Compaq Computer Corp. faces formidable challenges in trying to convince more banks to buy its line of extra-powerful PCs, experts said.
The San Francisco computer maker last week announced its intention to pursue the workstation market with a vengeance in coming months. These high-speed computers are used in bank capital markets groups and on trading floors to conduct high-volume transactions.
Traditionally, Sun Microsystems Inc., Palo Alto, Calif., and Hewlett- Packard Co., Dallas, have been the dominant suppliers of this type of bank hardware.
But Compaq - known for its personal computers and network servers - said it plans to confront these competitors with systems that cost as little as one-third as much but give the same computing power.
The company's new line of workstations is equipped with 200-megahertz Pentium Pro microprocessors from Intel Corp. and Microsoft Inc.'s Windows NT operating system. They are priced at $4,300 to $10,200.
But Compaq's task will not be easy. Some analysts view the company's move as an effort to retain its market position for computer servers.
Compaq says it controls 31% of the server market and agrees that selling front-end hardware designed specifically to work with its servers could help maintain its place.
"It's clearly a defensive action," said Michael Gale, an analyst at Intelliquest, a market research firm in Austin, Tex.
Distribution could be an issue for Compaq, said consultants. Sun, Hewlett-Packard, and Digital Equipment Corp., among other companies, hold long-established selling relationships with banks and other financial companies through wholesalers.
Compaq executives said at a press conference that they were just beginning to hire an army of wholesalers to penetrate the financial market.
"Compaq is a step behind," said Larry Tabb, a consultant at the Tower Group in Wellesley, Mass.
But price competition and the demand for an increasing variety of software applications loaded onto workstations could help Compaq's chances, analysts said.
"Demand for workstations is very software-driven," said Mr. Gale. "If you can develop the right relationships with software vendors, you can get a good entry point into the market."
Characterizing his company's chances, John T. Rose, senior vice president of Compaq's enterprise computing group, said: "In East Texas, they call it picking watermelons."
Industry consultants said Compaq is poised to ride the wave of popularity being created in bank back offices by the Windows NT operating system.
Compaq is gambling that banks, where proprietary Unix-based workstations predominate, will be attracted to open systems that can accommodate a wider variety of software applications.
"Banks are looking to get away from the restrictions of proprietary Unix-based operating systems," said Mr. Tabb. "Virtually every bank is testing Windows NT in some form."