Dell, HP Duke It Out in Workstation Market

Amid growing competition in the workstation marketplace, Hewlett-Packard Co. (HP) has released three new members into the Kayak line of Intel-based Windows NT workstations. But all the buzz lately in the market has focused on the recent success of Dell Computer Corp. (Round Rock, Texas,

Despite Dell's marketing blitzkrieg to claim pole position in the expanding workstation market, some industry analysts believe that HP is still the market leader. "Dell is not the leader, not by a long way. It's just these ... lies in statistics and depends what you count as a workstation," says Peter ffoulkes, workstation analyst with market analysis firm Dataquest Inc. (San Jose, Calif.). "Dell's claims are based on a looser definition of the market than we use, so it includes the OptiPlex line."

But whether Dell is actually number one or not is hardly the issue. More important for HP, Compaq Computer Corp. and all the other workstation vendors is that Dell has earned a presence in this market. "There's no doubt that Dell is growing tremendously in the workstation market. They're going to be a major force," adds ffoulkes.

Dell's direct selling business model has proved profitable in the workstation market as well as the PC arena. On the contrary, HP and Compaq both have an Achilles' heel: channels. Because it takes longer to get product to channels and then get it out, Dell has been able to deliver faster than its competitors. In fact, on June 30, when Intel Corp. announces the Xeon chip, Dell systems running the Xeon will be available for purchase. "The time-to-market advantage has helped us gain market share," says Linda Hargrove, vice president, Americas, workstations, Dell. "Time to market in the workstation space has traditionally been an indicator of who will be the market-share leader." Indeed, Dell scooped HP by about 45 days with workstations running Intel's 440BX chipset. Those workstations were released in the first quarter of this year, the first time Dell outsold HP or Compaq. And industry analysts have concluded that HP's new models were released in direct response to Dell's success.

HP's recent workstation releases are made up of three lines: the low-end Kayak XA, the midrange XU and the high-end XW. The Kayak XA-s is the first of HP's XA series that runs two processors. The system ships with either a 350-MHz or 400-MHz Pentium II processor, up to 768 MB of memory and a Productiva G100 graphics board from Matrox Graphics Inc. (Dorval, Quebec, The XU workstations will house a Matrox Millennium II graphics board, and have greater capability for memory and hard drive expansion. At the high end, HP's Kayak XW workstations include the same processors, but ship with HP's Visualize fx4 graphics subsystem. All three workstations ship with a 100-MHz system bus, thus enabling the processors to communicate with other components faster than the 66-MHz buses that previous versions of the workstations shipped with.

Dataquest's ffoulkes believes that HP's recent announcement has greater market implications than merely providing the world with three new workstations. "If we step back for a minute and look at the UNIX world, there is a three-level strata approach to workstations that includes high end, midrange and lower end. Well, the same thing is beginning to happen in the Intel-based NT workstation market," says ffoulkes.

Both HP and Compaq released workstations based on Intel's 440BX chipset only a month prior to Intel's announcement of the Xeon chip. Xeon will no doubt slip into high-end workstations, thus leaving the 440BX chipset for midrange and low-end machines. "Xeon will bring Intel systems a little closer to the RISC-UNIX market in terms of performance capabilities," says ffoulkes.