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July 20, 2000 (9:13 PM EDT)

IBM To Sell New Supercomputer Commercially

IBM To Sell New Supercomputer Commercially

By Mark Hachman,

IBM plans to announce Friday that the classified supercomputer it recently shipped to the U.S. Department of Energy, "ASCI White," will be available for commercial customers.

The potential maximum horsepower --12.3 teraflops, or 12.3 trillion floating operations per second -- the RS/6000 SP system offers is breathtaking. Yet IBM (stock: IBM) hopes to focus customers' attention on the computational power of each individual microprocessor and the I/O capabilities of an improved switch.

Each of the 16 processors per node boasts better floating-point performance for scientific or statistical computations. The improved I/O performance will be used in manipulating the large blocks of data found in databases.

Earlier versions of the commercial RS/6000 systems used only four processors per node. The bandwidth of the switch has also tripled, to 500 Mbytes per second.

The combination should appeal to customers in financial and e-business segments who run a blended mix of scientific and database applications, IBM executives and analysts said.

The new systems are being made available only about a month after IBM announced "ASCI White," a system capable of scaling up to more than 8,100 microprocessors. IBM executives said that was done deliberately.

"It's always been our strategy to help push the limits of our systems, to leverage that into a business environment via a quick turnaround," said Mike Kerr, vice-president of products for IBM Web Services, Somers, N.Y.

Selling a supercomputer commercially makes for an interesting segment on the evening news, but analysts called the disclosure a stronger selling point for the scalability features of each of IBM's nodes.

If customers are going to confront the decision of scaling up to a high number of nodes, "IBM has already kind of figured out what that means," said Rich Partridge, analyst with D.H. Brown and Associates, Port Chester, N.Y.

Each node contains 16 Power 3-II microprocessors containing copper interconnects, each running at 375-MHz, essentially doubling the computing density of previous generations of systems, according to Partridge. The system ships with tools for dynamic CPU reallocation, cluster-management services, and LoadLeveler software that improves automatic failure detection and job rescheduling.

Each of IBM's nodes will cost $190,000, an IBM spokesman said. "ASCI White" cost the Energy Department $110 million.

While IBM has fared well in mid-range and high-end servers, hardware sales for the company overall declined for the second quarter. In the first quarter, IBM's midrange Unix market share stood at 24.6 percent, compared with 21.4 percent for Sun Microsystems (stock: SUNW), according to IDC, Framingham, Mass. Kerr said RS/6000 revenue growth has been about 30 percent, year-over-year.

But second -quarter hardware sales at IBM overall declined about 4 percent from the same period last year, to $9.2 billion, dragged down by lower disk-drive and PC revenue.

IBM on Wednesday announced second-quarter 2000 diluted earnings per common share of $1.06, compared with 1999 diluted earnings per common share of $1.28 that included one-time gains. Net income was $1.9 billion, compared with $2.4 billion in 1999, including a $687 million gain from the sale of the Global Network business and other actions.

Second-quarter 2000 revenues were roughly flat, at $21.7 billion, compared with the same period a year ago.

Analysts polled by First Call/Thomson Financial expected IBM to report earnings of $1 per share.


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