DEC Alpha to take high, low roads

Electronic News, July 1, 1996 by Elaine Chen, Sarah Cohen

Maynard, Mass.--Digital Equipment is taking the next step in its Windows NT strategy with the early release of its high-end 500MHz Alpha 21164 microprocessor. Digital is poised to challenge Intel in the sub-$3,000 PC market as well, planning a low-priced 433MHz Alpha 21164 for release in 1997, following the launch of its FX!32 software and Windows NT 4.0.

"The next year is going to be an exciting year for Alpha," vowed Tim Miller, Digital's strategic marketing manager for Alpha microprocessors. However, analysts don't appear so sure, cautioning that a battle against Intel in the broad-based market will be difficult, if not impossible, to win.

The new 500MHz Alpha is part of the 0.35-micron family of processors which Digital unveiled this March, beginning with 300MHz, 366MHz and 400MHz versions of the MPU. It is being released some six months ahead of schedule, just in time to compete with Hewlett-Packard's PA8000 processor. "We've been able to ramp this up faster than we originally planned," Mr. Miller said.

Digital will feature the 500MHz processor in a line of workstations which will be announced within 30 days of the launch of the new chip. Digital is already including the 21164 line in a high-end family of workstations announced earlier this year. Prices begin at $15,863 for a Windows NT-version AlphaStation 500/266, including a 266MHz processor, 32MB RAM and 1GB storage.

An AlphaStation 500/400, with a 400 MHz processor, 64MB RAM and a 2GB hard drive is priced at $30,063. Digital also recently introduced a lower-priced model in its XL line, which includes a choice of Intel and Alpha processors. An Alpha XL 366 Personal Workstation, with a 366 MHz processor and 32MB RAM and a 1GB drive, is priced at $9,995.

According to Digital, the new Alpha will offer strong performance advantages against Intel. Comparing the 500MHz Alpha with Intel's 200MHz Pentium Pro, Digital claimed its SPECint95 benchmark, at 15.4, was double Intel's performance, with three times Intel's performance at a SPECfp95 benchmark of 21.1. In terms of price, Digital's 300MHz Alpha 21164 at $695 costs less than Intel's 200MHz Pentium Pro, said Mr. Miller.

Analysts seem to agree that Alpha's performance is solid, with Jerry Sheridan, principal analyst for servers at Dataquest, stating: "It's going to be a hot performer." Nathan Brookwood, principal analyst for microprocessors at Dataquest, added that Digital offers "the only RISC alternative that understands the importance of being able to run x86 software and provide good performance while doing it. Digital's made a substantial commitment to Windows NT, more so than competitors such as Hewlett-Packard, Sun Microsystems and Silicon Graphics. (Dataquest) considers the Alpha the number two choice for Windows compatibility after Intel architecture."

Even competitors like Cyrix concede that Alpha's performance is excellent, with Steve Tobak, Cyrix's VP of corporate marketing, describing the Alpha as "the best processor that I've seen" in the high-end market.

Yet Digital continues to face a major battle as it attempts to position Alpha in the "Wintel" world. At a panel during the recent Bear Stearns Technology Conference, Digital senior VP for technical development Bill Strecker, while trying to remain upbeat, acknowledged the tough battle Intel competitors face stating: "Just when you assume everything is over is when something changes."

Cyrix's Mr. Tobak, along with many analysts, warns that "We are still in the Wintel world...that is going to be the system of choice." "Why would you risk your business on a DEC Alpha processor?" asked Norm Bogen, an analyst with In-Stat. He added, "If I'm Packard Bell, I don't think I'm going to buy a DEC Alpha processor," noting that while OEMs would "love to switch" from Intel, "the risk of switching is high."

The lack of major OEM relationships has indeed been a problem for Alpha. Although Alpha sales are reported to have contributed 55 percent of Digital's gross margins this past quarter (EN, June 3), the chip's market penetration is currently far from vast, with OEM relationships restricted to smaller companies. Michael Feibus, a principal analyst with Mercury Research, stated that although he believed "a new class of customers will now consider Alpha...there's not going to be millions and millions of Alphas sold next year." When asked about OEM agreements regarding the new Alpha line, Mr. Miller only released the names of Digital itself and DeskStation Technologies, a Digital beta test site.

Although Mr. Miller indicated other companies would be on board by the fall, DeskStation business development manager Mark Jaimes recently said that as far as he knew, DeskStation was the only company currently purchasing and distributing Digital's EV56 366-, 400- and now 433MHz Alpha 21164 processors. DeskStation distributes the Alpha chips inside its Raptor ReFlex Windows NT workstations.

Digital hopes that the OEM picture will change with a flurry of new releases and price points planned over the next 12 months. Following Digital's unveiling of the 21264 Alpha processor for the workstation market in 1997, it plans to introduce the 21164PC, a version of the 21164 reengineered to retail at prices compatible with a $3,000 or less PC. "We're gearing up to have all the pieces available," Mr. Miller said.