IBM’s Servers Win New Business

International Business Machines (IBM: 127.25 -0.30 -0.24%) announced that Iskon, a leading Croatian Telco services provider in the alternative broadband market has chosen IBM’s blade server and storage virtualization platform to optimize its data backup and archive platform. By deploying energy-efficient IBM blade servers in a BladeCenter chassis, Iskon’s infrastructure will improve.

Iskon has also selected IBM’s Storage System DS5300 and San Volume Controller for the storage, back-up and archiving of data. Iskon has replaced the previously installed Hewlett-Packard’s (HPQ: 49.79 +0.83 +1.70%) server line with IBM’s new blade server and storage virtualization platform. The new servers from IBM will help Iskon streamline internal processes, reduce uncertainty and help ensure continuous service for customers.

IBM’s system will also support Iskon’s business growth, enabling it to introduce new services. IBM is the leader in the server market. According to Interactive Data Corporation (IDC: 25.51 +0.17 +0.67%), IBM had the strongest performance in the third quarter of 2009 followed by Hewlett-Packard (HPQ: 49.79 +0.83 +1.70%). IDC also said that both IBM and Hewlett-Packard are taking away share from Dell Inc. (DELL: 13.46 0.00 0.00%) and Sun Microsystems Inc. (JAVA: 8.44 +0.21 +2.55%) in the server market.

IBM grew its revenue market share to 31.8%, although sales declined 12.9% to $3.3 billion. That was slightly better than HP, whose market share inched up to 30.9%, as revenue declined 16.8%. IBM’s Systems and Technology segment has also been growing.

The company is currently focusing its investments on differentiating technologies with high growth potential including POWER6, BladeCenter QS22, BladeCenter-S, Systems z10, high-performance computing, virtualization and energy efficiency as part of its long-term target for 2010. In 2009, IBM unveiled a new generation of Intel Xeon processor 5500 series-based System x servers and launched a new generation of x86 System x Racks, Blades, iDataPlex Technology and Management Software.

According to IDC’s new data, server sales continued to fall in the third quarter but was better than expected, boosted by stronger demand for x86 servers as companies begin to substitute aging IT hardware. IBM’s continued expansion in the server business will extend the company’s leadership in energy efficiency, security and resiliency. This should also give IBM a competitive advantage over Hewlett Packard.

We maintain our Neutral rating on IBM.