Restructuring - Compaq pulled NT on Alpha to push eight-way servers

Compaq's recent decision to ditch support for Windows NT running on its 64-bit Alpha processors has left analysts shocked.

Initially Microsoft was blamed. But the company absolved itself of all responsibility, saying that the decision was made entirely by Compaq. Mark Tennant, Windows NT Server marketing manager, said: "The move was purely a Compaq product strategy." Compaq said dropping NT support was a 'rationalisation', but emphasised that it will continue to champion NT on its Intel-based platforms.

The rationale behind the controversial decision, according to Dr Mitul Mehta, analyst at Frost and Sullivan, is due to the company's new management attempting to turn around a company that has been losing focus for the last six months. "The new management is rethinking everything and the big issue now is margins," he said.

He added that its acquisition of Tandem and Digital left Compaq seeking a focus as it had become bloated with three distinct product offerings: Intel-based servers and desktops, Alpha-based servers and workstations, and Tandem's high-end, fault-tolerant Himalaya servers.

In the face of falling profit margins, Compaq's board decided to rationalise.

First to go was the man who orchestrated the Tandem and Digital buyouts, CEO Eckhard Pfeiffer, who was forced out in April.

Compaq then set out on a plan to slim down by reducing its product range under the banner of ebusiness solutions - and the decision to drop NT support for Alpha was the most high-profile result. Earlier, the company had decided to axe some 8000 staff across Europe by the end of this year.

The decision to drop Alpha from NT means that Compaq's entire Microsoft offering, both 32-bit and 64-bit, will come from computers based around Intel processors, present and future. The company said it will reposition Alpha as a high-end platform for its Tru64 Unix.

Tom Yeates, director of Alpha enterprise servers within Compaq EMEA, said Alpha will also assume the architectural role of enhancing the performance of Compaq's Himalaya fault-tolerant servers. "This is a clear statement that we are supporting Alpha, but with the success of NT on Intel, and the fact that four-way and eight-way servers are delivering the performance customers want, we see no need for NT on Alpha," he said.

"There are a few big customers [who have invested heavily in Alpha and Windows NT] who we are working with to ensure that they are well supported."

Compaq said killing off its NT-based Alpha business, as part of an overall slimming down process, would not interfere with potential sales of its eight-way Intel ProFusion servers. It added that this was the best scenario for customers, removing any confusion over what systems they should buy.

It also differentiated Alpha as a Unix system and Intel as its NT platform.