Midsize Computers Seek Niche

THE price wars that have engulfed the market for personal computers are spreading upward into the realm of midrange systems.

To analyst William Bluestein, that is a sign of chaos in the market and an indication that the future of midrange systems - which sell for $25,000 to $750,000 - depends on how well they adapt to the world of low-cost personal computers (PCs) linked together in networks.

"If it's not a PC-oriented solution, ... it's just not going to fly," says Mr. Bluestein, of Forrester Research, a Cambridge, Mass., market research firm.

Midrange systems must carve out a niche in the "client-server" style of computing that businesses are increasingly adopting. A client-server network includes both PCs, at which individuals work, and "servers," central computers that perform specialized tasks for any computer on the network. A server, for example, might act as a repository for a database to which all users have access. Or the server might work in tandem with a PC to run a program that requires lots of computing power and memory.

The catch: A server does not have to be a million-dollar mainframe or midrange system; often a souped-up PC will do.

Industry watchers say there is still a role for big hardware.

"There is room for midrange systems that keep up with the price/performance" advances that personal computers are making, says George Weiss, vice president of the Gartner Group of Stamford, Conn., a computing consultant to large corporations. Mr. Weiss predicts that the midrange market will grow at 8 percent a year to reach $125 billion in sales by 1996.

But Tom Wood, an analyst with the Business Research Group, a Newton, Mass., market research firm, is less sanguine. Although he acknowledges that many networks need servers with more power than today's personal computers, he predicts a big expansion in the speed of PC servers in the next five years. 1980s bread and butter

Nowhere is the challenge for midrange computers more evident than along Boston's Route 128, where such systems were the bread-and-butter product in the 1980s for Digital Equipment Corporation (DEC), Data General Corporation, Wang Laboratories Inc., and Prime Computer Inc. Those firms have been trying for years to come to grips with the PC revolution. Now each company faces a test of whether it can make good on those efforts.

"These companies were innovators, yet they forgot to keep innovating," Mr. Wood says. In the 1980s, the four vendors were successful selling minicomputers, midrange systems to which numerous terminals can be attached for individual users. While DEC and Data General are still upgrading these old-line systems, the PC network has become the standard computing model.

Prime recently shut down its hardware division and renamed the company after its software division, Computervision Inc. The software unit, acquired by Prime in 1988, makes computer-aided design products.

Wang, too, is fast becoming a software company, with a line of products called Office 2000. But observers wonder if Wang can keep its head above water. Last week the company delayed its latest quarterly report, raising worries that financial obligations might go unmet.

DEC and Data General are staying in the midrange hardware game, but have posted losses in recent months.

Digital, the second-biggest supplier of midrange computers after IBM Corporation, will soon come out with machines based on its ultra-fast Alpha chip.

But DEC is moving fast to branch out from its minicomputer emphasis. Digital's best hopes "lie in software and services," says David Smith, an analyst with International Data Corporation in Framingham, Mass. Future dinosaurs?

"If they stay with midranges, they're going to be as dead as dinosaurs," Wood says. He notes that DEC is pushing hard - and with some success - to break into the low-end PC market.

Data General is a much smaller company than Digital, but its Aviion line of servers is growing strongly, Mr. Smith says.

Steve Baxter, Data General's vice president of marketing, says the company's servers are among the most highly rated on a price/performance basis.

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