IBM upped the stakes in its Linux server battle against rivals Hewlett-Packard and Dell on Wednesday by introducing two server products at the LinuxWorld OpenSolutions Summit in New York City and leveraging the advantages of virtualization.

The Armonk, New York-based tech giant first teamed with two of its sometime allies and sometime rivals in the tech industry, Novell and Advanced Micro Devices (AMD), on an integrated Linux offering built around the next generation of its Informix Dynamic Server (IDS) data server, code-named “Cheetah,” which IBM and its customers have been testing.

The server runs Novell’s SUSE Linux Enterprise Server software on AMD Opteron 1000 Series chips.

The other product, on which IBM is going alone, is a midrange line of three servers based on IBM’s own POWER5 processor, which competes with AMD’s Opteron chips. IBM said the servers are able to handle up to 160 virtual server images at one time per system.

Virtualization has become a hot topic not only in Linux circles, but on the stock market. Last week, storage giant EMC said it would sell a stake in VMware, its virtualization software unit, in an IPO, driving up shares of EMC (see EMC to Sell VMware Stake).

Meanwhile the open source alternative to VMware, XenSource’s Xen software, continues to attract adherents. Virtualization software such as VMware, Xen, and Microsoft’s Virtual Server allow servers to run multiple operating systems and servers on the same hardware.

IBM, HP, Dell, and Sun Microsystems have been touting the benefits of virtualization on their servers with the help of software like VMware and Xen. IBM is trying to up the ante by claiming its servers can handle 160 virtual servers per microprocessor. But in the world of virtualization any vendor can make claims that have yet to be tested in real-world applications.

Still, like the other tech leaders, IBM has been attracted to the open source world and the possibilities offered by Linux. Even Microsoft, after a long period of resistance, has begun to extend an olive branch to open source, signing a controversial deal in November with Novell whose implications have been hotly debated in the open source community (see Strange Bedfellows).

Microsoft decided to make nice with the often distrustful open source folks on Wednesday evening when its Open Source Software Lab and Port 25 site sponsored a LinuxWorld reception.

Shares of IBM rose $0.91 to close at $99.20 in recent trading, while Novell shares fell $0.02 to close at $7.07, AMD shares climbed $0.35 to close at $14.95, and Microsoft shares increased $0.37 to close at $29.40.

Coopetition among Friends

IBM competes and cooperates with both Microsoft and Novell in many areas. For example, both Novell and IBM produce their own workgroup software, Novell GroupWise and Lotus Notes, but they still team up on other products like the Cheetah server.

Similarly, many of IBM’s servers run Windows while others run Linux. With virtualization technology, now they can run both.

Adam Jollans, worldwide Linux strategy manager with IBM, sees good reason why Microsoft, Novell, and IBM should cooperate.

“In terms of the Novell-Microsoft announcement that happened last year, this news is saying customers want to add Linux servers to their Windows environment and have interoperability,” he said.

He pointed out that IBM has also been working on interoperability with Novell, integrating with Windows and Linux via Centeris’ Likewise software. Plus, IBM has deals on the Linux side with not only Novell, but Red Hat as well.

“From an IBM perspective, customers want interoperability in these environments and we are already used to the mixed environment,” he said. “Sometimes you work with them and sometimes you compete with them.”

Virtualization technology will help IBM integrate more of these sometimes competing interests, but it will also help to consolidate servers that have not been running at full capacity, while cutting down on extra space and energy use.

“We’re seeing a lot of x86-based server farms where the utilization is running quite low—10, 20, 30 percent, while taking up a lot of room,” said Mr. Jollans.

He said IBM’s POWER5 chips will help achieve this goal of advanced power virtualization and consolidation on the server, allowing network administrators to take eight racks of x86-based servers and consolidate them down to one rack. On a 16-core system, he claimed the server could handle up to 160 different virtual servers on each POWER5 microprocessor.

“Utilization goes up and you’ve got a more powerful processor,” said Mr. Jollans.

There are plenty of ways to slice and dice a chip, especially when big tech companies compete and sometimes work together.