IBM eServerTM

9/15/2006 © 2006 IBM Corporation

IBM eServer™

Sophie Bechu, Vice President,

Brand Advocate, Systems z, i & p

Integrated Supply Chain

IBM eServerTM

© 2006 IBM Corporation9/15/2006

Agenda

IBM’s Portfolio

Financial Summary

Systems & Technology Group

Design for Supply Chain Overview

IBM eServerTM

© 2006 IBM Corporation9/15/2006

IBM’s Portfolio is Balanced Between Services, Software and Hardware

delivers strong earnings growth and cash generation

has a strategically balanced portfolio of hardware, software, and services

Transformed itself by divesting commodity businesses and investing in higher value solutions

Integrates to create a unique value for clients

IBM…….

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IBM 2Q06 Financial Summary

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2Q06 Revenue and Gross Profit Margin

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Geographic Revenue

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Global Services

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Software

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Systems & Technology

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IBM Systems & Technology Group MilestonesIBM is the #1 overall server vendor• #1 in blades and growing two-times faster than HP and three-times faster than

Dell in the x86 unit market.

IBM led in blade server revenue share for the eight consecutive quarters growing its blade revenue 61% in first quarter 2006 year-to-year.

IBM is the clear leader in worldwide supercomputing with Blue Gene as the #1 and #2 systems on the June 2006 TOP500 list of the world's fastest supercomputers.

–Blue Gene currently performs 280.6 trillion calculations per second or 280.6 teraflops.

IBM moved past Sun Microsystems and HP to take the top spot in UNIX server revenue in 2005.

IBM POWER5 processor-based systems, which power System i and System p platforms, currently hold 50 performance world records.

IBM leads the high-performance segment of the Intel-based server market, where technology innovation is crucial.

IBM eServerTM

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Focus on Innovation

In the 21st-century global economy, the pace and shape of innovation is being dramatically transformed. "The potential for innovation is only magnified by the emerging knowledge-based global economy," Palmisano said. "Today, the basis of innovation is less focused on things, and more on ideas, collaboration and expertise. And in our restless, 24-hour networked world, innovative ideas can move around the world with the click of a mouse.“ - Sam Palmisano

Chairman and CEO IBM

“We will fight our battles not on the low road to commoditization, but on the high road of innovation.” - Howard Stringer, Chairman and CEO, Sony Corporation

“Constant reinvention is the central necessity at GE... We're all just a moment away from commodity hell.” - Jeffrey Immelt, Chairman and CEO, GE

“From this point forward, innovation will be the compass by which the company sets its direction.” - Bill Ford, Chairman and CEO, Ford Motor Company

IBM eServerTM

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Product Families

Mainframe

BladesIntel® processor-based

AMD processor-based

POWER-based IntegratedPOWER-based UNIX®

Clusters

System Storage DS familySystem Storage Tape Family

System Storage Resiliency Family

System Storage Open Software family

Leadership Technology

Technology & Packaging

ProcessorsIBM z/Architecture™

Power ArchitectureX-ArchitectureCell Broadband Engine™

Enabling On Demand Business

Information On Demand

Grid Computing

Capacity on Demand

Grid Computing

Supercomputing Capacity On Demand

Infrastructure Solutions

SOAProduction, office & industrial printers

Retail hardware and software

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Advances in technology give us new options to drive innovation in the business

Resources without limits– Smart objects – Supercomputing for everyone– Storage

Computing power is everywhere – Embedded devices– RFID– Pervasive network capabilities

Connectedness of everything– Open standards– Virtualization – Service-Oriented Architecture

Examples driving change:

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1. Extend core systems innovation and leadership– Deliver on the IBM Systems Agenda– Focus on small and medium businesses– Pursue opportunities in emerging countries – Maintain product leadership

2. Leverage collaborative innovation and expand into adjacent opportunities– Technology Collaboration Solutions

• Semiconductor solutions• Intellectual property• Technology development and manufacturing• Power Management

– Reliability, Availability and Efficiency

Systems & Technology Group Strategy

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Openness Drives Power EverywherePervasive use of POWER builds out ecosystem

Pervasive in high volume products

Used acrossthe industry as embeddedtechnology

DS8000System p5-595System i5-595

System i5-520System p5-520

System p5 & System i5 Express

Power in Core Systems

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The IBM Systems FamilyInnovative, proven technology providing platform choice to match unique business needs

xSeries®

Innovation comes standard.BladeCenter®

Simplify data center complexity.System Storage™

Connected. Protected. Complete.System z™

The flagship for IBM Systems innovation and the heart of a highly secure, resilient and integrated infrastructure.

System p™

Get the power to do more, spend less.

Retail Store SolutionsLeading-edge hardware and

software for the most demanding retail environments

System i™Integration. Simplicity. Solutions.

Simplify your IT.Innovate your business.

IBM Printing SystemsInnovative output solutions for high-speed production printing, distributed print and

industrial applications

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IBM Integrated Supply Chain Strategy

Today the forces of globalization and commodization are unstoppable. And this has created a challenge that is as tough as it is clear: How to cut costs and grow simultaneously. In response, our strategy is to exploit innovation; and adopt a new competitive approach focused on leveraging our global expertise to dramatically lower cost positions and improve productivity, speed, flexibility, and resilience to drive growth.

We have the incredible opportunity to become the integrating force for IBM -- the "glue" that holds the company together and aligns all of our resources in the most important direction -- our clients.

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Design for Supply Chain (DfSC) Overview:Offerings designed for supply chain efficiency and effectiveness...

DfSC Supply ChainCapabilities

Global Logistics

Service Execution

Procurement

Manufacturing

Supply/Demand

Cust. Fulfillment

Configurator

Marketing Strategies and Product Plans

Technology and Design Portfolios

Development

Brand

DfSCDfSC Supply ChainCapabilities

Global Logistics

Service Execution

Procurement

Manufacturing

Supply/Demand

Cust. Fulfillment

Configurator

Global Logistics

Service Execution

Procurement

Manufacturing

Supply/Demand

Cust. Fulfillment

Configurator

Marketing Strategies and Product Plans

Technology and Design Portfolios

Development

Brand

Development

Brand

• Maximize commonality, modularity, universality, and postponement

• Optimize sourcing, planning, manufacturing, and delivery• Address supply chain limitations and leverage supply chain

capabilities

Product Design Supply Chain

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….and are distinguished by decisions based on life cycle impacts

Development (EC) Exp----------------------------------------------------------------Supply & Demand Planning----------------------------------------------------------Order Management ------------------------------Sourcing/Fulfillment plans -----------------------Material Acquisition ---------------------------------------------Bill of Material (BMC) --------------------------------------------Manufacturing MVA ----------------------------------------Inventory Carrying ----------------------------------------------------------------Warranty/Service ------------------------Obsolescence Risk ----------

Aftermarket Service & Support

LogisticsCustomer Fulfillment

Manufacturing

Market & Sell Solutions

Procurement

Manage Cust. & Partner Relations

Planning

Manage Sales& Marketing ContentProduct &

Solution Development

Understand Markets & Customers

Portfolio Supply Chain Strategy Product End-of-Life

Source

Plan

Make

Deliver

Development (EC) Exp |-------------------------------------------------------------|Supply & Demand Planning |--------------------------------------------------------|Order Management |-----------------------------|Sourcing/Fulfillment plans |-----------------------|Material Acquisition |---------------------------------------------|Bill of Material (BMC) |-------------------------------------------|Manufacturing MVA |----------------------------------------|Inventory Carrying |--------------------------------------------------------------|Warranty/Service |----------------------|Obsolescence Risk |---------|

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Design for Supply Chain Techniques 101

Software determines CD player or CD-RW or DVD functionality at final assembly

Combination CD/CD-RW/DVD

Interchangeable CD player, CD-RW or DVD “plug & play”

CD player

Generic Example

Personalize component only when customer requirement is known

A component designed to suit every conceivable need

A common interface that accepts different components

Component used in multiple end products (industry standard)

Description IBM ExampleDfSC Technique

Optimization of pluggable vs embedded VRM’s.

VRM output voltage setting based on installed component.

Postponement

Power supplies that operate over full voltage range (100v - 240v AC)

Universality

Common, Pluggable VRM’s (Voltage Regulation Module)

Modularity

Same power supply and/or chassis used across multiple product offerings.

Commonality

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Active Power Part Numbers Continue to Trend Down

0

500

1000

1500

2000

2000 2001 2002 2003 2004 2005 2006 2007

Active Power Part Number Trend

Non RoHS

ChassisConsolidation &

Product line simplification RoHS

“Active Parts”Redunction Focus

Projection

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Datacom Equipment Power Density Chart

22 kW

15 kW

30 kW38 kW

Individual Rack Capacity

IBM eServerTM

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Trends That Affect Power, Packaging, and Cooling 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Technology DriversProcessors

Power Density (W/CM ) 2

Chip Voltage (VDC)

IOPCI PCI X 4x IB Cables/Switches

4x IB & IB Modules 10 Gb Enet

2 1.0

Cooling

Cooling AbilityW/CM

2

U

Heat PipesChilled Air / Water 1

15Technology Enablers

20

3.3V, 5V, 12V

5V, 12V Hybrid

12V Distributed

Power

Power Density (W/in )3 3

20

Market DriversCPU cores perRack* (42U)

168 cores

ServersPackaging

Rack / Tower Rack Optimized Modular Scalar Systems

Server Blade - High Power

Server Blade - Low Power

Media

Form Factor (HDD, CD, FDD)

36 GB 750 GB SATA

3.5" 2.5" SFF, SCSI

HDD density

336 cores

PCI Express 40 Gb Enet

300 GB

2.5" SAS

Vapor Chamber

15 22

Chilled Air Racks

Multicore 2x

FBD Memory

Multicore4x

3.5" SATA/ SAS

(single core) (dual core)488 cores(quad core)

( * blade servers)42

0.8

Multicore8x

4035

40

Power Efficiency ( % )

94%90%

80%

92%85%

Outputs

IBM eServerTM

© 2006 IBM Corporation9/15/2006

Let’s Grow Together !!!

In summaryIBM plans to:

Extend core systems leadership

Become accelerators of innovation

Grow faster than the industry

Produce the best productLeast Cost

Best Quality and Reliability

On Time Deliveries

To Achieve These Goals:

Collectively we must improvePower efficiency

Reliability

Silicon Solutions

Packaging

Openness

Shared Innovation

IBM eServerTM

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