H-P Pushing Another Unix Server

The hardware giant sees big opportunities against leader Sun.
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The piling into the

Unix

market by enterprise hardware companies continues unabated.

The latest iteration of that trend came Tuesday from

Hewlett-Packard

(HWP)

, which rounded out its low-end Unix portfolio with the introduction of its L3000 server. The company is targeting the four-processor server at the high end of the entry-level Unix market. The L3000 will sell for under $40,000.

As with H-P's Superdome Unix server, the L3000 will offer a pay-for-use function that allows customers to expand and contract the processing power and memory of their servers whenever they feel like it, paying service charges for the extra power they use over the time they use it.

One shouldn't overstate the importance of H-P's announcement. The L3000 is an incremental addition to an existing server line, rather than a new family. Meanwhile, Unix sales still represent a minor portion of the company's business. Low-end servers in particular compose less than 3% of H-P's revenue, according to

Sanford Bernstein

analyst Toni Sacconaghi, whose firm hasn't done any underwriting for the company.

Still, H-P is talking tough, optimistic that it can unsettle competitor

Sun Microsystems

(SUNW) - Get Report

, the Unix systems giant whose string of blowout quarters has built it a reputation as one of the few bulletproof companies left in the technology sector.

"We think that we have a tremendous opportunity in the competitive landscape, specifically against Sun," said Mark Hudson, worldwide marketing manager for H-P's business systems and technology group. "They have a major transition to go through in the next six to nine months as they evolve their technology

to the new UltraSparc III chip architecture. By the time they come out with their new technology, we'll be another generation ahead."

Despite H-P's bold claims about the superior performance of its Unix offerings, Sun has managed to make large gains in market share even amid persistent concerns about its technology, including a rash of customer complaints about Sun servers mysteriously crashing. Most observers therefore think H-P's success with Unix depends more on continued organic growth of that market, rather than a battle for share against Sun or

IBM

(IBM) - Get Report

, which has also been working hard to build out its Unix line.

Not surprising, then, that H-P's shares were reacting little to the L3000 news. The stock was down $1.06, or 3%, to $34.62 in late-afternoon trading. Sun, meanwhile, was off $4.25, or 4.8%, to $83.94.