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IBM looks to boost Asia server sales

Big Blue is confident of capturing a huge chunk of the high-end Unix server market in Asia-Pacific and Japan. Is its target of $45 million in Regatta sales attainable?

By Nawaz Marican

SINGAPORE--IBM is confident of capturing a huge chunk of the high-end Unix server market in Asia-Pacific and Japan with its new p690 "Regatta" servers.

"Potentially, we will be able to ship over 100 systems to customers across the region," an IBM representative said at a Singapore event marking Regatta's launch.

Regatta prices average $454,000, and shipment is expected to begin next month, the representative added.

IBM embarked on the Regatta course in late 1996, when the company was a distant third behind Sun Microsystems in the Unix server market, said Ravi Arimilli, chief scientist of IBM's Power technology development group. The goal was to outdo Sun, and initially the plan was for a 128-processor behemoth using the same design philosophy of Sun as well as IBM's pre-Regatta servers.

"For us to get to leadership, we had to do something to convince people to migrate to our platform," Arimilli said. IBM embarked on a multiyear effort to recapture the market Sun had found so lucrative.

After a year of brainstorming, though, IBM discarded the 128-processor system in favor of a very different design: fewer CPUs with super-high-speed connections to each other and input-output systems that connect with network and storage devices.

While Sun, Fujitsu Technology Solutions and others compete to cram more CPUs into a server, "IBM's approach is the opposite: 'We're going to bring the workload onto a server with lower CPU count,'" said Brad Day, a Giga Information Group analyst.

Rajnish Arora, IDC Asia-Pacific Server and Workstation Research manager, said IBM's target of $45 million in Regatta sales for Asia-Pacific is attainable.

"The Regatta could play in two different sever segments, depending on how the server is configured--the $500,000-plus market or the $100,000 to $500,000 market," Arora said.

Last year, 373 high-end servers--priced above $500,000--were sold in Asia-Pacific, excluding Japan, for a total value of $296 million, according to IDC.

In the midrange category--between $100,000 and $500,000--3,562 units were sold in the region, with a total value of $656 million. In this category, IBM was the market leader in terms of revenue, followed by Sun and Hewlett-Packard. In terms of market share by units shipped, HP led the way, followed by Sun and IBM.

Unix servers, resurgent after products from Intel and Microsoft failed to live up to promises that their servers would quickly take over, are the biggest part of the overall server market. Research firm IDC calculates that worldwide Unix server sales totaled $29 billion in 2000, nearly half of the entire $60 billion server market.

IBM this week marked its first Regatta deal in Singapore with research and development organization the Institute of Higher Performance Computing (IHPC).

IHPC said that it will use the server for electromagnetics, chemistry, physics and nanotechnology research. Both parties declined to reveal the value of the sale.

CNET Singapore's Nawaz Marican reported from Singapore, and News.com's Stephen Shankland reported from San Francisco.