Eye on the Competition

Up-to-the-minute news on Sun's rivals

June  1998
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AMD, IBM in talks with Compaq regarding Alpha chip

Boston (June 18, 1998) -- Advanced Micro Devices Inc. (AMD) is negotiating with Compaq Computer Corp. to license the 64-bit Alpha microprocessor architecture, an AMD spokesman in the U.S. confirmed today.

IBM Corp., meanwhile, is in negotiations to manufacture Alpha chips, but not to license the technology for use in its machines, according to Tom Beerman, a spokesman for IBM's Microelectronics Division. Beerman was elaborating on an earlier report from Infoworld Netherlands.

Compaq acquired the rights to the Alpha technology when the company bought Digital Equipment Corp. The merger was approved on June 11 by Digital shareholders.

AMD spokesman Scott Allen confirmed a Computerworld Hong Kong report earlier today that quoted a Compaq official speaking about the negotiations between the companies.

"We think we're getting closer" to an agreement for licensing Alpha technology, Allen said, adding that the tenuous nature of negotiations made it difficult to predict when the deal might be finalized. "My gut tells me it will probably be sooner rather than later."

Currently, Intel Corp. and Samsung Electronics Co. Ltd. are licensed to make Alpha chips.

Last October, AMD chief Jerry Sanders announced at the Microprocessor Forum that his company had acquired the rights to use the high-performance advanced bus protocol of the Alpha EV-6 for its K7 microprocessor, due out next year. AMD has its own microprocessor facilities.

Intel acquired Digital's Alpha production plant in a lawsuit settlement. The suit involved issues related to Intel's licensing of Alpha technology last year.

The negotiations between IBM and Compaq are linked to a U.S. Federal Trade Commission (FTC) requirement that Digital make deals with other vendors to produce Alpha. The commission approved Intel's acquisition of the Alpha production plant contingent on the chipmaker allowing other companies to manufacture Alpha microprocessors.

The FTC ruling is related to Intel's dominance in the microprocessors. The ruling actually named specific vendors that Digital had to negotiate with, including IBM, Samsung and AMD.

Although AMD's talks have gone beyond the manufacturing of Alpha microprocessors into the actual licensing of the architecture, IBM's negotiations have not. A report earlier today had incorrectly stated that an IBM spokeswoman in the Netherlands said the companies were negotiating the licensing of the architecture, according to Beerman.

"We're in discussions regarding serving as a second source or manufacturing partner for Alpha," Beerman said.

Finalizing those talks might require the transfer of licensing rights, but not licensing regarding the actual architecture for use in IBM machines, he said.

--Nancy Weil, IDG News Service


Compaq's Pfeiffer elaborates on merger

New York (June 16, 1998) -- Compaq Computer Corp.'s Eckhard Pfeiffer used his keynote speech at PC Expo to review his company's plans to go forward now that its merger with Digital Equipment Corp. is complete.

Pfeiffer's speech, which kicked off the three-day long trade show, was largely a reprise of remarks he made last week after the merger was finalized. Compaq's president and chief executive officer did make one announcement that the company is launching Compaq Online Services to support Internet use among small and medium-sized businesses.

The service includes partnerships with various companies that offer Internet-based software and involves security, delivery of digital business files, and connectivity.

Otherwise, Pfeiffer stuck closely to the theme begun last week, pledging that with its Digital merger, Compaq is prepared to deliver "the most rewarding buying experience" for customers as well as sturdy, reliable products, unparalleled support, and innovative technologies.

Compaq will be a leader in promoting standards-based computing with its research and products, Pfeiffer said, emphasizing his company's support for Microsoft Corp.'s Windows NT platform and the partnership between the two companies. Digital's Alpha 64-bit chip architecture also drew supportive comments, although he carefully noted that Compaq will be ready with products that run on Intel Corp.'s Merced chip when it is released.

"In this interconnected world, customer expectations have never been higher," Pfeiffer said, speaking without notes and without looking at the monitors in front of the stage.

Compaq is making "a commitment to sell the way you want to buy," be that through resellers, over the telephone or online, he said.

Pfeiffer claimed that the company is not complacent about the Digital customers it now will count among its fold, although he gave only brief mention to continued support for the OpenVMS operating system that many of those customers use.

"To those in the audience who are Digital customers, I want to assure you we do not take your business for granted," Pfeiffer said, adding that Compaq will work to earn their trust and will move slowly to that changes are made at a comfortable pace for users.

Not everyone in the audience believes that promise.

"I think he was talking a little fluff there," said Todd Eglow, a computer consultant at Internet AdCom Services.

He finds it unrealistic "that he said we're going to change but at your pace. They're going to set the pace," Eglow said of Compaq.

Pfeiffer talked a lot about servers during his address and Robert Geib, DTP services manager at Aeroflex Laboratories in Plainview, New York, didn't care for that emphasis. He would rather have heard more about Compaq's PC line and also said he found Pfeiffer's talk "scary" because it underscores how large the company has become.

"I'd like to see them as a PC company as opposed to an IBM," Geib said. "I always saw Compaq as the little guy."

But there were those who warmed to Pfeiffer's message and who look forward to the future as Compaq sees it.

"I was encouraged to hear him stress NT as the platform of choice for the future," said Peter Plumley, director of computer and information technologies at Syracuse University.

Although Plumley also found the speech "trite," he also said he is hopeful that Compaq will make a big push for Digital's Unix operating system to run directory services for NT and liked the overall server platform message.

"He is actually charting a path that is going to work," Plumley said.

--Nancy Weil, IDG News Service. Rebecca Sykes from IDG News Service contributed to this report.


Digital shareholders OK Compaq acquisition, deal to close

New York (June 11, 1998) -- Digital Equipment Corp. shareholders voted overwhelmingly in favor of the company's acquisition by Compaq Computer Corp. at a special meeting held today, according to a Digital spokesman.

The deal is expected to close later today, and Compaq Computer Corp. chief executive officer and Chairman Eckhard Pfeiffer is expected to detail the merged company's plans tomorrow at a press conference in New York.

The new management team in any case will not include Digital CEO, Chairman and President Robert Palmer, who announced his resignation yesterday.

About 700 investors, mainly individual shareholders who were not Digital employees, attended the meeting in person. Of the 109 million shares actively participating in the voting, 107 million were in favor of the acquisition, according to the Digital spokesman.

The U.S. Federal Trade Commission (FTC) ended its review of the acquisition and the waiting period under the Hart-Scott-Rodino Act has expired, so everything is set for the close of the deal, which was announced in January and is valued at US$9.6 billion.

As a result of the vote today, Compaq will issue approximately $4.5 billion in cash and approximately 141 million shares of Compaq stock, based on an exchange rate of $30 in cash and 0.945 shares of Compaq stock for each common share of Digital, Compaq said in a statement.

The merged company plans to compete head-on with IBM Corp. and Hewlett-Packard Corp. in offering users the gamut of computing products and services -- from PCs up to mainframes. The new company will style itself as a complete solutions provider for users. It now has the resources of Digital sales and service troops, the range of its hardware, as well as the high-end computing line of Tandem Corp., which Compaq bought last year, Pfeiffer has said.

--Marc Ferranti, IDG News Service


Digital's CEO to leave as part of management shuffle

San Francisco (June 10, 1998) -- Robert Palmer, chairman, president and chief executive officer of Digital Equipment Corp., said today he will leave the company after the completion of Digital's proposed merger with Compaq Computer Corp., which is expected tomorrow.

Palmer's announcement apparently was timed to coincide with a statement from Compaq today outlining management changes that reflect the integration of Compaq with Digital and Compaq's Tandem division.

In a letter to Digital employees, 57-year-old Palmer offered no reason for his departure. A Digital spokesman said Palmer plans to remain at Digital to see the company through the end of its fiscal year, which ends July 31, and to oversee the merger, the spokesman said.

"His decision to leave was a personal one," the spokesman said. "He has no plans to retire, and there's no shortage of other things out there for him to do."

In a statement, Eckhard Pfeiffer, Compaq's president and CEO, praised Palmer for guiding Digital through "one of the most difficult and important periods in its history."

Palmer joined Digital in 1985 and became vice president of its semiconductor operations the following year. He also led the company's manufacturing, logistics and component engineering divisions, before becoming president, CEO and a member of the board of directors in 1992. He was elected chairman of the board in May 1995. Before working at Digital, Palmer held executive positions at United Technologies Corp.

Compaq announced its intention to acquire Digital in January for $9.6 billion, creating an IT giant capable of delivering everything from low-cost desktop PCs to high-end, enterprise systems based on Digital's 64-bit Alpha processor.

Digital's shareholders are due to vote on the merger tomorrow at their annual meeting. Holders of at least two-thirds of the company's common stock must vote to approve the transaction before it can go ahead, according to regulatory filings made by the company.

Among other senior Digital officials who retained their jobs in the management reshuffle outlined by Compaq today include John Rando, senior vice president of Digital's services division, who will now oversee both Compaq and Tandem's service divisions.

Earl Mason will serve as the new company's vice president of finance and administration and chief financial officer. Enrico Pesatori, who was president of Tandem, was made senior vice president of marketing at Compaq. He will report to Michael Heil, who will be Compaq's senior vice president and general manager for worldwide sales and marketing.

Digital's manufacturing operations will be integrated into Compaq's manufacturing and quality division, to be headed by Greg Petsch, Compaq said.

--James Niccolai, IDG News Service

NEC claims world's fastest supercomputer with SX-5 series

Tokyo (June 4, 1998) -- NEC Corp. will begin delivery of a new series of supercomputers in December of this year, the company announced today. The SX-5 series will be the world's fastest supercomputer with a maximum processing speed of 4 trillion floating point operations per second (teraflops), the Japanese vendor said.

The SX-5 series will be available in December of this year for a starting monthly fee of 20 million yen (US$145,000), NEC said.

The system uses NEC-developed middleware called SPINEware that enables Unix machines and PCs to control applications running on SX-5 machines, the Japanese vendor said.

Each node is powered by CMOS (complementary metal oxide semiconductor) large scale integrated chips based on a 0.25 micron design rule. The nodes also use 64M-bit synchronous DRAMs (SDRAMs) for memory, NEC said.

--Rob Guth, IDG News Service


U.S. FTC clears Compaq-Digital merger

San Francisco (June 3, 1998) -- Compaq Computer Corp. and Digital Equipment Corp. today announced that the U.S. Federal Trade Commission (FTC) has closed its review of Compaq's pending acquisition of Digital and that the waiting period under the Hart-Scott-Rodino Act has expired.

Although taking a step closer to finalizing the $9.6 billion deal announced last January, the two companies still need the approval of holders of two-thirds of Digital's common stock. A special meeting of shareholders will be held on June 11, 1998, in Westford, Massachusetts.

Subject to the receipt of shareholder approval and satisfaction of other customary conditions, Compaq and Digital currently expect the transaction to close shortly after the special meeting next Thursday, the companies said today.

--Torsten Busse, IDG News Service

Ross Technology to cease operations

San Francisco (June 1, 1998) -- SPARC clone maker Ross Technology Inc. is going out of business.

The company today released a statement that it will begin an "orderly shutdown of the Company's operations, while continuing its efforts to facilitate a sale of the remaining, smaller business."

Ross, a 60% Fujitsu-owned maker of 32-bit SPARC computers had been in financial trouble for over a year. Ross executives say the company's difficulties stemmed from a quicker-than-expected conversion by Sun's installed base to 64-bit UltraSPARC systems.

Ross had hoped to build a business by continuing to develop 32-bit systems for Sun users, after Sun had switched to UltraSPARC. But the Austin, TX-based company became a victim of both drastically reduced Unix system prices and the rapid penetration of Intel-based systems into the low end of the workstation and server markets.

Dataquest Principal Analyst Peter ffoulkes says that, given the intense competition in the industry, "It's difficult to see where the [Ross] business would have gone. I think they've just been caught in what is fundamentally an impossible situation."

Ross is currently at work on a 64-bit RISC processor called Viper, but there is no clear plan to bring the chip to market, according to a Fujitsu spokeswoman.

About half of Ross's work force will be laid off over the next eight weeks, and operations are expected to wind down through to the end of 1998, as the company shops around for a buyer.

--Robert McMillan, SunWorld. Rob Guth of the IDG News Service contributed to this story


HP targets IT service management at OpenView Forum

Boston (June 1, 1998) -- Hewlett-Packard Co. today used its annual global meeting of OpenView customers to announce new products related to IT service management.

The company also announced a partnership with Netscape Communications Corp. and the expansion of its partnership with Intel Corp.

Among the announcements today at OpenView Forum '98 in Seattle were the following:

The HP OpenView Forum '98 continues through Friday.

--Nancy Weil, IDG News Service


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