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HP’s AlphaServer Sales Continue Steep Decline

November 28, 2004

The vendor’s expected OpenVMS Itanium version should be death knell

THE VENERABLE AlphaServer is fading as a source of revenue for Hewlett-Packard Co. as the company readies the general release of OpenVMS, one of Alpha’s primary operating systems, for its Integrity server line.

In HP’s fourth quarter, which ended Oct. 31, AlphaServer revenue fell 27%, the vendor reported last week. That followed a 32% revenue decrease in the prior quarter. An HP spokeswoman blamed the decline on users moving to the Integrity line, which is based on Intel Corp.’s Itanium processors.

HP plans to stop making the AlphaServer at the end of 2006 but will support the systems through 2011. The company said Integrity sales are up 5% from a year ago and represent 16% of its businesscritical server revenue.

Varied Responses

Customers appear to be responding in a number of ways – not simply by buying Integrity servers. David Turner, sales manager at Island Computers US Corp., an AlphaServer reseller in Savannah, Ga., said sales of refurbished systems by his company are up 150% from last year.

Used AlphaSevers are gaining ground over new systems because users “don’t want to spend three times the money for a system that might be obsolete in three years,” said Turner. Sales of spare- parts kits are also rising, he said.

Nevertheless, some users are still buying new systems. Lee Mah, an OpenVMS systems administrator at a Canadian health care provider, said his employer recently purchased two 16-processor GS1280 AlphaServers. Mah said the health care provider couldn’t wait for the Itanium version of OpenVMS, because it needed additional server capacity right away.

Mah expects to use his new AlphaServers for about three years before growth of the 29,000-employee organization forces an upgrade. At that point, his employer will have to decide whether to stay with OpenVMS, he said. But “other platforms don’t have the reliability that OpenVMS has had for our applications,” which include mostly custom-built software and third-party payroll processing, said Mah.

HP is expected to announce the availability of an OpenVMS implementation for Itanium as early as next month.

Tru64 Unix, also used on AlphaServers, is being phased out, and some of its features, such as TruCluster, are being added to HP-UX, another bad sign for AlphaServer users. “If you are running Tru64 Unix, you are dependent on Alpha,” said Terry Shannon, an Amarillo, Texas-based consultant and publisher of the newsletter “Shannon Knows High Performance Computing.”

HP’s latest financial results showed a rebound after a dismal enterprise server revenue performance in the quarter that ended in July, when sales declined by 5%. Following those results, CEO Carly Fiorina fired three executives.

HP customers at HP World in August reported late deliveries and other supply problems. The company blamed the problems partially on an internal systems migration.

One of the users who had problems was Kees denHartigh, a systems and network analyst at the University of Alberta in Edmonton. He said the university ordered one storage array, but two were delivered.

But the university was happy with the initial storage array and “decided we could probably use two anyway,” said denHartigh. “We ended up buying it.” 50939

HP Results

* Overall revenue at HP increased 8% to $21.4 billion in the quarter that ended Oct. 31.

* Enterprise storage and server revenue:

Q4: $4.1 billion; up 7% year over year

Q3: $3.4 billion; down 5% year over year

Copyright Computerworld Inc. Nov 22, 2004




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