Compaq’s June announcement that it will cease production of the Alpha chip in 2004 rated at least an eight on the Richter scale, says IT analyst Terry Shannon.
But Shannon’s prognosis is positive as long as Compaq can overcome the FUD (fear, uncertainty and doubt) thrown up by competitors capitalising on initial user shock.
“After saying Alpha is the greatest for 20 years, it’s a huge marketing challenge to have to reverse this,” he says.
Shannon cites technology and economics as the reasons why Compaq will win by moving from Alpha to Intel’s IA-64 platform. Compaq gets to simplify and standardise on a single architecture which gives focus and cuts manufacturing cost, as well as R&D spending and time to market. Many people are being freed up for systems development work, he says.
“Despite being the fastest processor in the world, Alpha performance differentiation was diminishing and the Alpha business model was uneconomical — each chip had a $US500 overhead. Compaq could save $US150 to $US200 million a year by not developing its own processor architecture.” Looking at the road maps for the IA-64 post-2004, Shannon believes the outlook for the chip’s performance is excellent.
The announcement also immediately improved Compaq’s relationship with Intel, opening the door to more collaboration on products and technology.
Compaq has begun porting its operating systems to the Itanium processor family. Intel gains three more enterprise-ready OSes — Tandem NSK, Tru64 Unix and VMS — plus VMS software for Itanium processor family servers. The move diminishes Microsoft’s dominance on the platform, which is currently limited to Windows, Linux and HP-UX.
Shannon says historically Compaq and Digital independently before it have successfully made the transition from VAX to Alpha, MIPs to Alpha and CISC to RISC in the past. “It needs to convince customers and ISVs [independent software vendors] that it will work this time. As usual the devil is in the detail.”
Shannon also thinks Compaq needs to do more work marketing itself as a supplier of enterprise systems and not as a PC maker.