IBM to Sell New Computers to Businesses

— August 02, 2006

IBM, the world's largest technology services company, on Tuesday is announcing new server computers giving businesses access to computing power typically used by universities and large corporations.

The five systems, set to be unveiled at a New York briefing on Tuesday, use microprocessors from Advanced Micro Devices Inc., which has been making inroads against industry leader Intel Corp.

The systems promise more computing power but are more energy-efficient and generate less heat than earlier machines. They also cost less than comparable high-performance systems, IBM said.

The announcement is a boost for AMD as it hopes to maintain momentum against a raft of new chips from Intel. Dell Inc., the world's biggest personal computer maker, in May said it planned to use AMD's Opteron processors in high-end server computers by the end of the year, ending a 22-year exclusive relationship with Intel.

"Opteron offers a very high level of performance that is being adapted more and more for mainstream business applications," said Charles King, principal analyst at Pund-IT Research in Hayward, California.

AMD Chief Executive Hector Ruiz is scheduled to attend the New York briefing, along with Bill Zeitler, head of IBM's systems and technology group.

International Business Machines Corp. of Armonk , New York , faces tough competition in the server market from Hewlett-Packard Co., the leading global server vendor by revenue in the first quarter, according to market researcher IDC.

Both companies had about 28 percent of the worldwide server market in the first quarter, but IBM's revenue share fell 3.6 percent while Hewlett-Packard's share was little changed. Sun Microsystems Inc. grew the fastest of the major vendors, with a 5.8 percent revenue gain and 10.8 percent of the global server market, IDC said in May.

IBM started using Opteron processors in 2003, but sold them mainly to high-performance users such as universities and research centers, King said.

The systems also have been used by large insurers for sophisticated risk modeling and loss simulations, he said.

"What's happened in the last two years is there's been an increasing intersection of high-performance computing and commercial business applications," King said.

Businesses can put the new IBM systems to use in an array of applications, from intensive data processing to running Web sites, King said. They are also suited to delivering video and television over the Internet.

IBM expects to start selling the new servers in the third quarter, when it will also announce pricing.

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