Intergraph strategy shift tags Clipper NT, low-end

Electronic News, March 8, 1993 by Craig Stedman

CAMBRIDGE, MASS.--Intergraph plans to enter the generic hardware business after making Windows NT available on its Clipper-based workstations, ending the company's policy--now described by executives as flawed--of only selling machines in combination with its design software.

In a further shift away from strict reliance on its traditional high-end software, Intergraph is promising more aggressive marketing of the low-cost MicroStation CAD package, which previously had a low priority in part because of fears it could eat into sales of higher-priced products.

Intergraph chairman and CEO Jim Meadlock said last week he expects to sign a deal shortly for Dell Computer to carry MicroStation in its mail-order catalogs, a new revenue channel being counting upon to help almost double sales of the package to the $100 million range this year.

On the hardware side, Mr. Meadlock characterized Intergraph's past decision to not sell unbundled Clipper systems as "a fundamental mistake" that prevented the Huntsville, Ala., company from getting anywhere near the market share of other workstation vendors.

It is too late to change strategies in the Unix market, where rivals are entrenched and Intergraph lacks a third-party application base, but Mr. Meadlock sees a second chance with Windows NT and its promised common programming support for different hardware platforms. "I think it does open up some new opportunities for us," he said after a presentation at the Daratech design conference here.

Clipper performance would admittedly rank behind the other two RISC architectures targeting the NT market--Alpha AXP from Digital Equipment Corp. and the Silicon Graphics-owned MIPS technology--but Mr. Meadlock hopes to be able to work around that. "On a raw performance basis, we'd be third in that competitive situation, but that's a moving picture. And it's not just performance (that influences buying decisions). Certainly you'd like to be the highest performance always, but it's not always practical."

Mr. Meadlock added the latest Clipper models--topped by an 85Mips and 67.2Specmark deskside platform--give Intergraph "respectable performance with at least (Sun Microsystems)." Sun, by stressing other factors, has been able to maintain its workstation market lead despite lagging well behind rival vendors in throughput, he pointed out.

Meanwhile, Intergraph plans to more than triple Clipper speeds over the next two years, largely through denser packaging. The current three-chip C400 implementation used in the highend Series 6800 line will soon be combined into a multichip module and should be down to a single-chip device by year end, Mr. Meadlock said.

Clipper/NT machines are scheduled to become available this year and could be offered both totally devoid of any Intergraph software or with just MicroStation or "a small subset of our software compared to today." Both direct and indirect sales are envisioned, Mr. Meadlock said without elaboration. "We've got to do a lot of things differently, and I'm not prepared to discuss all of those yet."

No expansion in manufacturing capacity is planned, meanwhile, and Intergraph will continue to use Fujitsu as its C400 microprocessor foundry.

The proposed MicroStation marketing deal with Dell is another sign of Intergraph's change in thinking. Mr. Meadlock previously downplayed MicroStation as "a generic product," and the firm kept the highest-performance versions of the lowend package behind the scenes at some trade shows, such as the 1991 Autofact expo, where Intergraph offered glimpses of a high-end MicroStation demo to a hotel suite (EN, Nov. 18, 1991).

Such posturing also is now described as a mistake. "We have not done as credible a job as we could with a very good product," Mr. Meadlock said, attributing that more to "a lack of a focused effort on the low end" than to an attempt to protect its higher-cost I/EMS software.

Scott Bentley, marketing VP at Bentley Systems, the Exton, Pa., company that develops MicroStation and is 50 percent owned by Intergraph, said Intergraph took more notice of the package after a late 1992 marketing campaign aimed at Windows 3.1 produced strong results.

As for the possible cannibalization of I/EMS, "I think those concerns are no longer relevant," Mr. Bentley said. "The world has changed, and you can't protect your hardware by trying to ignore the fact that you have software on other platforms. Their hardware doesn't need that protection anymore, anyway."

Mr. Meadlock confirmed that existing MicroStation dealers aren't looking kindly at the Dell talks, "but the only point is we'd like to use as many channels as we can." Asked how Intergraph might mollify the dealers, he said, "I guess I really don't want to talk about that."