IBM and Sequent Computer Systems Merge - 13 Jul 1999

In an effort to establish a leading position in the emerging enterprise Windows NT and Windows 2000 (Win2K) data center market, IBM announced today its completion of a merger agreement to purchase Sequent Computer Systems, a 2500-person company in Beaverton, Oregon. Sequent is a leader in large-scale NT and heterogeneous NT/UNIX multiprocessor system deployments worldwide. IBM offered $18 per share of Sequent common stock, for a total value of $810 million. Sequent shareholders will vote on this offer later this week. If the shareholders approve this offer, regulators will have 60 to 90 days to give their approval. Bob Stephenson, IBM senior vice president and group executive, IBM Server Group, said, "Sequent brings some unique skills to enterprise-class computing. Sequent is a leader in Windows NT and UNIX interoperability. NUMA (Non-Uniform Memory Access) will be a defining technology for early twenty-first century UNIX and NT servers. When we talk to our enterprise customers, they tell us that managing heterogeneous operating systems is one of their enterprise's most pressing issues." "Increasingly, customers want servers that can scale quickly to manage unpredictable workloads or spikes in online traffic. NUMA is an elegant solution, combining industry-leading scalability and excellent manageability," Stephenson said. "IBM sees this purchase as complementary to our Netfinity and RS/6000 offerings. With this merger, we will offer our customers the most complete and comprehensive server product line available, offering everything from PC-based servers through supercomputers." IBM and Sequent became technology partners a few years ago when the two companies were founding members of Project Monterey. Project Monterey is an IBM-led initiative to build an architecture that spans Intel and PowerPC platforms and creates a high-volume, enterprise-ready commercial UNIX OS. Both IBM and Sequent were developing NUMA technology separately to support this initiative. Sequent's NUMA technologies are unique. Using NUMA, Sequent systems can run up to 64 Intelprocessors in one system. Sequent plans to expand this number to 256 processors in the near future. Sequent customers can even run NT on one set of processors and run UNIX on the other processors in the same Sequent system and manage both OSs from a central location. Many of the world's largest e-business-related applications, databases, data warehouses, application environments, and business intelligence applications run on Sequent servers often running Oracle as software. By acquiring Sequent, IBM can more effectively position its DB2 product in this market. After leaving Intel 16 years ago to form Sequent, Casey Powell, chairman and CEO of Sequent, was asked about the timing of the IBM merger considering the emerging NT and UNIX data center market that Sequent targets. Powell said, "This merger addresses the two pressing needs that Sequent has: size and software availability. It will give us reach through the IBM sales force. Sequent has a window of opportunity with NUMA-Q. This merger helps us leverage that opportunity. We find that our technologies are very complementary; rarely do we compete with IBM. We have very similar cultures, common competitive goals, and we both have the same viewpoint of the data center." Sequent pioneered the first large-scale SMP computers, shipping the first systems in January 1984 using commodity processors operating within one OS image. Sequent servers have become a favorite with data centers and large enterprise deployments because they don't force the customer to decide whether to run NT or UNIX alone, or force the customer to budget hardware purchases for each OS. As organizational needs change, Sequent's systems can accommodate migrating processor activity from one OS to another, and often back again. Sequent's product offerings include the NUMACenter for UNIX and NT, which uses Pentium Xeon processors. The hardware is a managed environment for middleware, databases, backup, and other management tools. The system uses the NUMA-Q architecture and Advanced Detection Availability Manager (ADAM), and Sequent often sells the system bundled with software and hardware components from Microsoft, Oracle, EMC, CLARiiON, and Computer Associates. Sequent also sells the NUMA-Q 1000 (for UNIX and NT) as a midrange data center server and the NTX 2000 (for NT) with up to eight Pentium Pro processors. IBM's sales force will directly sell Sequent's servers. Sequent also has a solutions business, adding software and services to its hardware products. Sequent sells into several markets, including customer relationship management, call centers, decision support/data warehousing, and enterprise resource planning. The company has a related professional services and customer services business. Clearly Sequent will leverage IBM's existing services group, IBM Global Services, which at $40 billion is the largest computer services organization in the world--a benefit that should provide a big boost for Sequent servers in the developing data center marketplace.