Briefs: September 6, 2004

IBM, INTEL BRINGING BLADE DESIGNS TO SYSTEM BUILDERS

"We are seeing a lot of interest among system builders to get involved in the blade market," said Pat Buddenbaum, blade server product manager for Intel's enterprise products group. "What we are trying to do with this is get the networking ecosystems vendors more actively involved in the market. In turn, that will create more interest among end users to adopt blades in the IT architecture, and that will help encourage more system builders to get involved in the blade market."

Buddenbaum said about 100 Intel system builders worldwide are building blade solutions.

IBM and Intel said releasing the design specifications will help hardware vendors develop BladeCenter-compatible network switches, add-in cards and communications blades. The companies will provide design guidelines and technical support; fee-based support from IBM's Engineering and Technology Services organization will also be offered.

"We've achieved a level of leadership in blades beyond our expectations. We feel it's time to open our architecture to others," said Tim Dougherty, IBM's director of BladeCenter marketing.

CITING SEASONAL ISSUES, INTEL REDUCES 3Q FORECAST
Intel continues to feel pressure on both its top line and bottom line, and last week the company reduced its expectation for both sales and gross profit margin for the third quarter.

Intel now anticipates revenue of between $8.3 billion and $8.6 billion for the quarter, compared with a previous forecast of between $8.6 billion and $9.2 billion. It cut its gross profit margin expectation to the 58 percent range from 60 percent.

The Santa Clara, Calif.-based chipmaker said global sales for its core Intel Architecture processor products are running weaker than expected during the quarter, combined with a previously anticipated reduction in excess component inventory. The company's flash memory business was also weaker than forecast.

Intel CFO Andy Bryant described the quarter as proceeding at the low end of seasonal patterns, and said the company is "counting on September to be a fairly typical September based on what we see in August and July."

While the softer-than-expected market was not limited to any specific geography, Bryant said retail and consumer markets are showing more weakness than others.

The company slightly disappointed some analysts with its revenue and profit results for the second quarter, and, at the time, said it had overbuilt an inventory of products that would need to be reduced during the next quarter. However, Bryant also said that a recent Intel price-cutting move did not seem to have the hoped-for results.

The company did not provide details on a segment-by-segment basis, nor could Bryant say whether the rest of the industry was seeing the same slowdown. Intel's primary rival in the PC and server space, Advanced Micro Devices, has not issued a mid-quarter update of its own.

Intel's third quarter ends Sept. 25. It is scheduled to report its full quarterly earnings Oct. 12.

LATEST ARRAY FROM HITACHI LEAPFROGS EMC'S OFFERING
Hitachi Data Systems is expected Tuesday to unveil its newest weapon against archrival EMC.

The new enterprise-class Lightning 3 array from Santa Clara, Calif.-based HDS is expected to offer a capacity of up to 1,152 hard drives. HDS and EMC typically leapfrog each other in terms of capacity and performance every year or two. EMC introduced its current flagship line, the DMX, in February 2003 and refreshed the line a year later. HDS last updated its Lightning line in October.

HDS executives will be joined at the New York rollout by Mark Canepa, executive vice president at Sun Microsystems' Network Storage Division. Sun is the largest reseller of HDS Lightning arrays. Hewlett-Packard is also expected to shortly unveil its OEM version of the new Lightning, which it calls its XP family of arrays. HP plans to publicly unveil the new XP at its HP StorageWorks conference next week in Houston.

NORTEL CEO TOUTS R&D, CHANNEL DEVELOPMENT ACTIVITY
Nortel Networks President and CEO Bill Owens last week painted an optimistic view of the Brampton, Ontario-based company's research and development into VoIP and security, despite recent operational challenges and events.

"There are a lot of products associated with voice-over-IP and how that works inside the network," Owens told journalists at the company's Billerica, Mass., R&D facility. "We do have some terrific security products [such as] Contivity, which is one of them that came out of Billerica, I think, here. We're doing a lot of the more advanced areas of security in the enterprise business, some of the deep packet inspection of the Internet is being done inside the enterprise business, so those are a few. We have some important steps to go through here over the next few months."

Owens also said channel development in the enterprise and government space will be among his priorities for the next year.

"You'll find us putting more attention and time into the enterprise business and partners," he said.