IBM Spends $2.4 Billion to Aim New Open Source Power Chip at Intel

IBM (IBM) appears to be banking on Power servers to resuscitate its sinking hardware business, culminating a three-year, $2.4 billion development effort with new open source Power8 chip-based systems while collaborating with the OpenPower Foundation to offer up the code to any and all comers to build on the platform.

IBM positioned the move as a “sharp contrast [with] other chip and server manufacturers’ proprietary business models,” but with its hardware sales tumbling 23 percent in Q1 and its Power business falling 31 percent last year, the vendor badly needs a hearty seedling from which to build a stronger beanstalk.

“There no longer is a one-size-fits-all approach to scale out a data center,” said Tom Rosamilia, IBM Systems and Technology Group senior vice president. “With our membership in the OpenPower Foundation, IBM’s Power8 processor will become a catalyst for emerging applications and an open innovation platform.”

Late last week, IBM rolled out five Power Systems S-Class servers aimed at large, scale-out computing environments. Two of the units, the S812L and S822L, run Linux exclusively, and the S814, S822 and S824 servers support Linux, AIX and IBM i. The systems will be available as of June 10 priced starting at about $8,000.

Still, IBM and the Foundation, whose founders also include Google (GOOG), NVIDIA (NVDA), Mellanox and Tyan and includes some 25 IT companies, have bigger fish in mind than what they might reel in with the new Power systems. The Foundation formally formed in September and IBM’s Power systems are the first units it has produced to serve its directive to propagate the platform.

With the Unix server market rapidly ebbing, the idea is to fight Intel (INTC) for Linux-based, data center installations by offering a better mousetrap to x86-based servers. IBM said its internal tests showed the Power8 processor—which measures one square inch and is embedded with more than 4 billion microscopic transistors and 11 miles of copper wiring—can analyze data 50 times faster than the latest x86-based systems.

“We really wanted to give people an alternative to Linux on Intel,” Rosamilia said.

IBM last year committed $1 billion in new Linux and other open source technologies for the Power servers that yielded five Power Systems Linux Centers and the Power Development Platform, a no-charge development cloud for developers to test and port x86-based applications to the Power platform.

The linchpin of the whole deal, of course, is IBM’s licensing decision to open Power to collaborators and competitors to tailor designs in whatever way suits them. And, it’s IBM’s participation in the OpenPower Foundation that could serve the wider goal to offer a real competitor to x86-based servers.

Running with an OpenPower ecosystem won’t come without a price for IBM, however. Martin Schroeter, IBM chief financial officer, said on the vendor’s Q1 earnings call that a reorganization of the Power group was in the offing, including some layoffs.