IBM snaps up Lego, blocks HP
Big Blue sells a broad collection of servers to the Danish toy maker, knocking rival Hewlett-Packard aside, just as HP's New York conference begins.
As part of a multiyear agreement, Lego will replace more than 220 HP servers with 34 IBM server and storage systems, products Big Blue said will let Lego respond to spikes in demand around the holiday season.
The deal involves IBM's recently expanded initiative to offer on-off computing capacity on demand. The approach lets a customer fire up spare processors during peak demand, paying IBM depending on how much extra capacity is needed, then shut them down later. Lego also may permanently activate the capacity under different payment terms.
"We are operating in a very competitive environment and need to respond to the dynamics of our market at a moment's notice," said Hal Yarbrough, Lego's senior director of global information technology. "IBM was able to provide an on-demand solution that matched our business needs for a cohesive, worldwide (information technology) infrastructure, while also adapting itself to our very cyclical business and need for rapid introduction of new products."
IBM declined to say how much the deal is worth, but Sageza Group analyst Charles King estimated that the figure is in the millions of dollars.
"Especially with companies like Lego, with a massive shift in transactions?toward the Christmas season, it makes an enormous amount of sense to call this stuff up, use it for as many days or weeks or months as they need it, then turn it off again," King said.
IBM's announcement stole some thunder from rival HP, which began a conference for partners and customers Monday. An HP representative confirmed the loss of the Lego server relationship. Lego has had AlphaServers using the Alpha processor and the Tru64 flavor of the Unix operating system, the representative said. HP has gradually been phasing out the AlphaServer line and encouraging customers to move to products running the HP-UX version of Unix. The Lego server deal is "one of a handful of losses in (the) product migration from Tru64 to HP-UX," the representative said.
The HP representative added that HP recently beat IBM in a separate services contract with Lego and also prevailed over Big Blue in a deal that involves servers for the China state tax authority. "We win some, they win some," the representative said.
IBM's Lego contract involves a mix of Unix and Intel servers. Lego has bought two top-end p690 "Regatta" Unix servers, four midrange p650 Unix servers, 24 high-end x440 Intel servers, four Enterprise Storage Server "Shark" storage systems and Tivoli storage management software, IBM said.