IBM, Sun engage in customer swapping

While Sun has wooed away from IBM Galileo International, which supplies airfare pricing information to United Airlines and others, Big Blue plans to announce Friday that it has won a larger customer from Sun, Colgate-Palmolive.

IBM and Sun both sell servers, massive computers that often have dozens of processors, cost hundreds of thousands of dollars, and handle transactions such as recording a company's entire sales and inventory changes. Even in today's competitive market, server sales are lucrative because they often tow along more revenue from services, consulting, storage systems and software.

Sun specializes in servers running the Unix operating system, products that caught IBM flat-footed in the late 1990s. But IBM has fought back with better Unix servers and pressure from its other server lines as well. After many months of losing share to IBM, though, Sun reversed IBM's encroachment in the United States in the first quarter of 2002.

On Thursday, Sun announced a second phase of its "Blue-Away" project. The first phase targeted IBM customers who had purchased the high-end Intel-based NUMA-Q server line, which IBM discontinued in December. The new chapter is aimed at snaring customers of Big Blue's low-end mainframes.

IBM is counterattacking with its own programs. For instance, an initiative called "Bluer Pastures," intended to infiltrate IBM servers into sales partners' product lines, signed up 56 new resellers in March. The move put IBM's Unix and Intel servers alongside Hewlett-Packard products at 14 resellers, Sun at 18 and Compaq Computer--now a part of HP--at eight.

The Galileo deal--worth millions of dollars--fits the Blue-Away agenda. Galileo decided to move from IBM mainframes to about 15 Sun Star Fire 6800 servers for an upgrade of its system to send out airfare prices to United Airlines, HighWire, Trip.com, and thousands of travel agents.

"Price per transaction was a determining factor," said Chief Technology Officer Robert Wiseman. "IBM has not really revised their transaction costs, and because of that you have a lot of traditional (IBM Transaction Processing Facility) users moving some high-volume transactions away."

Galileo isn't using Sun storage, however, Wiseman said.

But IBM's years-long effort to gain respect in the Unix server market, in part by importing technology from higher-end mainframe servers, is paying off. Big Blue will announce on Friday that Colgate-Palmolive has returned to the IBM camp for a mammoth global installation of SAP accounting and customer management software.

"We wanted them to get their mainframe mentality back," said Colgate-Palmolive Chief Information Officer Ed Toban. Now the company is using dozens of IBM Unix servers and is beginning to install the new top-end p690 "Regatta" machine.

"When we first started SAP in the mid-1990s, we started with IBM. Quite frankly, we had some issues back then on scaling," the ability for software and hardware to keep up with ever-increasing amounts of work, Toban said. Colgate moved to competitors' systems, but IBM's research and product direction convinced Colgate back into the fold. "Basically, we've decided to go back."

Toban declined to say whose servers IBM supplanted, but Sun and Colgate publicly announced their relationship before, with 23 higher-end Sun servers.

Now Colgate is using Unix servers and ESS "Shark" storage systems as well as IBM PCs. It's not using IBM's database software, though, preferring Oracle instead.