IBM Servers: A Little Extra

By Baselinemag  |  Posted 2004-09-01 Print this article Print

IBM's servers are worth paying more for, some say, because it has leading technology and service; others grumble that Big Blue runs like a bureaucracy.

IBM gets nods of approval for Intel-based servers designed with a keen eye for engineering detail, even if its systems tend to be pricier than rivals'.

The Central Bucks School District in Doylestown, Pa., swapped out Compaq servers two years ago in favor of IBM's. Ray Kase, the district's director of information technology, says his team evaluated IBM and Hewlett-Packard. The deciding factors, he says: IBM provided better integration between the servers and its own FastT networked storage systems, and the company seemed more technically astute.

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"We felt very good about the experience we had with the IBM engineers," he says. "They were really trying to get to know our environment, asking very detailed questions." Kase says the district's 46 IBM servers have had "virtually no downtime, and we have 25,000 students and faculty who hammer those systems pretty good."

But some grumble that Big Blue still functions like an impenetrable bureaucracy. It's sometimes tough to locate the right people at a company with about as many employees (319,273 at last count) as the population of Tampa, Fla. "There were a couple of times when I had to scream at someone to get service," says André Mendes, chief technology integration officer at the Public Broadcasting Service, which was an early adopter of IBM's BladeCenter. Adds a top information-technology executive at a Fortune 500 company, who asked not to be identified: "Dealing with IBM is like dealing with the IRS. They're totally unresponsive."

Not everyone agrees with such assessments. In fact, IBM's highly responsive service puts it ahead of competitors, says Brendan Carlton, systems manager at the U.S. division of Huhtamaki, a Finnish packaging company. Huhtamaki's servers, for example, are set up to alert IBM of impending hardware failures. "A few times I've come into the office and there's an IBM guy there with a replacement hard drive," Carlton says. "And I didn't even know I had a problem." As for pricing, he allows that IBM is usually "a little bit extra. But I'd rather pay more because IBM service is second to none."

Meanwhile, Leo Hurtado, CIO of furniture retailer W.S. Badcock, which operates 330 stores in the southeastern U.S., says the IBM servers his company purchased last year were less than 10% more expensive than those from Dell or HP: "We're very happy with the price point."

New Orchard Rd.,
Armonk, NY 10504
(914) 499-1900

Ticker: IBM (NYSE)

Employees: 319,273

Bill Zeitler
Senior VP & Group Executive, Systems Group
The IBM lifer (he joined the company in 1969 as a programmer) was put in charge of all storage and server products in January 2003.

Susan M. Whitney
General Manager, eServer xSeries
Responsible for Intel-based server development, sales, marketing and manufacturing organizations.

The xSeries includes x200 servers (up to four processors each), available as towers or in rack-mountable chassis; x300 servers designed for data centers; and the x445, available with up to 32 processors. BladeCenter systems can fit up to 84 two-processor server blades in a 7-foot rack. Management software includes Director, which tracks hardware configuration of remote systems and monitors components such as processors and disks.

Reference Checks

Cendant Travel Distribution Services
Robert Wiseman
Project: Travel-services firm last year migrated its fare-pricing system from an IBM mainframe to about 100 xSeries servers.

Central Bucks School District
Ray Kase
Dir., I.T.
(267) 893-2100
Project: The 24-school district in Pennsylvania spent about $250,000 in 2002 for 16 x300-series servers, plus 1.8 terabytes of storage. It now runs 46 servers, including a BladeCenter system with 14 server blades.

Brendan Carlton
Systems Manager
(913) 583-8744
Project: Finnish packaging company's U.S. division, based in De Soto, Kan., runs about 65 xSeries Windows 2000 servers in 10 plants and distribution centers.

J&B Group
Kurt Anderson
VP, I.T.
(763) 497-3913
Project: Wholesale food distributor this year replaced seven Dell servers with an IBM x400 eight-processor system running Microsoft's Exchange and SQL Server, and other applications.

W.S. Badcock
Leo Hurtado
VP, I.T. & CIO
(863) 425-7527
Project: Furniture retailer in Mulberry, Fla., consolidated applications on 47 servers—supplied by eight different vendors—onto 16 IBM xSeries systems.

Asian Art Museum of san francisco
James Horio
Dir., I.T.
(415) 581-3580
Project: Museum runs eight xSeries server blades running Windows 2000 in one AS/400-based iSeries midrange system. Three standalone xSeries servers run an Internet Protocol telephony system from Cisco Systems.

Executives listed here are all users of IBM's products. Their willingness to talk has been confirmed by Baseline.

IBM Operating Results*

2004YTD 2003 2002
Revenue $45.40B $89.13B $81.19B
Gross margin 36.4% 37.0% 37.3%
Operating income $5.13B $10.09B $6.80B
Net income $3.59B $7.58B $3.58B
Net margin 7.9% 8.5% 4.4%
Earnings per share $2.08 $4.32 $2.06
R&D expenditure $2.79B $5.08B $4.75B

* Fiscal year ends Dec. 31; YTD reflects first six months
Source: company reports

Other Financials**

Total assets - $99.58B
Stockholders' equity - $28.83B
Cash and equivalents - $7.72B
Long-term debt - $14.42B
Shares outstanding - 1.71B
Market value as of 8/25 - $142.51B

**As of June 30, 2004, except as noted


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