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Wed, Jul 14, 2004 - Page 12 News List

IBM takes on rivals with new computers


IBM was to introduce lines of data center computers based on its new Power 5 microprocessor yesterday, and industry analysts said the products will put further pressure on Sun Microsystems and Hewlett-Packard, the company's main rivals in the big-computer market.

The IBM move comes as the company has been riding a wave of momentum in the server computer business. IBM and Dell, which sell mainly to the lower-price end of the server market, have been gaining share against the competition.

IBM's success, analysts say, is a good sign for its hardware business, even as the company has tilted toward services in recent years. IBM is the leader in worldwide revenues from server sales, with its market share rising from 23 percent in 2000 to nearly 32 percent last year, according to IDC, a research firm.

The new computer lines, using IBM's Power 5 chip, will have an impact mostly on the US$21 billion segment of the server market for machines that mainly run on the Unix operating system. Hewlett-Packard and Sun still lead IBM in the Unix server market, but IBM has been rapidly closing the gap.

"This step ratchets up IBM's position in the ongoing battle among the Unix titans," said Brad Day, an analyst at Forrester Research.

The new IBM systems, analysts say, have achieved impressive gains in price-for-performance over competing machines. IBM has also built virtualization technology into the new computers, so that several workloads can run at once on a single machine, greatly increasing the utilization rate. Such technology has long been available on mainframe computers, but has only recently made its way onto other computers.

With the Power 5 systems, IBM hopes it can overtake Hewlett-Packard and Sun in the Unix market as both companies are making transitions. Hewlett-Packard is shifting from systems based on its own microprocessors to ones running on the Itanium chip, which was jointly developed with and made by Intel.

Sun, which was hit hard when the technology bubble burst, now has a strategy that relies more on software and user-based pricing instead of one that depends on hardware sales. It is uncertain how successful the new strategy will be.

"Sun has been getting its act together, but it still looks vulnerable," said Charles King, research director for Sageza, a technology consulting firm. "And market uptake on Itanium has been remarkably slow."

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