IBM Makes Bid to Recapture Its Unix Server Market Share
IBM will introduce a line of computers today aimed at capturing a far bigger share of the market for the most powerful servers handling Internet traffic.
IBM is making big performance claims for its new S80 server compared with the best, million-dollar-plus Starfires servers from Sun Microsystems, which has reaped huge profits by supplying the reliable, high-capacity machines to most e-commerce dynamos, including EBay, E-Trade and Amazon.com.
“This is about our intention to take leadership in the Unix server marketplace. We had it, we lost it and we’re determined to get it back,” said IBM Vice President Michael Kerr.
Unix was developed decades ago by AT&T; and has been adapted by many different companies that rely on it to improve performance and handle large networks of computers.
IBM’s share of the $12-billion market for mid-range, $100,000-to-$1-million machines using versions of the Unix operating system dwindled to 16% last year from 19% two years earlier, according to International Data Corp.
Hewlett-Packard’s and Sun’s market shares grew during those years to 30% and 19%, respectively, and Sun does much better than that for the largest systems selling for more than $1 million.
IBM’s Kerr said lab tests running applications from Oracle, SAP and others show that its new machines can handle about twice as much capacity per dollar spent as Sun’s Starfires.
The S80, which is IBM’s top of the line of its four families of servers, uses 24 chips and is the first to use IBM’s copper-on-silicon chips that run faster and cooler than pure silicon. (Sun uses 64 chips, but they are not copper-on-silicon.)
However, Sun laughed off IBM’s performance figures, saying the world’s biggest computer company was comparing the new IBM machines with figures released about the Starfires a year ago. “If we were to rerun those benchmarks today, we could double them in some cases. They’re kind of fighting yesterday’s battle,” said Shahin Khan, Sun’s director of marketing for data center products.
Khan also said lab tests can be a poor reflection of real-world operations, depending on programming and other factors.
Hewlett-Packard’s Patrick Rogers, head of server marketing, said IBM is “just catching up to us” in the speed of HP’s high-end, 32-chip V-class servers.
Industry analysts, however, said IBM’s new product appears impressive.
“They’ve been struggling,” said J.P. Morgan Securities analyst Daniel Kunstler. “They’ve been shellshocked by what Sun has done, and they want to climb back out quickly while Hewlett-Packard is still struggling.”
This marks IBM’s first serious upgrade in nearly two years.
“They can compete a lot better than they have been able to in the past,” said Steve Josselyn, a research director at IDC in Framingham, Mass.
Josselyn and other analysts said Sun will probably react by trimming prices on its Starfires.
“I expect [Sun] will respond by lowering prices,” said Andrew Allison, an independent analyst in Carmel, because IBM’s product “is a highly competitive platform, which seems to be very aggressively priced.”
The six-chip version of IBM’s S80 sells for $290,000, and more power can be added so that a 24-chip version can be had for $900,000.
IBM is capitalizing on technology it acquired this summer with the $810-million purchase of Sequent Computer Systems, which developed 64-chip computers.
Unix systems have felt some competition at the lower end by Windows NT and Intel chips, but so far those systems haven’t proved reliable or robust enough for major e-commerce hubs.
Compaq, Dell and others are selling or planning to sell servers based on eight Intel chips.
But for at least the next four or five years, Allison said, Unix will dominate in controlling Web traffic for most computers.
