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Compaq, Intel contribute to investment in Stratus

Compaq, Intel contribute to investment in Stratus

The recent $US115 million investment made by Compaq Computer, Intel and DB Capital Partners in Stratus Technologies is part of an effort to help the maker of fault-tolerant computing systems significantly expand its market reach and presence.

The Swiss company has also reached technology collaboration agreements with Compaq and Intel. Under the agreements, Compaq will licence and use Stratus' fault-tolerant technology in upcoming server products, according to Stratus president and CEO Stephen Kiely. Meanwhile, Intel and Stratus will work closely to optimise Intel technology for fault-tolerant computing, Kiely said.

Announced two weeks ago, the partnerships should help Stratus boost its presence in the market, Kiely said.

"We are today a $320 million company in an industry dominated by companies 100 times our size," Kiely said. "We concluded that our maximum impact and value delivery to our customers will occur when we become part of the product stream of a major industry player."

Besides the agreement with Compaq and Intel, Stratus already has a licensing relationship with NEC in Japan.

Though such licensing deals will form a core part of Stratus' sales strategy going forward, the company will also continue to make and market servers under its own brand name, Kiely said.

The strategy makes sense for Stratus and its customers, said John Enck, an analyst at Gartner Group.

"Stratus has been struggling to find its rightful place in the new market" with its fault-tolerant technology, Enck said. Because Stratus is relatively small, its products "were pretty much guaranteed to be niche products that would appeal only to a small segment of users," he said.

The partnerships with Compaq and Intel should help change that perception, Enck noted.

The $115 million investment will be made in the form of a preferred stock purchase. The shares will be acquired from Investcorp, a global investment company with offices in New York, London and Bahrain. Investcorp is the majority shareholder in Stratus.

Stratus and Investcorp will retain majority interest and voting control of the company following the conclusion of the transaction, which is expected to be completed by February 1, according to Kiely.

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