IBM Pays Customers To Ditch Sun Servers

Amid uncertainty over Sun Microsystems' future under Oracle, IBM is upping the ante in a competitive campaign that aims to convince businesses to switch from Sun servers to Big Blue's hardware.

As of last week, IBM doubled the monetary value of incentives offered under its so-called Power Rewards migration program. Under the new terms, IBM will offer customers $8,000 worth of software or services for every Sun Sparc processor ditched in favor of IBM Power servers. IBM previously offered $4,000 per processor for customers that made the switch.

The program applies to Sparc-based Sun hardware, such as the Sparc, UltraSparc, and Sparc 64 servers, and also to Fujitsu systems that run on Sparc chips. A customer that moves off a Sparc-powered system running, say, eight processors would be eligible for up to $64,000 worth of rewards.

IBM claims its Power System servers are two to four times more efficient than Sparc systems in terms of speed and energy use. Power servers use the AIX, Linux, and i operating systems.

The program appears to be paying off. IBM said it secured 28 "competitive wins" over Sun in the first quarter and that it has helped 1,640 customers migrate to IBM hardware from systems made by Sun, HP, and other manufacturers over the past year.

IBM holds the lion's share of revenue in the worldwide Unix server market. As of 2008, Big Blue's stake was 37.2%, compared with Sun's 28.1% share of total revenue, according to IDC.

Oracle said April 20 that it agreed to acquire Silicon Valley neighbor Sun for $7.4 billion.

Under the terms of the deal, Oracle will pay $9.50 per share for Sun's common stock. Oracle said it expects Sun's operations will boost earnings per share by at least 15 cents in the first full year after the deal closes while contributing more than $1.5 billion in first-year profits.

Oracle said it plans to combine Sun's server line with its own middleware and business applications to offer business systems that are fully integrated "from application to disk." Such an offering could appeal to IT bosses who want simplicity, but any disruptions caused by the merger could allow IBM to widen its lead in the market.

Oracle has said it expects its acquisition of Sun to close this summer.

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