May 10, 2001 5:00 AM PDT

Compaq finds new clients for luxury servers

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In 1997, Compaq acquired Tandem Computer, a maker of the most powerful and expensive servers available. Four years later, Compaq is getting around to linking Tandem to the rest of its business.

Tandem's Himalaya servers have long been favorites for a small number of very intense computing jobs--running international ATM networks and the New York Stock Exchange, for example. But Compaq has come up with a way to make the Himalaya line appeal to more customers and make other Compaq computers more like the Tandem line.

The key to this vision is a program with the ungainly name of "Zero-Latency Enterprise"--basically a giant Himalaya server database that joins together other databases within a large company. ZLE is fast enough that it can shuttle information quickly between different systems--such as those that handle in-store sales, an e-commerce Web site, accounting and promotional offers--without a delay.

Himalaya servers garnered $2 billion in product and service revenue in 2000, said Pauline Nist, head of the Himalaya business unit. The company's goal for ZLE in 2001 is $200 million, a major chunk of the overall Tandem revenue.

Compaq managed single-digit revenue growth in 2000 from 1999--"the first time they've increased in a dog's year," according to Terry Shannon, author of the Shannon Knows Compaq newsletter. But Compaq hopes ZLE will accelerate the trend, he said.

Tandem's computers are niche products. They run the heaviest-duty jobs that can be found. One handles America Online's login authentication, while another server with about 900 processors handles AOL e-mail. Other Tandem machines run the Nasdaq, and Tandem just won over the Tokyo Stock Exchange--the last of the 15 biggest exchanges that didn't use Tandem's Himalaya servers.

But with ZLE, Compaq can sell computers and services to more mainstream customers such as retail giant Target. And Compaq has begun spreading the ZLE gospel out of the rarefied air of Himalaya servers to less exotic but still powerful Unix servers, the Compaq servers running Alpha CPUs and Oracle's database software.

Getting it together
ZLE is a form of what other companies are calling "enterprise application integration," or EAI. But tying together already complicated systems running complex custom software is a tough sell for customers who have undergone painful upgrades to expensive programs such as SAP's software for managing sales and inventory.

With ZLE, a retailer can find suspicious behavior based on certain rules--such as the same customer returning new VCRs at three different outlets of an electronics chain on the same day. ZLE also can be used to page a security guard to approach the customer.

"Everywhere I've talked,

Gartner analyst George Weiss says the Himalaya servers play into Compaq's strength of massive scalability and fault tolerance as well as its presence in the environments of top blue-chip accounts.

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it's a hard sell," said Cal Braunstein, chief executive of the Robert Francis Group, a consulting firm. People understand the potential benefits of linking their servers, but creating and maintaining all the software adapters to join a company's databases is a major expense.

But a handful of giant companies need whatever help they can get, said Illuminata analyst Jonathan Eunice. "In a large bank, it's not unreasonable to have 50 or 60 databases that impinge on a mortgage decision," he said. "The customer record is spread around 121 databases and 17 proprietary systems, Intel systems from Dell and Compaq and HP, and mainframes from IBM. "It's a nightmare for these companies to have long data trails."

The ZLE concept began within one of Himalaya's core customer bases, the telecommunications market, when Sprint asked for a huge 25-terabyte database, said Dave Wilson, director of marketing for Compaq's high-end server business. Sprint had to be able to simultaneously add new data and sift through existing records for operations such as looking for fraud patterns. The result was the first ZLE system, which was fast enough to log more than 70,000 phone calls per second--about twice the current rate for all calls made in the world.

Next came retail giant Target, which is using ZLE to tie together sales, e-commerce, gift registry and "customer relationship management" software that keeps track of things like purchase history. The system has to function amid the heavy load of transactions--about 100 per second at times, Wilson said.

Now Compaq has created comparatively standard ZLE products and services for telecommunications companies. The company is working on new versions for financial, health care and transportation companies. Hertz, for example, has been examining a ZLE system to help keep track of where all its cars are, Nist said.

More of the same
Compaq also has high hopes for increasing sales among its traditional customers, especially telecommunications companies and stock exchanges.

The company has begun receiving new orders from telecommunications customers starting to comply with new U.S. regulations requiring them to be able to determine the location of 911 emergency calls made from mobile phones. Such services--whether using Global Positioning System (GPS) satellites or calculations based on how signals arrive at cell phone towers--will require huge amounts of new processing power, Nist said.

First will come the obvious use: helping police and paramedics locate people calling for help. But once the infrastructure is in place, Himalaya marketing manager Bob Sawyer expects a multitude of other uses. For example, teenagers will be able to consult their cell phones to see if any of the friends on a buddy list are within 100 feet or so.

The 911 business is compensating for the spending pullback that has curtailed telecommunications company spending and consequently has strapped many computing companies that sell to the telcos, Nist said.

Stock exchanges also are planning major new computing purchases to accommodate the increasing volatility of the market, 24-hour trading and the growth of day trading, Nist said.

The Nasdaq is tacking on a new Tandem system specifically to handle the burgeoning number of smaller transactions. And in the longer term, the Nasdaq has a five-year plan for a much bigger new system. Twice already, it's tripled the size of this planned computer.

The new Nasdaq system will rival the size of AOL's 900-processor server, a behemoth that required Tandem to change how fast it can respond to customer demands.

When the movie "You've Got Mail" hit theaters with a plot that hinged on AOL e-mail exchanges, AOL's subscriber sign-up rate tripled overnight, Nist said. "That's a product placement from heaven," she said.

But it was a customer order experience from hell. AOL called and immediately began upgrading its dozens of 12-processor clusters to their maximum capacity of 16 processors, Nist said. They bought new CPUs as fast as their contract allowed, she said.

Alpha arrival
Tandem machines currently use CPUs from MIPS, but the company is in the midst of a years-long switch to the faster Compaq Alpha CPUs that also power Compaq's Unix servers.

That switch is going slower than expected, but "nobody's bagging out of sales," Shannon said. Though the Himalaya S74000, introduced in 2000, can accommodate Alpha chips, the new CPUs won't arrive until 2003, according to current plans

Originally, Compaq hoped to make the switch by 2001 or 2002. But while customers wait, the company will offer "one or two performance kickers" to the existing chips, Shannon said.

The heart of Tandem computers' ability to resist crashes is the use of redundant hardware. Pairs of CPUs run lockstep, while the computer system checks to see if the one CPU's results differ from its mate. If a discrepancy is detected, the faulty CPU is switched off.

The transition to the Alpha line was contingent on the arrival of Alpha chips supporting this lockstep operation.


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