WSJ.com - IBM's Computer-Server Business Puts the Squeeze on Rivals

WSJ.com - IBM's Computer-Server Business Puts the Squeeze on Rivals: "IBM's server surge hasn't gained much notice, in part because it has been overshadowed by a slowdown in the company's giant services business, which accounts for about half of its total revenue. But it has put the squeeze on competitors. Servers -- essentially any computer bigger than a desktop model -- coordinate computer networks, crunch data, dish out Web pages, retrieve customer records and perform other tasks.
After regaining the top spot in servers in 2002, IBM captured 32% of the world-wide market last year, widening its lead over Hewlett-Packard Co., at 27%, and a sinking Sun Microsystems Corp., with 12%, according to International Data Corp., a market-research firm in Framingham, Mass. Dell Inc., the only other major company that is growing in server-market share, stood at 9%.
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Although IBM has had success selling Wintel boxes of its own, its most powerful, higher-priced models use IBM-made chips and a variety of other operating-system software. Some are smaller, modernized versions of its giant mainframes of yore, once the engine of IBM's profitability. Indeed, IBM says the key to its gains was its decision to continue designing and manufacturing a proprietary line of microprocessors, the miniature brains of computing, instead of standardizing on Intel chips as many competitors have done. IBM also has been selling more servers that run on the free Linux operating software, the bane of Microsoft."