COMPAQ REVERSES PLANS FOR UNIX ON INTEL CHIPS

September 24, 1999

COMMERCIAL NEWS

San Diego, CA — Compaq, in a memo to its employees, announced it has dropped its plans to convert its version of the Unix operating system to Intel’s upcoming high-end processors.

As expected, Compaq Computer will focus its energies on developing and marketing its Tru64 Unix only for its own chip, the Alpha, not Intel’s future IA-64 family of chips.

The decision will mirror the end of the development of Windows NT and its successor, Windows 2000, for use on the Alpha chip, a move that led Compaq to dismiss about 100 engineers.

Though Compaq says the move shows it’s focusing sharply on the markets where it can stand out above its competitors, the move is an acknowledgment that it will have to scale back the grand expectations that came with the acquisitions of Digital Equipment Corporation in 1998 and Tandem Computer in 1997.

“Eighteen months ago [after Compaq acquired Digital Equipment Corporation], Compaq had grand ambitions to make Tru64 one of the unifying Unixes,” said Terry Shannon, author of the Shannon Knows Compaq newsletter. “Sorry. Didn’t happen.”

Tru64 Unix, formerly called Digital Unix, was one of several diverse and sophisticated properties the computer maker gained when it acquired Digital.

The move is a strong contrast to what some Compaq competitors have chosen.

Sun Microsystems and IBM will support their version of Unix on both their own chips and Intel’s IA-64 chips. Hewlett-Packard and SGI meanwhile, are abandoning their own chip lines over the course of the next few years. HP is moving its version of Unix to the IA-64 family, and SGI is dropping its own Irix and beefing up Linux for IA-64.

The first IA-64 chip, Merced, is due in systems in mid-2000.

Compaq is planning to cut thousands of jobs as part of a strategy to once again become profitable, but the scaled-back Tru64 development won’t save Compaq money or cost Compaq employees jobs, said Tim Yeaton, vice president of Compaq’s Unix division, in an interview with CNET News.com.

“We have concluded that we need to be focused…and to simplify the strategy,” Yeaton said.

Dropping development of Tru64 for IA-64 wouldn’t leave Compaq empty-handed for selling Unix on Intel’s new 64-bit chips. Compaq has said it will sell systems with Monterey, a next-generation version of Unix that will combine “flavors” from IBM, the Santa Cruz Operation, and Sequent.

Though the curtailed Tru64 plans recognize Compaq’s failure to spread their products as widely as hoped, “It’s my belief that they’re going to soldier on with Tru64,” said Terry Shannon, author of the Shannon Knows Compaq newsletter. Revenues for Alpha chip sales were up 16 percent in the last quarter compared to the same quarter the year before, he said, and attributed about half of that gain to Tru64 sales.

The demise of Tru64 for IA-64 is a dent in Intel’s plan to make the new chips the “unifying architecture,” in other words, the hardware on top of which all operating systems run.

Like HP, IBM, and Sun, Compaq is trying to link its Unix servers with e-commerce. “Compaq has a strong, reinvigorated commitment to Tru64 Unix as a key element of its NonStop eBusiness strategy,” Yeaton said. The company recently added another $100 million to a marketing push to get customers to buy Tru64 Unix and get software companies to write software for the operating system.

Compaq had a version of Tru64 Unix successfully running on an IA-64 simulator last February, and as recently as April the company said passing that milestone “reaffirms our commitment to offering [Tru64 Unix] on Alpha today and on both Alpha and IA-64 in the future.”

Though Compaq won’t sell a branded version of Tru64 for Intel chips, the company will continue with a deal to provide it for the China National Computer Software and Technology Service Corporation, Yeaton said.

Alpha will not be dropped

Despite recurring speculation that the Alpha chip is a luxury Compaq cannot afford, Yeaton reaffirmed his company’s commitment to produce future Alpha chips. Compaq is backing the chips for Tru64 Unix as well as its OpenVMS operating system, Linux, and its ultra-robust Himalaya servers.

One boost to Compaq’s effort could come with its Wildfire servers. The servers, due to debut soon, are able to use as many as 32 733-MHz Alpha 21264 processors and will give high-end systems from Sun, HP, and IBM a run for their money, Shannon said.

Compaq will show the systems at several conferences, including Telecom 99 in Geneva in October, Shannon said.

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