NEW YORK, July 22 (Reuters) – IBM on Thursday unveiled a new mainframe computer called “zEnterprise,” which it said was the most powerful mainframe ever and is more cost-efficient than previous-generation products.
The move comes as International Business Machines Corp seeks to secure its market leadership in mainframes, which are powerful computers used by large corporations to process high volumes of data and financial transactions.
IBM and its main rivals, Hewlett-Packard Co (HPQ.N) and Oracle Corp (ORCL.O), are all targeting corporate data centers, which are struggling to deal with heavy data traffic and seeking ways to lower the costs of running such systems.
Even Cisco Systems Inc (CSCO.O), traditionally a maker of routers and switches, recently began selling data center servers, promising simpler and more energy-efficient systems.
IBM said its zEnterprise is 40 percent to 60 percent faster than its predecessor, System z10, but uses about the same amount of electricity.
Tom Rosamilia, head of IBM’s System “z” mainframe business, said that over 40 percent of chief information officers, who make technology purchasing decisions, expect their data centers to hit space or power constraints within a year and a half.
“The moment when you hit the capacity when you have to build another data center, or the power company says you can’t have any more, then capacity at the margin becomes very, very expensive,” he told Reuters.
“The zEnterprise really helps them to reduce their footprint so they can avoid building out a new data center for real estate or power reasons,” he said.
The Armonk, New York-based company did not disclose the price of the product, but said its price relative to capacity would be lower than for the z10.
While IBM has been shifting its focus to services and software and away from commoditized hardware, high-end servers are still crucial as it tries to sell a wide portfolio of technology services and products.
It said it spent $1.5 billion on research and development for the zEnterprise system in a 4-year project involving over 5,000 of its employees.
The upgrade was well-flagged. Sales of the System z series, including the z10 and earlier products, fell 24 percent year-on-year in the second quarter as customers awaited the launch.
The core server in the zEnterprise system contains the world’s fastest, most powerful microprocessors. They run at 5.2Ghz, making them capable of executing more than 50 billion instructions per second.
The microprocessor technology also includes new software to help handle data-heavy workloads, by utilizing predictive analytics technology, it said.
The company also said the new mainframes could be integrated with other IBM servers, using IBM’s blade products and software.
It will also come with a water cooling option, which could help reduce energy consumption by up to 12 percent by removing air heat, it said. (Reporting by Ritsuko Ando; Editing by Richard Chang)
HP tempers revenue outlook, cuts 2 pct of workforce
Hewlett-Packard Co gave a disappointing outlook for full-year revenue and said it will lay off another 2 percent of its workforce as consumers and businesses cut spending on computers, printers and services, sending its shares down about 5 percent.
The mew round of layoffs — which total roughly 6,400 jobs — announced on Tuesday are on top of previously announced cuts from integrating the operations of IT services company EDS, which HP acquired last year.
HP said the job cuts will come in its product segments, such as PCs and printers. The reductions will happen over the next 12 months.
HP, which vies with smaller rivals Dell Inc and Acer Inc in a depressed global PC market, also expects fiscal year revenue to slide 4 percent to 5 percent compared with a previously forecast of 2 percent to 5 percent, offering a more pessimistic view of 2009.
The company’s services business was the largest by revenue in the quarter, boosted by the EDS buy. PC revenue fell 19 percent, imaging and printing revenue dropped 23 percent and storage and server sales sank 28 percent.
Analysts said the company is doing a good job controlling costs in a difficult environment, but said investors may be spooked in the absence of more upbeat comments from Chief Executive Mark Hurd.
Although Hurd did point to pockets of improvement, he told Reuters in an interview that in terms of demand: “We’re expecting roughly more of the same.”
Frost & Sullivan analyst Ron Gruia said Hurd is approaching the demand question very carefully.
“He does show a little bit more cautiousness and maybe it’s better to be a bit more cautious in this environment.”
BELLWETHER PAIN
The shares of the technology bellwether, which some analysts deem a safe haven in the downturn because of its diverse portfolio, fell as much as 5 percent in after-hours trading.
HP’s stock is roughly flat for the year, compared with a 25 percent rise for International Business Machines Corp and a rise of more than 10 percent for Dell.
HP reported a net profit of $1.7 billion, or 70 cents a share, in the fiscal second quarter ended April 30, down from $2.1 billion, or 80 cents a share, a year ago.
Excluding certain restructuring and acquisition-related items, HP posted a profit of 86 cents a share, matching analysts’ average forecast, according to Reuters Estimates.
Revenue slipped 3 percent to $27.4 billion, a whisker off Wall Street’s forecast of $27.5 billion.
For the current quarter, HP forecast earnings, excluding items of 88 cents to 90 cents a share, with revenue flat to down 2 percent sequentially.
Wall Street is forecasting a profit of 89 cents a share on revenue of $27.5 billion.
In February, HP cut its full-year outlook after quarterly revenue missed expectations.
PROGNOSTICATIONS TWEAKED
For fiscal 2009, the company still expects an adjusted profit of $3.76 to $3.88 a share, but now expects revenue to fall 4 percent to 5 percent.
HP is the second-largest IT services company and No. 2 maker of servers, trailing IBM in both.
The company is the top-selling PC maker and its business is less dependent on corporate customers than No. 2 player Dell.
According to research group IDC, HP managed to boost its market share to 20.5 percent in the first calendar quarter.
Some industry executives, including from Intel Corp and graphics chip maker Nvidia Corp, say overall tech sector demand has bottomed out and expect sales to pick up.
But this week, executives from other IT players, including microchip maker Advanced Micro Devices Inc and software services provider Sybase Inc offered dour assessments of the economic environment, warning against betting on a tech sector recovery too soon.
The shares of Palo Alto, California-based HP fell about 5 percent to $34.72 from a regular close of $36.58 on the New York Stock Exchange.