But Wait, There's More

Big Blue Gives Big Trade-Ins to Spur p5 590 and 595 Sales in Q2

If you are looking to swap your Power4-based pSeries 670 or 690 server to a new p5 590 or 595, IBM has a deal for you. If you order between now and June 24--which is a week before the end of the second quarter and is enough time for IBM to ship the new box and book the sale in the second quarter--then IBM will give you some free processor core activations and a big trade-in credit.

As is the case with similar IBM deals, the amount of the trade-in credit depends on the machine you are swapping out and the machine you are moving to. The credit ranges from $45,000 to $240,000 and the free processor activations range from 4 to 16. Basically, IBM is giving you some cash and a lot of processing capacity for your old pSeries box instead of just cash for the pSeries machine and a steep discount on the new box. This does two things. First, it allows IBM to get a very valuable pSeries machine for peanuts, which it can resell for more money through its Global Financing unit to companies who don't want or need to move to a p5; and it can also chop it up for parts and sell those parts. Moreover, it allows IBM to book a sale for the new p5 at a relatively high price, which boosts its revenues--at least until the trade-in credit check is cut back to the customer. To take part in the deal, you have to buy a p5 with 16, 24, or 32 processors activated, which is a pretty expensive box. But for customers looking to consolidate several pSeries servers or who have big capacity needs, this deal will fit the bill.

HP Says Itanium Application Count Up 25 Percent Since January

The Itanium software portfolio seems to be growing at a nice clip, and Hewlett-Packard was happy to report that at its HP Enterprise Forum in Copenhagen, Denmark, this week that the total number of applications available on Itanium has grown to 4,000, an increase of 25 percent since January. I was told by HP in December 2004 that Itanium chip had 2,900 applications ported to it and that HP hoped to hit 4,500 applications by the end of 2005. Having pulled in 1,100 new applications in less than six months already, if this rate can be sustained, Itanium could have more than 5,000 applications by the end of the year--well ahead of HP's projections from six months ago.

HP Promises vPars on Itanium Servers By Year's End

If you were under the impression that Hewlett-Packard was already shipping its vPar virtual partitions on Itanium-based Integrity machines, you might be surprised to learn that this feature is being promised for delivery some time this year on the Itanium boxes.

HP has two kinds of partitions on its servers. The HP 9000 midrange and Superdome high-end serves have had so-called nPar hard partitions starting in September 2000 when the Superdomes were launched. Servers based on a four-way cell boards could have each board logically and electronically isolated from the others in the system and have those resulting partitions run their own HP-UX operating system installed on it. The Itanium-based Integrity server line has had nPar partitions for HP-UX and Windows operating systems at the high-end for some time, and last summer, Linux-based nPar partitions were announced that could span as much as eight processors in the 16-way and 64-way variants of the Integrity Superdome boxes. (Linux was not supported on the Superdomes until then, which was also something of a surprise.) The low-end Integrity servers have supported nPars running Windows, Linux, and HP-UX for some time. In August 2001, HP announced vPar virtual partitions, debuted in the PA-RISC versions of the Superdomes and then cascaded down the HP 9000 server line. There is some confusion as to when vPar support was expected on the Itanium-based machines running HP-UX--some people were thinking in the first quarter of 2005--but HP said this week that it would deliver vPars on HP-UX 11i v2 on Integrity machines in 2005. So basically, that means any time between now and December.

Cray Bags $17 Million Supercomputer Deal from Uncle Sam

Supercomputer maker Cray got some good news last week as it said that the U.S. government had invested $17 million in the "Black Widow" next-generation supercomputer. Cray agreed to kick in $17 million of its own cash to the project as well. In early 2004, Cray was telling Wall Street that in 2006 it would be working on a follow-on in the vector super line code-named Black Widow that will employ new multistreaming processors (MSPs), which are used in the Cray X1 and X1e and were supposed to be manufactured using IBM Microelectronics' 90 nanometer copper/SOI/low-k chip making processes. As we previously reported, Cray canceled its chip deal with IBM, and this investment might have something to do with making sure the project progresses. In 2008 or so, the "Black Window-II" kicker is supposed to come out. Black Widow will initially hit a several hundred teraflops initially, says Cray CEO Jim Rottsolk, and will expand up to petaflops (thousands of teraflops) during its lifetime. Uncle Sam wants to have that computing power--rest assured--and it wants such large capacities from multiple suppliers, which is why Cray is still in business. By 2010, Cray is expected to have a newly architected system dubbed "Cascades," which aims to bring sustained petaflops performance to high-end supers.

SSA Global Prices Its Initial Public Offering

ERP software supplier SSA Global said last June that it wanted to go public again, and last week the company priced its shares and the size of the float in the initial public offering. Last year, in SSA's filings, it put a dummy value of $200 million in the S1 filing it made with Securities and Exchange Commission (so it could calculate fees for financiers), and the real value came in at about half that. Specifically, SSA plans to sell 9 million shares at a starting price of $11 a pop, which comes to $99 million. That gives SSA a market capitalization of about $206 million. SSA's venture capital owners, General Atlantic Partners and Cerebus Partners, together own a large swath of stock that they can hold on to or sell as they see fit--nearly 56 million shares, in fact; these shares are currently valued at just under $2 a share for reasons that probably make sense to Wall Street analysts but not to normal people. Why SSA is not valued at $716 million in the S8 form it filed is unknown, but all shares being equal, that is what value the company should have based on the float.

As to whether or not SSA is worth this much money is a matter that Wall Street investors will decide over time. SSA had $157.5 million in software license sales in fiscal 2004 ended July 31 last year, support revenues of $322.5 million, and services revenues of $156.5 million, for a total of $636.5 million. This is above the range that SSA was projecting when it went on an acquisition binge several years ago after being taken over by venture capitalists. SSA brought $18.8 million to the bottom line last year, about a third of the prior year when revenue was less than half of fiscal 2004's levels. In the first two quarters of fiscal 2005, SSA has been able to maintain its sales and boost its profits by about a third.

Gartner Says IT Staffs Will Contract by 15 Percent in Five Years

Just when you thought it could not get worse, maybe it can. According to Gartner, by 2010 the number of people in the IT profession is expected to contract by 15 percent. Moreover, the company is projecting that within five years, six out of 10 people affiliated with IT organization will have business-facing roles (rather than being isolated in coping with hardware and software), which at midrange and large enterprises could mean that up to a third of employees vanish compared to staffing levels in 2000. There are a lot of forces behind this trend, but Gartner expects that business units will start managing their own IT infrastructure, which leaves IT people out of the loop. Utility computing and other services-style computing are also part of this expected trend.

IBM Pushes Grids for Economic Development

Grid technology and utility computing are fast becoming the universal ointment to fix the woes of the computer business. Whether or not this salve actually will work remains to be seen, but being skeptical does not mean being negative on every new idea related to grid computing that comes along.

For instance, last week, IBM announced a partnership with OneCleveland, based in the formerly industrial center of Cleveland, Ohio, to try to use grid technology to bolster collaboration between branches of the government in the greater Cleveland area, its citizens, and public facilities such as hospitals and schools. IBM and OneCleveland are going to build a grid, called the Economic Development Grid, using technology that has yet to be determined.

If you are not familiar with Cleveland, that is where Standard Oil of Ohio, part of the Rockefeller empire, was based and where shipping and railroad infrastructure was dense and manufacturing and distributors were located in the late 19th and early 20th centuries. According to OneCleveland's president, Scott Rourke, the non-profit Internet service provider has been getting donations of fiber optic bandwidth to build a network that serves northeast Ohio, which has a population of around 1 million. Public schools, universities and colleges, hospitals, government offices, and museums pay OneCleveland for access to this network, which is run by IBM. Having built the network, IBM and OneCleveland want to take the system up a notch and use grid technology to allow collaboration across that network. For instance, one of the early projects will be to allow patient records to be shared across all hospitals in the region, thus eliminating redundant and incomplete record keeping for patients that go to different hospitals in the area. Eventually, OneCleveland hopes to add in K-12 school records, which will allow preventive medicine to be performed on students in the area. This ultimately cuts healthcare costs and improves the quality of life in the Cleveland area.

According to Ken King, IBM vice president of grid computing, IBM is cooking up other schemes to use grid computing to drive economic development. He says there are natural centers of information around the world, which could become centers of research and collaboration if this information becomes gridded. Think of where the petroleum, medical, pharmaceutical industries are clustered. The establishment of such grids could even be used to foster a new business. For example, a city with good pizza delivery near a rural setting and low costs for living could decide to set up a grid to attract software developers out of Silicon Valley and to a new area. The software companies could not only collaborate over the grid, but actually use the grid to code, test, and distribute their wares. King says IBM is starting out small with these economic development grids, and will stay in the United States with them for now. But he says there is nothing unique about the U.S. that makes the idea work. IBM just wants to get some experience before it goes global.