IBM lures HP customers, reuses their abandoned HP gear

It's no surprise IBM goes to great lengths to lure Unix customers away from HP. But IBM is pretty innovative when it comes to making money at HP's expense, even long after customers have switched to Big Blue.

HP customers who take advantage of a new rebate program must stop using their old HP systems within 90 days and turn them over to IBM. What does IBM do with the HP servers? In some cases they are simply recycled in an environmentally friendly way. In other, more lucrative cases, however, IBM uses the HP servers itself or leases them out to other customers, according to Scott Handy, IBM vice president of worldwide marketing and strategy for System p servers.

"We might be fairly unique in this," Handy says.

The new rebate program coincides with IBM's System p 550 Express Unix servers becoming generally available this month. (Compare server products.) Customers who use HP PA-RISC systems are being offered rebates of $1,200 a core, or $9,600 when they buy an eight-core IBM system. That's about a 10% discount off the usual price, Handy says, savings that can be used to purchase IBM's migration services. After migrating to an IBM server, customers "have 90 days basically to turn in the other servers. Literally, our IBM group takes them and we recycle them," he says.

In addition to recycling, the possibility of using, reselling or leasing an HP system "makes [the rebate] financially justifiable for us," Handy says. "Part of our global size means we have quite a wide variety of business models going on at the same time that I can leverage for this competitive program," he says.

The System p 550 is in the midrange of the Unix market, and competes with the HP Integrity rx6600 server with dual-core Intel Itanium processors, Handy says. HP is trying to phase out its PA-RISC system and upgrade customers to the Integrity servers, and IBM believes some of these customers are unhappy and ready for a change. Talk of phasing out PA-RISC actually goes back as far as 1999.

The rebate for PA-RISC customers is new, but it won't be the first time IBM reuses competitors' products. Handy says IBM has lured 1,000 Sun and HP Unix customers over to Big Blue in the last two years, and in many of those cases required customers to turn in the old HP or Sun server.

HP acknowledges handling customer trade-ins in much the same way. "All competitive trade-in equipment is either sent to recycling or to a partner for resale. This recycling is part of HP's company-wide green initiative," an HP spokesperson wrote in an e-mail.

IBM coupled its announcement of the rebate program Thursday with new test results. IBM says the results show its p 550 beating HP’s PA-RISC on database transactions per minute by 16%, while using less than 10% of the energy and a fraction of the space.