IBM Merges Server, Chip Groups

The company says merging the two groups is a natural step, since the objective of both is to sell servers running in large part on IBM's Power chip technology.

IBM has merged its server and chip groups in a move designed to streamline the operations of both units.

The merged business unit, called the Systems and Technology Group, will be headed by William Zeitler, senior vice president and group executive for IBMs Systems Group, and John Kelly, senior vice president of the Technology Group, according to an IBM spokesman.

The two groups have similar business objectives—to sell servers running in large part on IBMs Power chip technology—so merging them was a natural step, said Jim Larkin, a spokesman for IBMs Systems Group.

"Increasingly the world is evolving into a two-chip design type of world," Larkin said. "Youve got Intel [Corp. processors] and youve got [IBMs 64-bit] Power. As that increasingly becomes the case in the industry, there is going to be a need for making a close alignment between the folks who make these incredible [Power] processors and the folks who sell systems in which these incredible processors run."

A closer working relationship will mean that customers will be able to get their hands on Power-based systems more quickly, he said.

The Systems Group, which employs about 13,000 workers, has been successful, particularly over the past few years as IBM has refocused on the server business. However, the chip-making business—which has about 17,000 workers—has struggled and currently is unprofitable, having lost almost $34 million in the fourth quarter in 2003. Along with building IBMs Power and ASIC chips, the unit makes chips for such companies as Apple Computer Inc.

IBM is scheduled to release the next version of its Power technology, Power5, in the middle of this year. Larkin said Power5—which will offer such enhancements as simultaneous multithreading—will offer users up to four times the performance of the current Power4+.

The Power platform is incorporated in both the pSeries and iSeries servers, which can run with IBMs AIX Unix operating system or Linux.