IBM opens architecture, business model with Power chip strategy

The chip war between Intel and IBM feels like the kind of serious, neck-and-neck corporate combat where the players keep their cards close to their chest. But the key to success may in fact lie in overhauling traditional closed business models, fostering business partnerships and a more open, collaborative development model.

A recent article on by James Niccolai notes that as the market for ‘traditional’ Unix servers running back-end Oracle, SAP and IBM software has declined, IBM’s Power chip business has lost ground to Intel’s Xeon challenge. In response, IBM (Nasdaq: IBM) has been opening up its business model as it seeks new markets for its high-end microprocessors, in Web and analytics applications in hyperscale data centres.

IBM won’t stop making Power servers, and last week at the Open Power Summit in San Francisco it launched new systems based on the new Power 8 microprocessor. The company continues to woo US and Chinese online service providers as customers. But today’s customers want low-cost, no-frills systems that they can tinker with, a challenge to IBM’s big-metal business model.

IBM has begun to shake up that model, Niccolai writes, by licensing other server makers to produce Power chips. The expectation is evidently that these other manufacturers will take the technology to market using a more agile, open and low-cost business model.

Another step in this direction was IBM’s launch of the OpenPower Foundation last August. Through the foundation IBM is making Power architecture elements like processor specifications, firmware and software more open, and collaborating on development. The OpenPower Foundation Web site says its goal “is to create an open ecosystem, using the Power Architecture to share expertise, investment, and server-class intellectual property to serve the evolving needs of customers.” The consortium now has 26 members, some of whom – Nvidia and Altera among them – made their own Power-related announcements alongside IBM’s last week.

Google has also worked with IBM and Canonical to develop open-source tools and firmware for Power systems. Signing Google as a Power customer would be a huge win for IBM, but Google is still evaluating the hardware. Nonetheless the Computerworld story reports that Google “is attracted to the open, multivendor approach IBM is taking.”

So far IBM’s Power servers come bundled with expensive software and services, not an attractive option to companies like Facebook and Google which have a notoriously low-cost business model. That’s why the licensee path makes more sense as a way of pushing the Power product into the market.

Niccolai says that IBM is essentially mimicking the business model used by ARM, which designs processors for smartphones and tablets and licenses then to other companies for manufacture. That’s where the resemblance ends, of course, as ARM’s chips are decidedly not nearly on the scale of IBM’s Power line.

“Power is well-known for computers with doors on them,” said Brad McCredie, IBM’s vice president of Power development, in a reference to the large cabinets that house Power servers. “You don’t think of them as scale-out computers. We’re taking that technology used to build computers with doors, we’re decomposing it into its elements, and we’re making it available to people to innovate.”

Andrew Brooks
Andrew Brooks
Andrew Brooks is managing editor of IT World Canada. He has been a technology journalist and editor for 20 years, including stints at Technology in Government, Computing Canada and other publications.

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