IBM doubles the data

March 21, 2000: 5:05 p.m. ET

New memory system designed to enhance server performance
By Staff Writer Richard Richtmyer

NEW YORK (CNNfn) - IBM on Tuesday rolled out a new line of computer memory modules that it says helps speed the flow of data on the Internet by doubling the amount that flows between a network server's memory banks and its central processor.
    The new memory modules are based on Double Data Rate (DDR) technology, which allows computers to send and receive twice as much data with every beat of the system clock than previous memory systems. This technology creates a high-speed pipeline between the processor and memory and increases the efficiency of a network server, IBM said.
    DDR was developed in part as an alternative to a memory technology called Direct DRAM, which was developed by Rambus (RMBS: Research, Estimates). Although Direct DRAM has gained the support of chip-industry industry stalwart Intel (INTC: Research, Estimates), there have been several product delays, and a growing number of industry participants have been growing increasingly dubious of the company's future prospects.
    While IBM's introduction of its new DDR memory modules -- which the company said would first be used in its Netfinity and NUMA-Q servers -- is not really a groundbreaking technology development for Big Blue, it shows that it has taken an increasing role in support of the memory architecture.
    IBM has been an active supporter of DDR technology. Last year the company, which historically has had a reputation of closely guarding its technology secrets, set up a Web site where it shares at no cost specifications and designs for DDR memory modules.
    "It's significant in the sense that there's a big debate in the memory industry over whether Rambus or DDR will win out in the end," said Victor De Dios, an analyst at De Dios & Associates, a technology advisory firm that focuses on computer memory companies.
    However, because DDR appears to be gaining more support in servers and the competing Rambus technology has so far been focused on desktop PCs, De Dios does not see the move as IBM trying to face down Rambus.
    Last month, Intel said it would not support the use of DDR memory systems in mainstream desktop PCs.
    "I think they're pretty much saying what we've always believed and have forecasted, which is that DDR and Rambus will co-exist in the market because they address different market segments," De Dios said.
    But by focusing its technology on the server market, IBM is locking in on an area where there is much more room for growth, according to De Dios.
    "In the end, the one who wins is the one that is better positioned in the growth segments, and we believe the growth segment is in servers," he said. "We think by 2002, the demand for memory in servers will be about equal to that of desktops."
    From a broader standpoint, Tuesday's announcement also shows that the company is focusing on beefing up the hardware side of its business, which some observers say has lagged in comparison with some of its other business lines such as software and services.
    "One of the things IBM needs to do more of is become more competitive with their hardware products," said John Jones, an analyst at Salomon Smith Barney in San Francisco. "They've become very competitive in software and services. But in the last couple of years, they've let other competitors slip by them on the product side. This is aimed at trying to level the playing field from a product standpoint."
    IBM (IBM: Research, Estimates) shares edged up 3/4 to 113-1/2 Tuesday on the New York Stock Exchange trade. Meanwhile, Rambus, which hit a high of 471 earlier this month and have been under increasing pressure, ended Tuesday's session 50-15/32 lower at 266-9/16, a 15.9 percent decline on the day.