I.B.M. Forms New Division Responsible for Servers

Company News

By Lawrence M. Fisher
The New York Times

August 2, 1994

I.B.M. said yesterday that it had formed a new business unit, the Systems Technology and Architecture division, which is to develop common hardware technologies and design standards for the company's computers known as servers.

The International Business Machines Corporation disclosed the reorganization in an internal memo that it distributed to the press.

I.B.M. named Phil Hester, who is 39, general manager of the new unit. Mr. Hester, who was previously vice president systems and technology for I.B.M.'s RISC systems division in Austin, Tex., will remain in Austin, but will now have oversight as well of the company's AS/400 and mainframe-level servers. Mr. Hester will report to John M. Thompson, senior vice president and group executive.

'Combined Expertise'

"It makes sense for us to leverage the combined expertise we have across these three product groups," Mr. Hester said in a telephone interview. Servers are the machines at the heart of computer networks and are used to move files and programs to other computers.

I.B.M. said its three server divisions -- Large Scale Computing, AS/ 400 and RISC System/6000 -- would maintain responsibility for product development, and that the brand identities of each division in the market would be maintained. But the new unit will develop common processor and memory subsystems that will be used in all three classes of machine.

Mr. Hester said that the three classes of server were moving to a common chip technology, CMOS, which would facilitate sharing components. "Before, the collaboration we had between the groups was more in an informal manner," he said.

I.B.M. said the common design features among its products would give it a competitive advantage in the market for client/server systems, in which tasks are split among large and small computers on a network.

'A Lot of Redundancy'

While I.B.M. had announced the consolidation of product lines in the past, yesterday's move "sounded more credible," said Sam Albert, an industry consultant in Scarsdale, N.Y.

"There's a lot of redundancy there," he said. "What they have to do is what General Motors, Ford and Chrysler do with cars -- to have a common set of parts. They cannot continue coming to market with competing architectures."

Tom Whiteside, the president of MIPS Technologies Inc. and the former head of the Power PC program under Mr. Hester, said he was a strong choice to run the new unit. "There are very few people who engineers will really follow, and Phil is one of them," he said. "It's a smart move on their part."

I.B.M.'s shares gained $1 yesterday to close at $62.875 on the New York Stock Exchange.