Re: NY Times Reports "Little Blue "- IBM to Offer Smaller VersionOf Its Mainframe Computer

From what I have heard (and if I reveal my sources I'd have to kill you),

Steve

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Sent: Thursday, April 27, 2006 5:52 AM

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Updated 12:01 AM ET April 27, 2006

IBM to Offer Smaller Version Of Its Mainframe Computer

By Charles Forelle

Call it Little Blue.

<http://www.smartmoney.com/att/eqsnaps/index.cfm?story=snapshot&symbol=ibm>International
Business Machines Corp. will soon begin selling a
junior version of its flagship mainframe
computer, pitching the machine at small and
medium-size businesses concerned about the
security and reliability of lower-cost servers.

The economy model, called the z9 Business Class,
will start at $100,000, well below the
quarter-million-dollar figure that is a typical mainframe starting point.

The move, expected to be announced today in
Beijing, represents an effort to extend the life
of the venerable machine, whose lineage goes back
more than four decades. The mainframe, though
less central to Big Blue than it was in eras
past, remains a substantial source of profit,
since the pricey machines have few competitors.
Sales of mainframes also drag in other business,
such as software and services needed to set them up.

<http://www.smartmoney.com/att/eqsnaps/index.cfm?story=snapshot&symbol=Stallings,
Jim>Jim Stallings, IBM's general manager for the
mainframe unit, said the announcement is a
"statement that long term," the mainframe "is a growth platform."

The mainframe, once derided as ancient and
obsolete, is alive and kicking, if not flying out
the door. Sales have been up and down: They rose
15% from 2003 to 2004, then fell 8% from 2004 to
2005, IBM said, though it doesn't disclose precise figures.

The big machines were long aimed at financial
institutions and government agencies that value
them for their tight security and heavy-duty
processing horsepower. But in recent years they
have taken on nimbler tasks. IBM has designed
special modules that allow users to run the free
Linux operating system on the mainframe, as well
as applications based on Java software technology
that is popular for Web-based programs. At the
same time, IBM's competitors have tried to lure
longtime mainframe users to cheaper machines.

But sales of the special Java and Linux modules
have been growing, Mr. Stallings said, indicating
that some companies are devoting mainframe space
to tasks that once ran on low-cost servers.

Write to Charles Forelle at charles.forelle@xxxxxxx

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