Sun, Aug 24, 2014 - Page 13 News List

IBM forms a partnership with Chinese rival Inspur

Bloomberg

International Business Machines Corp (IBM) formed a partnership with Inspur Group Ltd (浪潮集團) after the Chinese company tried to lure away customers with its “IBM to Inspur” marketing campaign.

IBM’s database and WebSphere software are to be used on Inspur’s servers, which are set to be the first high-end hardware to be wholly developed and produced by a Chinese company. Inspur is also to use IBM’s Power8 chips to help design its own systems, the companies said in an e-mailed statement on Friday.

The deal sets aside the companies’ rivalry, spurred by tensions between the US and Chinese governments over claims of cyberspying and hacking made by US companies.

Inspur set out on a campaign to win over IBM’s customers after Bloomberg News reported in May that the Chinese government was studying whether domestic banks’ reliance on the US company’s technology threatened national security.

IBM said at the time that it was not aware of any Chinese government policy that recommended against the use of IBM servers within the country’s banking industry. On Friday, the China Daily reported that IBM said it never stopped providing new servers to Chinese banks, citing an interview with the chairman and chief executive officer of IBM China Group D.C. Chien.

IBM has been trying to turn around falling revenue in China, which has weighed heavily on chief executive officer Ginni Rometty’s profit goals. Sales in the country declined 11 percent from a year earlier in the second quarter, after tumbling 20 percent in the first three months of the year, adjusted for currency conversions.

Almost half of IBM’s China revenue comes from hardware sales, the company said in May.

For Inspur, the deal could help convince potential customers to buy its hardware with the option to use IBM’s software. Inspur plans to design its own systems based on technology from the OpenPower Foundation, which has 53 members and supports open-source technology, according to the statement.

That makes it easy to integrate IBM’s software on the new Inspur servers. IBM’s sales of application infrastructure and middleware — the type of offerings its new Chinese partner plans to deploy — accounted for the biggest share of the worldwide market last year at 30 percent, according to researcher Gartner Inc.

In a separate statement yesterday, IBM said it is also working with China Telecom Corp (中國電信) in a three-year agreement to help small and medium-sized businesses run cloud-based applications.

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