Lest old acquaintances be forgot: the return of Unisys

Over the last two years, Unisys, the once mighty mainframe and PC company, has been trying to turn itself into a mighty high-end server and services company.

Since Lawrence A. Weinbach took control in September 1997, the company has increasingly focused on those high-margin service offerings, shed its low-margin PC business, and moved to a commodity server model - which inevitably involves a closer relationship with the Wintel alliance.

Weinbach's strategy - known as Momentum 2000 - is continuing to forge ahead, and, according to several key company executives who assembled for a conference in California last week, it's working. They pointed to a clean balance sheet, reduced debt, and higher brand awareness as evidence of this.

Recent financial results would seem to back-up their confidence. Revenue in Unisys' last fiscal quarter increased 4 per cent to $1.87bn (up from $1.79bn in the year-ago period). Diluted earnings per share were up 72 per cent. It achieved an operating profit margin of 12.3 per cent, compared with 11 per cent the previous year. This is hardly spectacular growth - but considering the company made a loss of $32.2m in the same quarter of 1995, these figures show significant signs of a company in recovery.

Brian Hadfield, head of group sales and service, UK, Middle East, Africa and India, said that Unisys is now well-positioned to grow its revenues and its profits. He outlined the key planks of the strategy he intends to pursue to ensure this happens. "We are going to focus on the customer. Customer loyalty and customer advocacy are key differentiators in business today. We must also consistently strive to be easy to do business with, and understand business problems in our customers' eyes," Hadfield explained.

A keen customer focus may not be the most revolutionary concept in the world, but Unisys has wisely decided to concentrate its efforts on the industry sectors in which it has been traditionally strong - the communications, financial services, public sector, publishing, supply chain and transportation markets.

Internally, it has created six units to service these sectors: ebusiness, global industries, global network services, global outsourcing, systems and technology, and an over-arching worldwide sales and support operation.

The Internet and ecommerce are also set to feature more prominently in Unisys' plans, both in its internal communications and its dealings with customers. Again, these are familiar concepts to any modern business, but Unisys firmly believes it's going above and beyond the industry norms. Hadfield said the company's customers are being linked via the Web, and can use it to garner information on, say, systems configuration and purchasing. "We are taking the concept of the portal, and turning it into a community," he claimed.

Unisys plans to gain 50 per cent of its revenues from ecommerce within two years (it currently generates 18 per cent), and intends to specialise in the implementation of complex, business-focused solutions in its target vertical markets. André Pino, director, electronic business marketing, Unisys, said: "You have to look at return on investment in ebusiness. Many vendors just scare customers into doing something. We have real substance to offer."

Much of this 'substance' comes from its ES7000 enterprise server and its decision to back NT. Existing Unix customers apparently have nothing to fear though: according to Sam Samman, director of software product management for the Unisys enterprise server business initiative, the company isn't abandoning Unix altogether, but believes that its users should (and will) migrate to the Windows platform in time.

Microsoft itself is quite happy with that attitude. As Michel Gambier, Michel Gambier, lead product manager, enterprise server products, Microsoft, put it: "[Unisys has] made an unequivocal commitment to Windows NT."

Launched in October this year and described by Unisys as 'the Wintel mainframe', the ES7000 is based on the company's Cellular MultiProcessing (CMP) architecture. This architecture supports dynamic partitioning, which enables the servers to run Unix and Windows in the same cabinet, and allows administrators to reallocate input/output (I/O), memory and processors on the fly. Unisys has been working with Microsoft to ensure this functionality is available within the Windows Datacenter Server (part of the Windows 2000 offering) when it ships next year.

The ES7000 accommodates 32 Intel Pentium III Xeon processors, and, according to Samman, "We can achieve the same performance with 32 32-bit processors as Sun does with 64 64-bit processors at a fraction of the cost."

However, Unisys is prepared for the arrival of Itanium, Intel's 64-bit architecture - it claims the ES7000 is easily upgradeable. In addition, the partitioning features will allow the co-existence of both 32- and 64-bit applications within the one box.

The processors have access to 64GB of memory and 96 I/O channels, which, Unisys says, can be fully exploited thanks to the CMP technology's use of a 'crossbar' switching technique, which replaces the bus system used in its rivals' products. This provides a "shared everything" architecture, and is designed to eliminate the bottlenecks caused when processor-to-memory access takes place across a single communications bus.

As Samman neatly put it: "Buses are for peasants."

Whether Unisys itself can attain the ranks of the IT aristocracy rests heavily on the market's adoption of Windows 2000. With Unix still firmly established as the high-end operating system of choice, and developments such as Linux threatening Windows further, its "unequivocal" backing of Microsoft may seem premature. But it must be remembered that the ES7000 does support multiple operating systems. Despite the company's claim that its strategy is firmly based on NT and is in no way "schizophrenic", it is, in fact, in a perfect position to hedge its bets. And that's not a bad position to be in.