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February 24, 1994

PROGRESS REPORT ON DEC LIFE-OR-DEATH ALPHA GAMBLE – AND IT ISN’T LOOKING TOO HOT

By CBR Staff Writer

When Digital Equipment Corp first talked about bringing out its Alpha processor, the industry was hopeful that the chip would be a success, with all the relevant customer advantages that this would offer; pricing would be forced down as the Pentium, the PowerPC and the Alpha all competed in the same market. Now, things are looking a little more unbalanced: Intel Corp’s stronghold on the iAPX-86 standard means that the Pentium is Fsafe. Meanwhile the PowerPC and the Alpha have to battle it out with Hewlett-Packard Co’s Precision Architecture RISC, the MIPS Technologies Inc R4600, and Sun Microsystems Inc’s 64-bit UltraSparc chip, which won’t even come this side of the counter until late in the year. The Alpha, offering blistering nominal performance at a price mid-way across the spectrum, ($400 approximately in 1,000-up quantities), doesn’t seem to have had much of a look in. In its fiscal second quarter results the company said that it still accounted for only 10% of all product sales.

Pigeonholed

Meanwhile Apple Computer Inc plans to ship at least one million PowerPC machines in the first year. DEC’s strategy around the Alpha is to pull a cloak of client-server technology around it, giving users the ability to use the chip at every level, including the middleware stage. Its recent raft of client-server announcements on February 8 segregated client-server systems into a number of frameworks, which included communications, applications product and data management. A gaggle of products was launched which were pigeonholed into each of these different categories, and thus DEC’s definitive client-server strategy was formed. One could say also that this strategy was a thinly disguised attempt to give the Alpha chip an identity. The Alpha is designed to power the next generation of machines that DEC desperately needs to attract existing VAX users. It runs OpenVMS, OSF/1 and Windows NT, and will run NetWare this year. There is also a version of Solaris ready and waiting just as soon as Sunsoft Inc sees a market demand. The problem is that fewer people than expected seem to be buying machines based on Alpha. Revenue fell 12% for DEC in the second quarter, and some of this was down to falling VAX sales. Rick Frazier, marketing manager for Alpha AXP systems at the company’s Computer Systems Group, points out that VAX users don’t change their systems every year, which may be true but still does nothing to explain away the fall in VAX sales.

By Danny Bradbury

The fact that VAX users are deciding to move on isn’t that worrying in itself. The fact that the figures show they’re not moving onto Alphas is, for DEC, very worrying indeed. Still, apart from DEC’s own Alpha computer sales, someone must be buying these chips to build their own boxes.Well, the good news is that some chips are being sold. Let’s look at some of the highlights. Ing C Olivetti & Co SpA is making Alpha machines. Cray Research Inc has sold two machines using 64 Alphas each. Elite Group Computer Systems Ltd in the Far East is making Alpha-based unbranded personal computer clones and the German retail manufacturer Vobis AG is making Alpha-based machines. There are some names there, not many of which are household. Touting Cray around as a flagship contract is all very well until one realises that the company has only sold 128 processors through the account, although it has announced orders for rather Fmore than that. Meanwhile, tecchies everywhere are champing at the bit to be let loose on Apple’s PowerPC units, and Pentium machines have been launched by… well… everyone. The Maynarder signed a couple of impressive deals for its own Alpha machines, but one vendor selling Alpha machines in a 20m contract to the Poles for a railway system (CI No 2,341) doesn’t equate to success in the wider scheme of things. To be fair, Frazier affirmed the company’s statement that Alpha sales for the second quarter were down because of applications delays. He also added that the number of applications has more or less tripled since the end of last year, to 2,500 or more. Th

is is encouraging, and should mean that revenues from Alpha machines will increase… assuming that chip revenues are driven solely by applications availability, which they aren’t. One of the problems with DEC’s chip is that it doesn’t support that many operating systems. It supports NT, which is effectively its main advantage. It also supports OpenVMS. The other operating system presently running on the processor is OSF/1, which only DEC is really pushing, and which isn’t directly System V.4-compliant, so that transferring most Unix applications to what DEC calls Digital Unix will be a little more difficult for developers. No wonder the third party development community was slow in getting its act off the ground. Meanwhile the Pentium’s operating system support is unchallenged thanks to Intel’s loyalty to the good old iAPX-86 standard, and the PowerPC will eventually support the following: System 7, AIX, NT, OS/2, Solaris and Taligent. Let’s hope that NetWare for Alpha hits the streets soon and that Sunsoft decides to get Solaris out, or DEC will have a lot of talking to do. Ironically, given the danger to Alpha represented by Intel, Frazier’s commitment to the Pentium is strong. He sees the two processors slotting together nicely in his cosy client-server strategy and points out that the DEC chip has more performance than the Pentium.

Jungle

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He grins smugly as he reminds Computergram of the 275MHz Alpha winging its way to customers in the next month. Even so, the relative lack of support from developers for the Alpha could mean that the firm ends up selling more Pentiums than Alphas anyway. Still, DEC has a low-end Peripheral Component Interface version now, (but then so does the Pentium), and it is planning low voltage versions of the chip for mobile computing. The problem is that no matter how good a technology is, if it isn’t positioned correctly it will die a death, in the same way that the Betamax videotape format did. If Alpha doesn’t succeed in this crowded market, DEC VAX users that are now running out of steam will be left with no DEC vines to swing to, and will grab onto someone else’s. This will leave not only DEC’s Alpha chip but also all the associated software and services that bring in the margins lost in a very dangerous jungle.

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