Server Price War: IBM Launches Midrange Market Assault

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Escalating an already heated rivalry with Sun
Microsystems Inc., IBM Corp. on Monday unveiled a new line of midrange servers that pressures its
rival on price.

Utilizing POWER4 microprocessor technology, the new server line, dubbed the eServer p670, is designed to take the battle to Sun. The
POWER4 microprocessor contains two one-gigahertz+ processors, a high-bandwidth system switch, a large memory cache and I/O
interface.

IBM said the design — first used in its top-of-the line “Regatta” eServer p690 — gives it high performance while
lowering the amount of electricity and number of processors needed to run the server. The processors come in palm-sized four- or
eight-processor multichip modules, allowing them to conserve space as well.

IBM said its 4-way eServer p670 comes in at $178,280, as opposed to Sun’s 4-way Sun Fire 4800, priced at $257,525. Both systems
offer tape, CD-ROM/DVD-ROM and two 18.2GB hot-swappable disk drives and warranty.

IBM’s 8-way eServer p670 is priced at $316,944,
while Sun offers an 8-way Sun Fire 4800 and 8-way Sun Fire 6800 priced at $408,929 and $495,635, respectively. All three systems
feature 8GB memory, tape, CD-ROM/DVD-ROM, two 18.2GB hot-swappable disk drives, and warranty.

IBM’s 16-way p670 costs $535,522,
while Sun’s 16-way Sun Fire 6800 costs $792,731. Both systems feature 16GB memory, tape, CD-ROM/DVD-ROM, two 18.2GB hot-swappable
disk drives, and warranty.

“The IBM eServer is fortified with mainframe-inspired reliability features at a price
point that is substantially lower than our competitors,” said Val Rahmani, general manager of the IBM eServer pSeries. “The new
eServer is hard proof of our intention to offer the best systems and the most affordable prices at every segment of our server
product family.”

Big Blue said its p670 can also be operated as either a single large server or divided into as many as 16 “virtual” servers, running
any combination of the AIX 5L and Linux operating systems. It can also dynamically reconfigure partitions while operating.

Sun Response Expected

The server also features self-healing architecture built with technology from IBM’s Project eLiza initiative, allowing it to
continue operating through major failures and system errors.

Sun is expected to launch a new midrange server, code-named Starkitty, Tuesday.

The battle between the East Coast and West Coast firms for the midrange market is only a small part of the larger conflict. In the
first quarter, research firm IDC released server stats for Q4 2001 which showed IBM edging out Sun in the Unix market, capturing
first place in market share for the first time since the fourth quarter of 1998. IDC’s findings showed IBM with 26.9% of the
worldwide Unix market share, while Sun captured 26.8%. At the same time, IBM was well in the lead in overall worldwide market
share, capturing 32%. Sun was fourth, after Compaq and HP, with 12%.

For full-year 2001, IBM grabbed 28% of the overall worldwide server market while Sun was fourth with 13.8%.

The struggle for the Unix space, and IBM’s ability to edge into first place there, came in the midst of turmoil in the server
market. Revenue in the server market dropped 26% in the fourth quarter of 2001, according to IDC. For the full year, factory
revenue dropped 19 percent to $49.8 billion and unit shipments declined 2%.

This story was first published on InternetNews, an internet.com site.