IBM to build computing 'mega centers'...
IBM Confirms It Will Build
'Mega Centers' for Web Firms
An INTERACTIVE JOURNAL News Roundup
International Business Machines Corp. confirmed late
Wednesday that it plans to build "mega centers" in the U.S.,
Europe and Asia that will provide computing muscle to Internet
companies.
Earlier in the day, Merrill Lynch & Co. analyst Steve Milunovich
said the company initially plans to build five such mega centers in
the U.S. and two or three in Europe. An IBM spokesman said
those numbers were about right, but declined to be more
specific.
The mega centers would fall under IBM's Global Services
division, which has been Big Blue's growth engine in recent
years. Services now account for about 38% of IBM's total sales.
IBM has been working on the
mega-center plan for a year, aiming to
cash in on the explosion in electronic
commerce.
As companies begin to conduct
e-commerce, they need more computer horsepower -- but they
may not want to buy the expensive machines themselves. The
idea is that they would lease computing power from IBM, which
would house acres of big computers and storage devices in the
mega centers.
Potential customers would range from Internet-service providers
and pure e-commerce companies to traditional companies that
need support for their Web sites.
Intel Corp. announced this spring that it would open "server
farms" that would largely do the same thing. IBM worries that Sun
Microsystems Inc., the leading provider of Web servers, will
capture more business from Internet firms as they grow quickly,
Merrill Lynch's Mr. Milunovich said.
IBM declined to discuss construction dates or estimated costs of
the mega centers.
Mr. Milunovich also said that he expects IBM to continue selling
personal computers. IBM's PC business lost nearly $1 billion last
year, but the company has shown improving results in the first two
quarters. Mr. Milunovich said management told him that the
"numbers are beginning to work for them" in that business.
"At this point I'm not looking for major divestitures," the analyst
said.
It has been a busy month for the Armonk, N.Y., giant: It agreed to
buy Sequent Computer Systems Inc., a maker of powerful server
computers used in business networks, for about $810 million
and, in a bid to regain leadership of the market for
high-performance data storage systems, late Tuesday
announced plans to buy computer-networking company Mylex
Corp. for about $240 million.
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