IBM's new server to counter Oracle

International Business Machines (IBM), the largest computer-services provider, is introducing new server systems today, aiming to bolster its leading position as software rival Oracle Corp enters the market.

The Power7 systems will be tailored for specific projects, such as running electrical grids or financial analytics, Rodney Adkins, senior vice president for systems and technology, said last week in an interview. The systems, made of integrated servers, software and storage, will start selling this month.

The release marks the first new systems since Adkins took over IBM’s hardware division in October, after predecessor Bob Moffat left the company amid the Galleon Group insider-trading scandal. IBM’s focus on project-specific systems, along with investments in research and development, will help it gain market share even as Oracle starts selling similar servers with its acquisition of Sun Microsystems Inc., he said.

“It’s easy in this industry to say, ‘I have this piece, I have this piece, I have this piece, now I have it all,’” said Adkins. “It really requires innovation.”

With the purchase of server maker Sun, Oracle Chief Executive Officer Larry Ellison has said he plans to challenge IBM by selling computers packaged with software customized for industries, such as retailing.

Global sales of high-end servers will be about $14 billion this year, according to Framingham, Massachusetts-based researcher IDC. IBM held 40 percent of that market in the third quarter, IDC’s most recent report. Hewlett-Packard Co. had 27 percent, followed by Sun with 26 percent.


Hardware Sales
Hardware sales make up 17 percent of Armonk, New York-based IBM’s total revenue, which topped $95 billion last year. The company is the world’s third-largest software maker, trailing Microsoft Corp. and Redwood City, California-based Oracle.

IBM offered to buy Sun for about $7 billion last year, according to people familiar with the matter. Oracle ultimately acquired Sun for $7.4 billion, and the deal closed last month.

IBM rose 52 cents to $123.52 in New York Stock Exchange composite trading on Feb. 5. The shares had fallen 5.6 percent this year before today.