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IBM Servers Get Boost From Chip

Times Staff Writer

IBM Corp. plans to introduce a new generation of server computers today that could vault the company ahead of rivals Sun Microsystems Inc. and Hewlett-Packard Co. in a market valued at $21 billion worldwide.

The p5 servers use IBM’s new Power 5 chip and run on the Unix operating system and thus can be more competitive in a segment of the market long dominated by Sun and HP. IBM says its new machines will offer faster performance and the ability to “micropartition,” or split up the functions of the Power 5 chip to mimic the function of up to 10 separate servers.

Servers are high-capacity computers that form the backbone of corporate, government and university networks. They operate e-mail systems, host websites, manage payroll and run inventory programs, among other functions. People who do banking through personal computers or ATMs, who make airline and hotel reservations online or who shop at online stores probably are going through servers with Unix operating systems.

Through micropartitioning, the workload of up to 10 underused servers can be consolidated onto one p5 server, IBM and analysts said. That reduces costs for customers, who have to pay licensing fees for each microprocessor in their servers.

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It also means needing to buy fewer servers, which may run at 80% capacity when processing paychecks every two weeks but hum along at only 10% to 15% the rest of the time, said Dan Olds, principal analyst with Gabriel Consulting in Beaverton, Ore.

“IBM is finally going after the business values, such as micropartitioning and getting server utilization rates higher,” Olds said. IBM’s new machines should allow the company to overtake Sun and HP, at least in the short term, he said.

As recently as the mid-1990s, Armonk, N.Y.-based IBM ran a distant third in Unix servers, the largest segment of the server market. Big Blue tried to turn things around by launching development of the Power 5 chip and assiduously courting software firms to develop programs for its machines.

As a result, IBM’s server revenue climbed 12.1% to $4 billion over the course of 2003, while Sun’s shrank 15.5% to $5.4 billion and HP’s slipped 3.4% to $5.3 billion, according to technology market researcher Gartner Inc.

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“It’s fair to say IBM is competing on both sides of the price-performance equation and is very aggressive in wanting to grow their market share,” said IDC server analyst Jean Bozman. With growing share, “they will be able to come in with more follow-on sales of software and services.”

IBM had developed its previous server, the p4, in a “do-or-die” program that was rushed and had left out significant capabilities, said Ravi Arimilli, chief architect of the p5.

“We ran so hard on the p4 that we didn’t have time to think,” Arimilli said.

“With p5, we sat down and thought it out.”

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That meant meeting constantly with software vendors, developers and customers to come up with four p5 models. The systems will carry prices ranging from $10,000 to several hundred thousand dollars, significantly cheaper than equivalent servers from Sun and HP, IBM claims.

Sun and HP said they were neither impressed by nor worried about IBM’s new p5 servers.

“It’s really not big news,” said Larry Singer, senior vice president of the Competitive Group at Santa Clara, Calif.-based Sun. “P5 will have the lead for a few months, then we’ll come out with something called Niagara that will put p5 to shame.”

Vish Mulchand, HP’s director of server marketing, said he felt “absolutely no concern” over IBM’s description of outperforming more expensive HP servers.

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“We’re not at all afraid of these claims,” he said.

Palo Alto-based HP is developing its own processor-partitioning technology, which is expected to be available this summer, Mulchand said.


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