IBM announces partnership with Chinese rival Inspur

Deal will allow US company’s database software to be used in mainframes

IBM has announced new partnership with China’s Inspur following politically fuelled rivalry. Photograph: Reuters

IBM has announced new partnership with China’s Inspur following politically fuelled rivalry. Photograph: Reuters

 

IBM has announced a new partnership with China’s Inspur Group following the latter’s recent “IBM to Inspur” marketing strategy designed to lure its customers.

Now, IBM’s database and WebSphere software will be used on Inspur’s mainframes, which are the first high-end servers to be wholly developed and produced by a Chinese company.

The companies announced their collaboration today, setting aside their rivalry, spurred by tensions between the U.S. and Chinese governments over claims of cyberspying and hacking American companies.

Inspur had set out on a campaign to win over IBM’s customers after Bloomberg News reported in May that China’s government was studying if domestic banks’ reliance on the American company’s technology threatened national security.

IBM said at the time that it wasn’t aware of any Chinese government policy recommending against the use of IBM servers within the country’s banking industry.

Earlier today, the China Daily reported that IBM said it never stopped providing new servers to Chinese banks, citing an interview with DC Chien, chairman and chief executive officer of IBM China group.

IBM has been trying to turn around falling revenue in China, which have weighed heavily on CEO Ginni Rometty’s profit goals.

Sales in the country declined 11 per cent in the second quarter from a year earlier, after tumbling 20 per cent in the first three months of the year, adjusted for currency conversions.

Almost half of IBM’s China revenue comes from hardware sales, the company said in May.

For Inspur, the deal could help convince potential customers to buy its hardware with the option to use IBM’s software.

IBM’s sales of application infrastructure and middleware - the type of offerings its new Chinese partner will deploy - accounted for the biggest share of the worldwide market last year at 30 per cent, according to researcher Gartner.

In a separate statement today, IBM said it is also working with China Telecom in a three year agreement to help small and medium sized businesses run cloud-based applications which are stored on remote servers instead of on-site.

Bloomberg