Executives at Sequent Computer Systems Inc were busy celebrating last month after winning round one of their head-to-head technology contest with executives at rivals Data General Corp. The contest centered on a new generation of high-end servers based on Intel SHV server high volume pentium processor quad boards, employing NUMA non-uniform memory architecture high-speed clustering technology. Both companies said they would ship systems before the end of 1996, but only Sequent was ready, delivering NUMA machines with up to 16 processors in December – the Data General machines will not now ship until mid-1997. In spite of its victory, Sequent is keeping surprisingly quiet. The formal announcement of its NUMA systems, it says, will not take place until February in a bid to avoid a slowdown in sales of its existing Symmetry server range. But why not use its lead to get ahead of the competition? Sequent told our sister magazine Computer Business Review that it has ample stocks of quad boards from which to build NUMA machines. And, as Sequent’s Steve Wanless points out, Symmetry is being phased out anyway. It will only account for around 25% of unit shipments and revenue by the end of the year, and further development could well be halted in 1998.
Gap in the product line
Perhaps a more pertinent reason for the delay is that replacing Symmetry will leave Sequent with a gap at the low-to middle- sector of its product line. The entry-level NUMA machine, notes Wanless, offers the same power as a midrange 8 to 10-way Symmetry machine. But he admits that the systems really come into their own at the higher end – four quads and above. But machines of that kind of power range currently only make up a quarter of Sequent’s unit shipments and a third of its revenues. While Sequent hopes that NUMA will help it rapidly expand this part of its business, it cannot afford to simply cede the rest of its customer base to rival suppliers. The solution to this problem, Sequent hopes, will come in the shape of a new range of what it describes as entry level midrange servers, based on technology sourced from Chen Systems Inc, a company for which it paid $2m and 300,000 shares in the latter half of last year (CI No 2,942). Sequent says it plans to announce the new systems sometime in the first quarter of this year, and will be targeting tasks such as intranet, local area network and application serving. The machines, which will run both NT and Unix, will also use Intel quad boards in up to eight-way configurations, but the systems will be based on commodity technologies bought in from other suppliers. Intel Corp , NCR Corp and Corollary Inc are all said to be potential suppliers. Sequent believes that, by taking a commodity approach to the new range, it will be able to compete more aggressively in the increasingly margin-constrained low-to mid-range server market. It hopes to boost its NT-derived revenues from 10% in 1996 to around 30% this year – although Wanless admits that there may be some attrition at the very low- end. In the revenue projection charts, NUMA systems will make up half of Sequent’s total sales for 1997. But all of this depends on Sequent’s ability to offer a full and up to date product line in the first half of the year – which may explain the slow introduction of NUMA. Sequent should report 1996 revenues of $616m, up 14% from 1995. For this year, it is targeting revenue growth of 30%, but achieving that goal will need careful management. The company will have to manage two major product transitions, introduce a new technology – NUMA – all while continuing to restructure its channels and set out to work with new partners.