Unisys Has High Hopes by Aiming Low

Three years ago, Unisys broke free of its heritage as a stodgy mainframe
company by redefining itself in the high-end computing market with the
introduction of the ES7000
family of Intel-based servers running on Windows.

Capitalizing then on the greater stability of Windows 2000, Unisys was
able to make some inroads in the high-end server market due in part to the
so-called “WinTel” architecture. With the power of 8- to
32-way processing, Unisys signed on some customers that wanted to move away
from proprietary RISC/Unix-based systems.

This time around, Unisys is taking aim at the low-end market. On Monday,
the Blue Bell, Pa.-based company will introduce the first expansion to its
ES7000 line of Windows-based servers. Timed to capitalize on the marketing
push behind the April 24th launch of Windows Server 2003, Unisys is making
available the ES7000/500 models featuring the same Unisys Cellular
MultiProcessing (CMP) server technology powering mainframes. And while the
servers have the capable of TPC-C benchmarks of 118,381.38 transactions per
minute (tpmC) at $5.56/tpmC, making it faster than the 8-way server
offerings from HP and IBM, the 500 line starts at a base of just
4-processors at a price of $35,000.

“For some people, it didn’t work out that well. It’s not economically
attractive,” said Mark Feverston, vice president, Unisys Enterprise Server
Marketing, referring to the previous ES7000 line.

The ES7000/500 series is Unisys’s answer to IBM’s x440 eSeries
line
, which was introduced a year ago. IBM’s so-called “building block”
servers also features the “pay-as-you-grow” modular concept with prices
starting at $18,000 for a smaller two-way server.

To be sure, Unisys officials contended the low-end initiative isn’t being
launched because of a lack of demand for the more complex machines. During a
telephone interview, Feverston explained that 75 percent of all ES7000
systems that have shipped go out the door with 16 or more processors. But
analysts believe that statistic is more of a function of the large
enterprise-class customer base that Unisys has traditionally courted.

“The reason that people were only buying big systems is if they weren’t
buying big systems, frankly they had better options,” said Gordon Haff,
senior analyst at Illuminata.

And to that extend, Unisys may have resolved one of the biggest issues
with the traditional ES7000, which is the high upfront investment costs.
“One of the attractive things with the x440 is it is very modular and you
can buy as you go. And particularly with something like a high-end Windows
system … where Windows is still thought of as more of a distributed OS …
there is a comfort level for customers to take it slow and buy it
gradually,” Haff told internetnews.com.

Unisys officials believe they can succeed by targeting their sales
efforts in the right directions. Feverston said the three areas where they
are concentrating on is in the consolidation market, database server market
and in the growing area of business intelligence — which has long been a
stronghold of Unix-based systems.

And in this arena, Feverston believes that, with its WinTel arsenal,
Unisys will have success luring customers migrating away from Unix. Even
that other Unix alternative (namely Linux) can’t compare with
a high-end Windows environment for Unisys’s customer base, he said.

“The kind of customers we attract are people that need sophisticated,
mission-critical enterprise applications,” the Unisys VP explained. “We
believe Linux does not have the enterprise capabilities. It does not have
the ecosystem around it.”

That ecosystem Feverston is referring to are the independent software
vendors, systems integrators, integration skill sets and utility vendors
that support the WinTel platform.

“When you see all those kinds of organizations come together around
Windows, that’s the biggest ecosystem on the planet. If I’m moving away
from Unix, I don’t want to compromise. What they see is there is no
compromise going to the ES7000. We really think we are going to have an
impact on Unix.”

That said, Unisys may still find it difficult to tap the low end market,
the analyst said.

“It’s going to be tough for Unisys to make a big impact in that broader
market…it’s still relatively high-end in the scheme of things,” Haff
explained.

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