Compaq's Switch To Intel Processors Causes Few Ripples

Reaction among Compaq customers ranges from excitement to mild discontent following news that the company will use Intel processors rather than its own Mips and Alpha technology inside its high-end servers.

One Compaq loyalist sees last week's announcement as a beginning, not an end. "It's a complete and total falsehood that they're killing Alpha or that Tru64 Unix, Open VMS, and NonStop Himalaya will wither on the vine," says John Barr, lead clinical-systems architect for Memorial Hermann Healthcare System in Houston. Barr, who also sits on Compaq's Open-VMS board, which is comprised of Compaq customers who analyze and validate Compaq Open-VMS strategies, believes Compaq and Intel are forming an alliance that will create a more stable high-end computing platform that will drive down the cost of high-end computing. Barr says Alpha will provide the basis of Intel's future developments in Itanium.

Barr reasons that Intel wants to use Alpha technology to bolster the delivery of Itanium, and this will proliferate use of Compaq's operating systems by standardizing on the Itanium chip set. "And by standardizing, you reduce costs." Barr called it a brilliant move.

"I'll tell you what, no offense to Mr. Gates, but I don't want to bank my business on Microsoft Data Center," Barr says. "I'm going to bank my business on known and trusted systems. Instead of just being able to run NT on a Proliant, you can also run Tru64, NonStop Himalaya, and Open VMS."

Memorial Hermann Healthcare System is a $2 billion not-for-profit community of 12 hospitals in southeast Texas and a Compaq customer for the past five years. The health-care system has more than 280 Compaq Proliant servers and four Alpha clusters running mission-critical clinical systems such as electronic medical records, radiology services, and nurse and physician clinical-data repositories. All of Memorial Hermann's servers run Windows NT 4.0 and will be migrated to Windows 2000 over the next 18 months.

Services represents 21% of Compaq's total corporate revenue, up from 15% in 2000. Global Services employs 38,000 people in more than 200 countries, up from 33,000 employees in 2000.

Barr predicts that the first Itanium chips running on Campaq's operating systems will debut by the end of 2002, or the beginning of 2003. He wouldn't speculate about pricing.

Another Compaq customer, EBS Partnership in London, is likely to take a different path for its next generation of IT. "We've found Compaq's leadership in the office server environment and its partnership with Microsoft to be advantageous," says Makhan Lalli, head of global operations for EBS, which moves $80 billion in currency daily along its global network. Although the firm mostly uses Compaq servers, there is a mixture of Dells and Compaqs on the desktop.

Lalli says EBS still relies heavily on Alpha and VAX-VMS platforms. This will change over the next two years as EBS migrates its online trading system from more than 1,000 VAX-VMS servers to a Java-based Sun platform. "Sun is truly a mission-critical platform. We wouldn't trust our trading system to an Intel platform," he says.

EBS's FXNet bank reconciliation system runs on both VAX-VMS and Alpha platforms. Lalli says if EBS continues to offer FXNet, the online brokerage will have to make changes in order to avoid migration to the Itanium platform. "Itanium is unproven in the financial-services industry, and we don't want to be the first," he says.

A third Compaq customer doesn't believe last week's Alpha announcement will have much effect. DirecTV Inc.'s relationship with Compaq dates back to the satellite television provider's origins in 1992. When DirecTV, now a $5 billion company, was setting up its business in El Segundo, Calif., to provide television programming in a digital format, the company invested in building satellites and broadcast facilities. The budding company contracted with Digital Equipment Corp. to provide network and systems integration services as well as 64-bit Alpha servers.

By the end of 1994, DirecTV had about 100,000 subscribers. A year later, the subscriber base had exploded to 1 million, then doubled to 2 million in 1996. Through 2003, DirecTV will outsource its subscriber-transaction management system to Compaq Global Services, which handles about 10 million bills per month for the fast-growing digital satellite television provider.

Mark Schubert, VP of enterprise strategies and architecture for DirecTV, doesn't believe Compaq's switch to Alpha technology will have much of an impact on his company because the satellite television company will likely be ready for a platform change before Compaq's support for Alpha is up. Says, Schubert, "Our main billing system will be replaced within a few years, and we had planned on migrating off Alpha at that point."