Compaq's abrupt termination of the development of Windows NT for its Alpha platform has left it needing to appease customers which had invested in this technology.
Gareth Cadwallader, head of Compaq UK’s newly formed enterprise solutions and services group (ESSG), has spent the last few days in meetings explaining Compaq’s actions to customers.
They naturally wanted to know why, despite previous assurances, Compaq has chosen to discontinue development of the Alpha platform beyond NT4 service pack six [due later this year]. (See Network News 8 September)
"There are customers in the UK, but there aren't many, so it is possible and indeed necessary that we tackle each one individually. They are all in different stages of their investment cycle with NT," Cadwallader told vnunet.com. "Some of them they might have one NT/Alpha server somewhere, but others may have their whole strategy based on it.
"Over the next six months Compaq will working with each of those customers to work out what they do now. We hope that some of them move across to the Intel-based ProLiant range to take advantage of the potential performance of 8-processor and 16-processor [due early next year] servers.
"For other customers we will have to come up with other ways to find ways of supporting them for a longer period," he added.
Customers had heard the news through leaks to the press, rather than from Compaq. Cadwallader did not think this was satisfactory.
Responsibility to customers
With most customers he found an understanding of why the decision was made, and they had shown a surprisingly willingness to look forward and let Compaq guide them out of their dilemma.
"I'm expecting to do whatever it takes to protect our customers' investment. We have a responsibility to help them through it and we will help them through it."
It was too early to gauge whether customer migration of NT servers running Alpha systems on Alpha to NT on the Intel platform could influence a similar migration of Unix servers on Alpha to Unix on the Intel platform. "It doesn't appear to be on the radar," he argued.
In the server market Compaq now wants to focus its attention on two areas - Tru64 Unix on Alpha machines, and NT on multi-processor Intel machines.
"The Unix market is consolidating, the winners will win more and the losers will disappear. You have Sun and HP out on their own, then a big group, with IBM's AIX and Tru64 as the leaders of the group. We need to separate ourselves from the group and catch up with the leaders and maybe displace one of them.
"In the Proliant Intel server market we are getting phenomenal performance levels as we move from four-way Xeon to eight-way and 16-way in the New Year. This is a new server opportunity: we have to catch the same mind-share with this technology as we did with the [entry-level server] SystemPro.
“At the low end of the market we expect the same commoditisation that we have seen in the desktop space. We have to lead in that change and not get defensive," he explained.
The merger of the enterprise product with the services divisions into the enterprise solutions and services group (ESSG) represented Compaq's recognition that it needed to present a coherent strategy to both customers and ISV and channel partners.
ESSG has only been in existence since July. Before that it was four separate divisions: the enterprise product group (all Compaq's servers and storage) and the three services divisions - customer services, operations management services, and networking and systems integration. It accounts for two thirds of Compaq's UK revenue.
The goal for ESSG is to facilitate the formation of partnerships between independent software vendors (ISVs), system integrators and planned design manage support (PDMS) specialists to create product bundles tailored to particular markets.
For example, one solutions matrix will develop a churn management offering for the Telco industry. The initiative will be lead in the UK by Mike Hender, director of non-stop ebusiness.
Cadwallader argued that this would amount to more than vertical segmentation of the sales force and marketing efforts to focus on particular industries.
Some ‘value chains’ would be industry specific, but many, like CRM, data-warehousing, data-mining knowledge management, business intelligence and ecommerce could be horizontal. Despite being industry buzzwords, these markets represent huge market potential.
"Whether or not they're buzzwords, this is what CIOs or IT directors are planning to do. This is what they are spending their money on once we get through the you know what [Year 2000]," he explained.
Compaq will seek out partners based on expertise and a record of success in the target market. Where one partner is a natural leader in the partnership, Compaq is prepared to take a facilitator’s role.
"There are situations where customers have chosen a system integrator and expect a choice of platform. Equally there are a number who have standardised on a hardware platform who like a choice of system integrator or ISV. We will be able to take the initiative where there is not a clear leader," said Cadwallader, "We think Compaq can play a powerful role as the grit that people build the pearl around.”
Restructuring of services
Despite well-documented restructuring of Compaq worldwide, Cadwallader claims that the UK, one of the strongest-performing regions, has survived without considerable redundancies.
In Services, growth in revenue and head count had and would be maintained, even though offices had been closed, where there was geographical duplication. There would be services people changing their expertise.
"In the services area you are always rebalancing – in the past we have moved from a focus on VAX skills to NT and Tru64 skill. Next year we’re not going to need all these Year 2000 consultants: most of those will go back to what they were doing before," he said.
Cadwallader recognises that corporate customers prefer to work with services partners that support other vendors' products. He does not anticipate that the merging of the services operation into the product division will become an issue.
"In UK corporate sector the multi-vendor proposition is the only one they will listen to. They want a single source service provision; they don't want to deal with 30 or 40 services providers. In any customer engagement of any size I don't think customers are in any doubt that we have that multi-vendor capability.
"Some of our top customers don't buy Compaq at all. Of the top 50 Compaq services customers, 5 to 10 per cent, Compaq hardware is not on the preferred vendor list. We have not lost one of those accounts since the Compaq acquisition. It doesn't seem to be an issue," he added.
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