Digital Equipment has taken its strongest stand yet against Intel, pushing its Alpha chip down in price closer to the Pentium and touting its Strongarm processor as a key platform for network computers.

The Comdex show will see results of both these strategies. Enorex will demonstrate its Ultra PC line, announced last week, which will feature PC form factors and interfaces but running on Alpha processors at up to 500MHz. The entry level system will run at 366MHz and offers 32Mbtes of Ram and a 2.5Gbytes hard drive for #2,200.

Digital has managed to drive down the price of the Alpha Risc processor through deals with volume chip manufacturers, notably Samsung - which achieved mass fabrication of the 500MHz version - and VLSI.

Support for standard PC interfaces also brings down the cost of the total system, since add-ons specifically built for Risc systems can be twice the price of PC devices. Digital, like Sun, will support the ATX form factor, to which the PC industry is moving this year from the 'Baby-AT' design.

Another important factor in the Digital bid for Intel's high end space is its FX!32 software, launched last month and available on the Enorex machine. This is a translation program that enables the Alpha to run Windows software written for Intel chips at the same speed as on a 200MHz Pentium. Native Alpha programs such as Microsoft Back Office run two to three times faster, claims Digital.

On the NC front, Digital's semiconductor division is pushing its Strongarm processor, which has been adopted as one reference platform by Oracle, for its NC specification. Digital has signed up Wyse Technologies and Korea's LG Electronics, both of which are launching Strongarm-based NCs at Comdex. Two smaller names, Boundless Technologies and South Africa's Alphavision, have also taken the chip design.

Digital denies that it will build its own NC, however. Despite the aggressive stance of the semiconductor chief, Leo Joseph - who claims a prototype NC based on Strongarm with Java OS and the Hotjava browser - Digital president Bob Palmer was more ambivalent. "We see there might be a market for such a platform," he said at the Decus user group in California last week. "We don't plan to build such an appliance but we hope other companies will buy our chips."

In a benchtest using the Caffeinemark 2.01 Java benchmark, Digital claimed a system based on the SA-110 Strongarm processor performed at 480, compared to 221 for a Pentium Pro system using Linux OS and Netscape Navigator. The Pentium system had 64Mbytes of Ram, as opposed to eight Mbytes on the Strongarm prototype.

Palmer repeated his assurances to Decus that Digital has most of its reorganisation behind it, at the company's annual stockholders' meeting in Boston on Thursday. He said Digital, after over three years of successive restructuring - and several similar statements from Palmer - will beat analysts' profit projections for the fiscal year. Analysts are currently predicting $1.04 per share. "We believe we can do better than $1. That's our objective, not our forecast," he said.

Wall Street took Palmer's statements sufficiently seriously to send the stock up over $2 to 33 3/8 on Thursday.

However, 40 employees from Digital's European headquarters staged a protest at the shareholders' meeting, claiming the cost cutting strategy has failed to improve Digital's fortunes and should be abandoned. Digital now has 57,000 employees, less than half the 130,000 it had in 1989. Derek Lee, head of the delegation of union representatives from six countries, said: "We're now in the downsizing business. We're no longer in the business of selling computers." His solution would be to expand in boom areas such as services - a policy Digital has actually tried in the past, with limited success.

Palmer outlined the key growth areas for 1997 as high performance 64-bit Unix systems, NT, and Internet applications.