Compaq will transfer its entire 64-bit family of servers to Intel's Itanium microprocessor architecture by 2004. Also as part of the agreement, Compaq will sell key intellectual property behind its Alpha processor business to Intel, the companies announced Monday in a joint telephone press conference in New York.
Compaq currently offers high-end servers based on Intel, Alpha and MIPS processor architectures. Monday's announcement means that Compaq will standardise on one architecture.
"There will be a single base line across all our platforms. We are standardising on the Itanium microprocessor line," said Compaq Chairman and Chief Executive Officer (CEO) Michael Capellas. "We are definitely looking at a common server architecture down the road."
Before the transfer is completed in 2004, Compaq will release its upcoming next-generation Alpha processor known as EV7, while designing and building NonStop Himalaya servers that use MIPS chips, Capellas said. "There will be two more performance increases within that time," Capellas said.
Under the nonexclusive, multi-year agreement, Compaq will transfer Alpha tools and engineering resources to Intel, along with granting licenses to Compaq's Alpha microprocessor technology and compilers, Capellas said. "This is great for efficiency. It allows everyone to do what they do best, and it allows us to simplify our product line," Capellas said.
At least one Alpha customer was concerned about the announcement. "Of course I'm a little worried. I want to make sure my investments are protected," said Eric Thomas, founder and chief executive officer of L-Soft International. L-Soft runs and maintains e-mail list applications, including the widely-used Listserv list management program.
"It may not be a bad thing, because I think Intel will pour a bunch of money into it," Thomas said. But L-Soft's Thomas is not planning on leaping onto the Itanium bandwagon just yet. "It's too early to say if we'll switch. I want more details," he said.
Intel's purchase of the technology could also be beneficial to Intel if the company incorporates it into its next generation of 64-bit processors, Thomas said. "My only real worry is that there will be so much focus on the Windows world that (Compaq) might lose focus on Unix and VMS."
From Intel's side, the purchase gives Intel technology it can use to enhance its Itanium architecture, Thomas said. As far as Compaq's side of the deal, they either sensed they didn't have financial resources to win a battle against IA-64, or they felt that they could really dominate the server market with the help of a larger player, he added.
"We're not releasing financial details on the transaction," Capellas said. Intel President and CEO Craig Barrett added, "Clearly, we're talking about a significant amount of money here."
Though he repeatedly declined to "go into specific numbers," the agreement will include the transfer of some engineers to Intel, Capellas said. Over the next couple of years, several hundred Compaq microprocessor engineers, compiler experts and infrastructure employees will be offered employment with Intel, both Capellas and Barrett said.
"Intel gets a whole lot of very smart engineers in the deal," said Nathan Brookwood, principal analyst with Insight 64 in Saratoga, California. Included with that are engineers working on a technology called SMT (Simultaneous Multi-Threading), which allows a single processor to appear as multiple processors, each working in tandem. Compaq has been working on this technology for some time now, while rumors have been circulating that Intel has been looking into using the technology in future releases of its 32-bit architecture, Brookwood said.
"We are not buying the Alpha chip product line," stressed Paul Otellini, executive vice president and general manager, Intel architecture group. Furthermore, because the arrangement for buying Compaq's intellectual property was nonexclusive, neither company believed the deal would pose any regulatory issues, Barrett said.
"We believe this is just an extension of competition in the marketplace," Capellas said.
Both Barrett and Capellas said the arrangement would provide its customers with unparalleled price and performance. "This agreement is more cost effective for the customer," Barrett said.
Companies using code written for the Alpha processor will now have to recompile it to run on Intel's Itanium platform, said Brookwood. "On one hand, I'm sure that it's going to represent more work to those customers than if Compaq continues to come out with new versions of Alpha, but I think that most of them realized the economic constraint of offering a proprietary processor can be daunting."
However, Compaq is giving people plenty of time with this announcement, Brookwood added. And even though customers will have to recompile software, Compaq's support of its Tru64 Unix operating system on Itanium architecture means that most software investments will be preserved. "They'll have to recompile, which is an annoyance, but they won't have to re-write," Brookwood said.
"Had they waited, then found in three or four years that they would have to move quickly, it might have been a little more chaotic," he said.
Compaq will now have to offer a new version of its middleware applications, which will run on Compaq's Tru64 Unix operating system on the Itanium architecture, Brookwood said.
Barrett said that the deal will give Intel "access to some really super engineering and engineers," while allowing the "Itanium microprocessor family to move more quickly" into the super computing and enterprise server space, Barrett said. "This deal allows us to rapidly move into the backend of the data solutions market."
As for Compaq, there will be significant cost improvement for the company while also creating "increased volume for us," Capellas said. Furthermore, Compaq would increase its savings since it "will not have to continue to invest in the core infrastructure," Capellas said.
According to Capellas, "Intel architecture is the best choice for the enterprise market" and the deal will free Compaq to focus its energy on system engineering and the services that can be packaged around it.
High-end clustering and parallel computing will in the future be a key aspect of the market, Capellas said. "Part of our agreement is to jointly look at parallel computing which is very, very important," Capellas said.
Compaq will immediately begin to port Tru64 UNIX, OpenVMS and NonStop Kernel operating systems and development tools over to Intel's Itanium line, the companies said.
Hewlett-Packard (HP) has made clear it has similar intentions with its own proprietary PA-RISC processors, with one difference. "HP offers its customers binary compatibility, where running these today, you don't even have to recompile," Brookwood said. Customers will "probably want to recompile eventually because you'll get some performance benefits from that."