HP loses Lego to IBM

NEW YORK: IBM, today said it signed a technology deal with Danish toy maker Lego Co. in which it will replace systems from competitor Hewlett-Packard Co. with pay-as-you-go computing that it said will cut Lego's costs during the holiday season.

International Business Machines Corp. did not disclose terms of the deal, which involves about 30 computer servers and some data storage systems.

Competition between HP and IBM heated up after HP bought Compaq Computer last year and as corporations have cut their technology budgets due to the weak economy.

HP said this was one of a "handful" of contract losses related to the Compaq Alpha server, which is based on proprietary Compaq technology that was being phased out even before HP bought the company.

"We win some, they win some," an HP spokeswoman said, adding that HP recently won a computer server contract over IBM with the China State Tax Authority.

IBM and Lego in a joint statement said the toy company would replace 230 Hewlett-Packard computers with six large computers from IBM that run on IBM chips and the popular Unix operating system, 24 computers based on microprocessors from Intel Corp. and four very large data storage machines.

IBM has been pushing its "on-demand" computing model since last year when Samuel Palmisano took over as chief executive officer. IBM says companies can save money by paying for only as much computing as they use.

© Reuters