updated 7/13/2004 6:28:29 PM ET 2004-07-13T22:28:29

IBM Corp. is upgrading an important line of computer servers Tuesday in a bid to vault over rivals Hewlett-Packard Co. and Sun Microsystems Inc. and cash in on a multibillion-dollar bet.

IBM is the world's leading seller of servers, which crunch data and run Web applications for big companies.

But the company is fighting to improve its status in servers that run the Unix operating system, a relatively high-margin market worth $4 billion overall in the first quarter alone. H-P led with 31 percent share in the quarter, followed by Sun at 28 percent and IBM at 25 percent, according to International Data Corp.

IBM executives say the new Unix servers will perform two to three times better than the previous line thanks to new processors, IBM's Power5 chips. IBM has spent billions trying to make Power processors into high-performance engines for Big Blue's own computing systems and for video game consoles and PCs made by other companies.

One of the biggest advantages of the Power5 server chips is that they can be "partitioned" to behave like 10 separate processors, meaning they can perform 10 separate tasks at once and reduce the need for expensive additional machinery.

Power5 chips are being added to other server lines and data storage machines this year, but the Unix rollout is considered the biggest.

"Within the space of six months we will have refreshed virtually the whole line," said William Zeitler, who heads IBM's systems group and boasts that IBM will lead the Unix market within 24 to 30 months. "We've never undertaken a set of technology shifts that are that ambitious. We have a lot riding on it."

Analysts agree that H-P and Sun are vulnerable. H-P has yet to win significant share for its high-end servers based on the Itanium chip it co-developed with Intel Corp. Sun has struggled with its strategy and other internal issues since the dot-com bust.

"I think this comes at a really interesting time," said Charles King, an analyst with the Sageza Group. "IBM seems to be the one whose been standing tall while the others have been taking body shots."

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