IBM enters into partnership with China’s Inspur Group Ltd

International Business Machines Corp has entered into a partnership with Inspur Group Ltd after the Chinese company tried to lure away customers with its ''IBM to Inspur'' marketing campaign, Bloomberg reported.

IBM's database and WebSphere software would be used on Inspur's servers, which are the first high-end hardware to be wholly-developed and produced by a Chinese company. Inspur would also use IBM's Power8 chips to help design its own systems, the companies said in an e-mailed statement yesterday.

The deal comes in the backdrop of tensions between the US and Chinese governments over claims of cyber spying and hacking US companies. Inspur had launched a campaign to take away IBM's customers after Bloomberg News reported in May that the Chinese government was evaluating whether IBM's technology undermined national security.

IBM had said at the time that it was not aware of any Chinese government policy vetoing the use of IBM servers in Chinese banks.

IBM had been trying to revive declining revenue in China, which was a key element driving CEO Ginni Rometty's growth strategy. Sales in the country were down 11 per cent from a year earlier in the second quarter, after plunging 20 per cent in the first three months of the year, adjusted for currency conversions.

The partnership would see the two companies collaborate on the development of new hardware systems for Inspur using IBM's Powerserver chips, PC World reported.

Earlier this year, Inspur became a member of IBM's OpenPower Foundation, an alliance of vendors dedicated to the development of the Power chip architecture.

The companies would however, compete in the server arena, but were working together as clients, and partners demanded more technologies to analyse larger data sets, IBM said in an email.

While not known in the US, Inspur had been making news in China as it challenged IBM's server business. The vendor, in May, announced a marketing programme called ''I2I or IBM to Inspur'' aimed at convincing customers to switch to the Chinese company's systems.

Although the US company was at one time a major player in China's x86 server market with a 20-per cent share a year ago, research firm IDC said local rivals were giving it stiff competition.