reality in the next year.
Analysts are generally positive about Data General's
chance for at least modest success as it competes
against Sequent Computer Systems, which has equal
expertise in NUMA products, and other vendors
invested in the success of Fibre Channel SANs,
including Compaq, Hewlett-Packard, and Sun.
Peter Labe, an analyst with Buckingham Research
Group, said Data General's server revenue will rise 11
percent in fiscal 1999, to about $604 million, and
predicts its storage business will increase 27 percent to
$510 million. Buckingham also predicts other areas of
the business, such as services, will report flat revenue,
with an overall revenue projection increase of 9 percent
to $1.6 billion.
Storage Focus
Data General president and CEO Ronald Skates is
aware of both the circumstances and challenges. "The
key for us is to get before more directors of computing
systems," said Skates. "We have to knock on doors."
Data General sells storage primarily to hardware
partners, and it earned a ringing endorsement when Dell
began to resell Clariion storage with its servers late last
year. That's quite a comeback: About two years ago,
Data General stopped investing in its SCSI RAID
storage technology and poured all its resources into
Fibre Channel. But Fibre Channel developed more
slowly than expected, and the company was more than
a year late delivering products when it introduced its
technology in 1998.
"Our partners filled out their product line with
competitive products because we had nothing to
provide them," said Schwartz. Now, said Dataquest
analyst Kimball Brown, storage is the company's
biggest strength.
But Data General must move rapidly to stay competitive
with other Fibre Channel vendors, which means
successfully marketing the technology to users.
"Data General appears to have very strong technology,"
said Montague of Morgan Keegan, but he cautions that
"there's risk in the market timing of these concepts, and
the execution to deliver them."
Schwartz acknowledged this. "We have to deliver all
the software to make [SANs] work in an aggressive
time frame," he said. "And, we have to increase our
brand awareness."
The company said it plans to more than double the size
of its Clariion division by September, to about 700.
Challenges are also evident in NT servers. Data
General dropped out of the volume NT server market
last year, having gained less than 1 percent share of
volume in the third quarter. It now enjoys leadership as
a niche provider of highly customized NT machines
priced from $100,000 to $1 million. But Data General
faces a threat from the Wintel server leaders, who smell
opportunity in that market.
Data General's focus is now on its Cluster-In-A-Box:
two NT servers (one serving as a failover server),
Clariion storage, and management software preloaded
and tested with the customer's software. This sells
primarily to midsized businesses. Such buyers also need
a company that can set up the systems for them and
provide services.
Take American Dairy Brands, for example. When the
Dairy Farmers of America bought the cheese division
from Borden Foods last year, that division didn't have
its own IT infrastructure. The company needed up to 10
NT servers to run key applications, including a
packaged ERP application for the consumer-goods
industry, Citrix WinFrame, and Microsoft Exchange
and SQL Server. American Dairy Brands chose Data
General over Compaq.
"The equipment was all Intel-based, so there wasn't a
big difference," said IS manager Bill McCurry. "What
sold me on Data General was the services side of the
business."
American Dairy Brands was short on IT staff, and had
to get the systems up in three weeks. Data General
could make that promise, while Compaq, at the time,
couldn't, said McCurry.
Still, Data General's rocky health, which includes a
$152 million loss in fiscal 1998, means it may yet face
trouble surviving independently. Buckingham Research's
Labe calls a future acquisition of Data General a
"remote possibility."
But American Dairy Brand's McCurry isn't too worried.
"I'd expect the company that purchased them would
adhere to what I've come to expect from Data
General," he said. |
