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IBM unveils new $1 million mainframe
SAN FRANCISCO (Reuters) -- International Business Machines Corp. Tuesday announced a mainframe computer three times more powerful than its previous version. IBM, the world's largest computer company, also said customers show no signs of shunning the powerful systems in favor of cheaper servers from rivals. The new eServer zSeries 990 starts at $1 million. IBM's computer-services arm, the largest such operation in the world, is also making the product available on-demand, similar to the way a utility supplies electricity. The Armonk, New York, company launched the new mainframe's predecessor, the eServer z900, almost three years ago and has since sold more than 4,000 of them, said William Zeitler, who heads IBM's systems group which sells computer servers used in large corporate, government and university networks. IBM built its business on the back of the mainframe computer. Many have dubbed this venerable technology a dinosaur, but it has nonetheless survived developments that have made most computers far smaller and cheaper than a mainframe. The zSeries 990, code-named T-Rex, will probably be purchased by customers in the financial-services industry, where many companies need the ability to process millions of online transactions securely, quickly and reliably, Zeitler said. Rivals were quick to criticize IBM's offering, which was widely expected. Hewlett-Packard Co, which has a competing product in its Superdome server, and Sun Microsystems Inc., which has its own high-end servers, including the Enterprise 1000, said IBM's mainframe locks customers in at high prices and doesn't give them choice. Zeitler disagreed. "We don't believe and haven't for a decade that mainframes are the answer to everything, or that Unix or Intel servers are the answer to everything," Zeitler said, adding that IBM's mainframe, including the new one, run the popular Linux operating systems and software from Sun, including Java. "This wouldn't work if our products weren't open," Zeitler said, referring to the system's abilities to use software from a variety of companies. While mainframes are declining as a percentage of overall revenue, the timing of the launch is important because IBM typically markets these products to its customers ahead of the release, Sanford C. Bernstein analyst Toni Sacconaghi wrote in a research note ahead of the announcement. With an estimated 40 percent of IBM's profits tied to the mainframe business, Sacconaghi estimated that an upgrade boosts revenue by 1 percent to 2 percent and earnings by 3 cents to 4 cents per share in the quarter it is introduced. IBM said that one z990 mainframe can process 450 million e-business transactions a day, or can manage hundreds of virtual Linux servers. IBM also said the new computer can turn its computing capacity on and off, allowing customers to add computing power during peak periods. The revamped mainframe has twice the number of microprocessors and almost three times the capacity of its precursor, IBM said, and it can use from 1 to all 32 of its processors on the fly, without shutting the system down. Two models of the computer will be available June 16, two others at the end of October, while the on-demand service for the mainframe will be available in September, IBM said. Copyright 2003 Reuters. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
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