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IBM top-end server to face Sun, HP

Big Blue, which will announce Friday that its top-end p690 "Regatta" Unix server is available in volume, finds itself facing competition from both Sun and Hewlett-Packard.

IBM, which plans to announce Friday that its top-end p690 "Regatta" Unix server is available in volume, had long planned the server as an assault on Sun Microsystems. But Big Blue must now take Hewlett-Packard into account too.

IBM got caught flat-footed by Sun's ascent to the top of the Unix server heap in the late 1990s; Regatta is the culmination of five years' toil to catch up.

"Now that we have Regatta out, we're going to start seeing really major share growth over the next quarters," Val Rahmani, general manager of IBM's pSeries Unix server line, told CNET on Thursday.

Sun had long been IBM's major rival in the field, but recently HP has been making strides. In the third quarter, Sun was No. 1 in the overall Unix server market with 28.8 percent market share. HP was No. 2 with 28.5 percent, followed by IBM with 20.9 percent.

With Friday's planned announcement, Regatta is crossing a crucial milestone known as general availability, which typically means that a product can be delivered without delay to customers and that underpinnings such as support and spare parts are on hand.

IBM said early Regatta customers have gravitated toward two configurations: eight-processor models with a list price of about $400,000 and 32-processor models listing for $1.4 million.

One early Regatta customer is The Gap, the clothing retailer that also operates Old Navy and Banana Republic stores. The Gap has purchased two p690s to run software for predicting retail demand across its stores.

Although IBM prefers to position the 32-processor Regatta against Sun's 72-processor Sun Fire 15K "Starcat," real competition is also coming from HP.

With its Superdome system on sale for nearly a year, HP has edged out Sun to take the top position in both the midrange Unix server market for systems costing $100,000 to $1 million and the high-end Unix server market for machines costing $1 million or more, according to IDC's third-quarter market share figures.

All three companies lost revenue in a plunging Unix server market. But because some lost more revenue than others, IBM gained 5.6 percent market share, HP gained 5.2 percent and Sun lost 10.2 percent.

"HP's (revenue) fell less fast than Sun's did; therefore, (HP) took share off them," Rahmani said, dismissing HP's gain in market share. "The reality is it's coming down to a two-horse race": IBM and Sun.

HP's Superdome accommodates as many as 64 processors, but most configurations ship with 32 or fewer, HP has said. The company is preparing a 128-processor successor.

Sun is on IBM's heels. The Sun Fire 15K will start shipping in volume in late December or early January, spokeswoman Kasey Holman said. "Currently the demand is outstripping the supply," she said.

Rahmani took over the Unix server group just as her predecessor, Rod Adkins, reached the climax of years of work to resurrect the importance of IBM's Unix server line.

"The hard work is never over, but I certainly find myself having picked up a business with a wonderful product line," Rahmani said.

Unix servers, used for tasks such as tracking inventory or performing stock trades, are the mainstay of the server market. More powerful than Windows servers and less costly than mainframes, Unix servers accounted for $29 billion of the $60 billion in total server sales in 2000, according to IDC. Sales of powerful servers are important because they can trigger a cascade of related spending on software, services and storage systems.

The strength of a company's Unix server line is key in signaling corporate dedication to customers that must make multiyear commitments and to allies such as software companies.

IBM still is working hard to catch up to Sun in software support. For example, there still is no version of Veritas' data-protection software for IBM's AIX version of Unix, though the companies are working to fill the gap.