IBM targets Sun with lower-priced midrange servers

NEW YORK: International Business Machines Corp. said on Monday that it will

launch a new line of midrange server computers that steps up the price pressures

on its archrival, Sun Microsystems Inc.

IBM said servers in its new p670 line, which is targeted at large and

medium-sized companies, would cost up to 40 per cent less than the equivalent

offerings from Sun because they will use fewer computer chips.

"IBM has been getting more astute at Unix and it is launching products

at prices that put its competitors in palpitations," said Charles King, an

analyst with Sageza, a Silicon Valley-based market research firm. Sun, which is

also expected to launch a midrange server this week, has been fighting IBM on

technology and pricing to capture share in the moribund market for servers

running the Unix operating system.

Competition has heated up between Sun, IBM and the third major Unix vendor,

Hewlett-Packard Co., as recession-wary corporations have frozen technology

budgets, and analysts have given mixed signals about Sun's recent performance.

"You're seeing these cheaper midrange boxes because, despite the

government's protestations (that the economy is rebounding), there is a

reluctance amongst companies to spend too much money," King said.

The server line, which will ship on April 26, includes four computers ranging

in price from $178,270 to $535,522, compared with Sun's equivalent range of

$257,525 to $792,731 IBM said. Analysts categorize servers roughly into three

groups with high-end computers, costing more than $1 million, midrange computers

that cost between $100,000 and $1 million, and low-end computers that cost less

than $100,000.