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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





, 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 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



, says Jones, because blade sales would account for a higher percentage of total revenue than at tech giants



and IBM. (Jones' company has a position in Dell.)

Dell is currently in third place in the market, with only a 9% share of the market in the third quarter of 2005, according to IDC, compared with H-P's 32% share and IBM's 42% share.

Dell spokesman David Lord said the company is quickly gaining ground, having increased its market share from 2% since it introduced its most recent blade product in 2004.

"Not only is there phenomenal growth in this mark overall, but Dell's growth within that market has been phenomenal," said Lord.

According to Lord, Dell is committed to growing with the blade market. "We are also going to continue to focus on driving this balanced blade architecture that makes them accessible to all customers," he said. "We don't want them to be proprietary; we don't want them to be overpriced."

In addition to the Cell-based blade, IBM on Wednesday unveiled a dual-core Power processor-based blade and an energy-efficient



Xeon blade, due out later in the year.

IBM's Jotwani says the Cell-based blade, which features nine cores, is geared toward customers doing graphics-intensive workloads such as medical imaging and movie editing.

"We clearly don't see Cell being a general-purpose blade," says Jotwani. But the Cell blade represents another direction to push blade servers, in addition to the corporate data centers where blades are already making strong inroads.

American Technology Research analyst Shaw Wu says that IBM's lead in the market is not just about hardware. The company's deep array of enterprise software provides a good complement to its blade servers.

"I think manageability software is specific to this area because the requirements are a little different than standards servers," says Wu, pointing to issues such as rack density, power and cooling. "That's what really differentiates IBM from the rest."