Compaq Computer's decision earlier this year to discontinue Windows NT on its Alpha servers will cost the company up to $100 million in the fourth quarter and an additional $100 million to $150 million in the first quarter of 2000, according to a filing with the US Securities and Exchange Commission (SEC).
The charges will be taken to cover costs associated with the trade-in programs and migration services put in place for users who have already purchased Windows NT-based Alpha servers.
Compaq announced its decision to withdraw NT support on Alpha at the end of August, citing low customer interest and sales volume.
Going forward, the company said it would focus all its Windows NT efforts on its Intel-based ProLiant servers, while the high-end Alpha server line would be reserved mainly for OpenVMS.
Following that decision, Compaq announced a series of programs to help existing NT-on-Alpha customers migrate to ProLiant servers or Tru64 Unix, OpenVMS or Linux environments.
Apart from information filed in its 10-Q SEC filing, Compaq so far has made no public mention of the costs associated with the move.
"It was a hard decision they had to take ...but Compaq needed to rationalise its product lines," said Richard Chu, an analyst at S. G. Cowen & Co. in Boston.
"Compaq needs to develop a critical mass on their Unix enterprise platforms. They can't do that while continuing to [support development on] several permutations of operating systems and platforms,'' Chu said.
The eventual tab will obviously depend on the number of customers that need to be migrated to other platforms or have their systems replaced, said Terry Shannon, editor of "Shannon Knows Compaq," an Ashland, Mass.-based newsletter.
"On the surface, the [costs] look rather high,'' Shannon said. "But Compaq must have evidently thought it would cost them less to do this than to continue supporting NT on Alpha."