Workstations Work Some New Magic

JUST A FEW MONTHS AGO, THE BEGINNING OF THE END seemed in sight for workstations, the powerful desktop computers used by engineers. After years of double-digit growth, sales had slowed to just 7% in 1993. Worse, personal computers outfitted with Intel Corp.'s hot Pentium chip and Microsoft Corp.'s network-ready Windows NT operating software were poised to steal a big chunk of the workstation market.

Not so fast. Suddenly, makers of traditional work-

stations are enjoying a miniboom. Last month, industry leader Sun Microsystems Inc. blew past Wall Street estimates with an unexpectedly large jump in shipments--49%--over last year's September quarter. Silicon Graphics Inc., already the industry's best performer for 1994, hiked internal sales-growth estimates from 35% to 40% for the fiscal year ending next June. Orders also are strong at Hewlett-Packard Co., which had seen a lag, and even at struggling Digital Equipment Corp. The result, says analyst Nancy Battey at International Data Corp., is that workstation revenue growth likely will hit double digits this year.

Why the turnaround? For one thing, Windows NT has not caught on yet. Moreover, new graphics-oriented machines, such as SGI's 3-D workstations, still far outpace PCs for traditional design jobs. And workstation makers have found new markets for high-end machines: such demanding jobs as inventory management and sales-transaction processing, which once required big mainframe computers.

Investors love it. Sun, HP, and SGI stocks are trading near their 52-week highs. But the good times may not last. As Pentium PCs become dirt-cheap and NT comes on stronger next year, the battles will break out anew.