'Pay as you grow' from IBM

Information technology giant IBM has announced that high-end models in its new eserver computer range will include extra processors that will lie dormant until activated by the user.

IBM says the gimmick it has dubbed "capacity on demand" will allow users to upgrade their computers more cheaply than has previously been possible.

The firm's Asia Pacific director of marketing and strategy, Edward Orange, said the cost of the 30 per cent extra processing power would be borne by IBM and would not be reflected in initial purchase prices.

Customers would be charged only when they had activated the processor's power via the net.

"It's a gamble for IBM," he said. "We are betting on the loyalty of our customers."

Mr Orange said IBM would also absorb the financial risk of a similar scheme in which the company will install a fourth eserver in standby mode for every three ordered.

IBM says it has already spent $US5.5 billion developing the eserver range, which has been seen as part beefing up of its product offering and part re-branding exercise.

"There is a whole new infrastructure that is required to compete in the e-business world," said Mr Orange.

"We've had to redesign our servers from the ground up."

The range starts with the rack-mounted xSeries with models priced from $US1554 and extends to the zSeries at around $1.2 million which is capable of 2.8 billion transactions a second and will support up to 2 terabytes of memory.

In between are the 64-bit iSeries with models starting at $US10,413 and the pSeries, which is aimed at the Unix market with models starting at $US13,599.

All models will be capable of running under the Linux, AIX, Windows 2000 or S/390 operating systems and will come pre-bundled with IBM's Websphere e-commerce application software.

The eserver range will replace IBM's existing System 390 and RS6000 mainframes, AS400 systems and the ASX and Netfinity servers, but Mr Orange said that these models would continue to be supported.

"Nothing dramatic has happened to the product path," he said.

"Rather than trying to compete on speeds and technical features we are going to compete in support and capacity on demand."

Last week, IBM said it planned to spend $US75 million this quarter on a worldwide campaign to promote the eserver, but it has since learned that it may face a lawsuit over its choice of name.

North Carolina-based company Technauts claimed on Friday that it holds a trademark on the name "eServer" for the server appliances it has been marketing since early last year.