IBM Hones Blade Line

IBM(IBM Quote) unsheathed a bevy of blades on Wednesday, beefing up its lineup of the thin servers.

Among the new IBM servers is a blade running the Cell processor developed jointly with Sony(SNE Quote) and Toshiba, and the first showcase for the chip outside of the Sony PlayStation due out later this year.

But as much as the announcement represents an important step for the Cell processor, it also signals the rising role of blades within the server market as hardware makers sniff out new sources of revenue.

Juhi Jotwani, IBM's BladeCenter director, says the company is looking to spread blades beyond the walls of enterprise data centers into retail, hospital and digital media environments.

The Blade.org industry consortium, which was also formally launched Wednesday, will spearhead this endeavor by helping to promote blade servers in assorted end-markets.

Blades constitute only a small slice of the overall server market, accounting for 4.6% of total server sales in the third quarter of 2005, according to industry research firm IDC.

But sales of blade systems are growing at an explosive rate, with shipments up 72.1% year over year in the third quarter, compared with 11.3% growth for the overall server sector.

With power and space savings becoming an increasingly important consideration in data centers, blades offer a practical solution. Blade servers are essentially circuit boards that can be stacked together within a single chassis, sharing a common network and power source.

Blade servers aren't moving the needle for these companies, says Chuck Jones of Atlantic Trust Stein Roe. But competing in the blade space is something they have to do, because sitting on the sidelines would mean getting shut out of the emerging market.

The company with the most to gain from blades is Dell(DELL Quote), says Jones, because blade sales would account for a higher percentage of total revenue than at tech giants Hewlett-Packard(HPQ Quote) and IBM. (Jones' company has a position in Dell.)