How May We Serve You?

Billions of dollars at stake in shifting server market

At a recent news conference in New York, Dell computer announced its readiness to ship Intel-based thin servers with the same direct sales derring-do that marked its successful assault on the PC market.

At that very moment in Dells Round Rock, Texas, headquarters, however, a server made by a competitor was churning out the thousands of orders from Dells $50-million-per-day Web site. That back-end server is not even built from the bread-and-butter Intel processors on which Dell depends for its core business. Rather, it is a Himalaya machine, made by Dells nemesis, Compaq Computer, which acquired the Himalaya line with its purchase of Tandem Computers.

The paradox of Dell, a leading Internet company, depending on Compaq back-office processing equipment at the same time it is entering the fast-growing server market illustrates how the order of server suppliers is being shaken up. And it raises new questions about which company, if any, will ultimately dominate the increasingly diverse market for the machines that power e-commerce.

High-end boxes from Hewlett-Packard, IBM, Silicon Graphics Inc., Sun Microsystems and Unisys, most often powered by Unix, still represent the bulk of the iron-horse servers that can be counted on to run 24/7 while hosting thousands of concurrent users.

But the sudden demand for both types of servers — consolidated and thin — is pushing server vendors out of their safe niches onto uncertain ground.

It promises to be a grueling race.