Hewlett-Packard’s $21 billion acquisition of Compaq sent shivers through an industry worried about change. But the real changes with Compaq lately have only served to focus its life sciences gaze.
Its announcement that it would discontinue the Alpha chip caused concern, but effects won’t be felt for some time. “We’ll be selling Alpha chips for at least another six or seven years,” says Ty Rabe, director of Compaq’s high-performance technical computing group, who adds that a few more generations of Alphas are slated to be released. “And we’ll support them for at least five years beyond the production date.”
Basically, Compaq realized that Intel’s Itanium chip would eventually perform better than the Alpha — and with Intel’s better economy of scale, there would be no way to compete financially. So Intel acquired the Alpha technology and will incorporate it (as well as the hundreds of engineers who developed it) in phases. The improvements to Itanium, Rabe says, should be in memory, bandwidth, and parallel processing power — Alpha’s main strengths. By 2003, Compaq will support Itanium systems with Tru64 Linux. And when the transition from Alpha to Itanium does occur, it’ll feel to customers like just another update to the Alpha, say Compaq officials.
“Designing microprocessors is not really a core competency of Compaq,” Rabe says. Eliminating Alpha was a way to simplify the company’s product line and eliminate the design cost. It also lined up the company with HP’s platform. In the meantime, he explains, “We’ll be focusing on differentiating our products at the system level” instead of the microprocessor level. That’s made easier by the popularity of clusters and parallel computing, which have reduced the importance of individual processor performance.
Without processors to worry about, Compaq can focus on services as a new company angle. According to Rabe, working closely with customers will be emphasized more now as the company tries to create more personalized solutions to compute problems.
Compaq’s been plagued by broad layoffs this year. The latest figure is 8,000, up from earlier estimates of 3,000 or 5,000. And with the merger, 15,000 layoffs are expected between HP and Compaq. At presstime, none of the layoffs was expected to affect the life sciences group, which is actually adding a few people. The life science emphasis is important to Compaq, which hopes to be in a strong position with the industry when the market picks up. Rabe says the company has at least 20 significant genomics prospects in the Boston area alone, with similar numbers in California, the DC area, and New Jersey.
— Meredith Salisbury