IBM Puts Muscle Behind Servers

As part of the push, the IBM Server Group plans to launch this month a new Blade Center product, which will combine several key hardware and software technologies into a single product.

Mark Shearer, vice president of eServer products at the IBM Server Group, said Blade Center will include a chassis with 14 blade slots, Intel Xeon two-way processors in each blade, Fibre Channel and Ethernet connectivity, among other technologies. Additional details were not available.

Even as it prepares the new offering, IBM is reinforcing its existing server assault with new pricing strategies. Under the Green Streak program, IBM is shipping iSeries models 270 and 820 at discounts of up to 50 percent to end users, while maintaining margins for business partners, IBM executives said. The company and partners are targeting legacy AS/400 installations that run traditional "green screen" applications, hoping to migrate large portions of its installed base to newer technology, the IBM executives said.

Buell Duncan, general manager of eServer iSeries at the IBM Server Group, said the move has helped make iSeries more price-competitive. He estimated the cost to move those installed-base customers to servers that can handle both legacy applications and newer e-business-related tasks could have reached about $96,000 in the past. With the new servers and pricing approach, the cost drops to about $43,000, he said.

But Steve Harris, vice president at Millennium Computer Group, Novato, Calif., an iSeries business partner, said the Green Streak initiative "misses the mark. The machines that are targeted in the promotion force most customers to upgrade to a level that even when you apply all the discounts, it's still a pretty expensive proposition."

He said the iSeries market has been "very soft," a trend he ties to the slow economy and customers who bought excess capacity when they upgraded prior to Y2K.

John Flores, director of marketing at Sirius Computer Solutions, IBM's largest iSeries solution provider, said he has heard from other IBM partners that Green Streak is driving down profitability but said he has a more favorable view. "We're doing some things to reconnect with customers that may have not bought from us within the past 18 months."