1 July 2002 Systems giant IBM will announce today a new utility computing service based on its zSeries mainframe and the Linux open source operating system. The idea of utility computing is to ensure optimum usage of computing power by consolidating it into a single, centralised power from which resources are drawn in a similar way to electricity, gas or water.

The company is expected to announce a new service called Linux Virtual Services, which will enable customers to run a wide variety of their own software applications on mainframes running in IBM’s data centres. These customers will pay IBM based largely on the amount of computing power they use.

To provide the service, IBM will partition zSeries mainframes into hundreds of virtual Linux servers. The company claims it can provide customers with savings of between 20% and 55% compared to the total cost of owning and maintaining their own servers.

However, according to Gartner analyst Bruce Caldwell, “the pricing is still very complicated. It’s not like electricity or even phone service”.

IBM will charge customers about $300 (€302) per month to use what it dubs a “service unit” — three of which are equivalent to the computing power of a midrange Intel-based server. Customers must agree to buy a fixed number of service units for one to three years, based on average daily usage.

Since a single-processor Intel-based server costs less than $5,000 (€5,040) to own outright, say analysts, the service does not make sense on the purchase cost alone. IBM counters that customers will see considerable savings from reducing IT management and administration costs and freeing up floor space in their own premises.

“We see a huge opportunity going forward. Our best estimate is that in five years, 10% to 15% of the $1 trillion IT market will be in the form of on-demand computing,” says James Corgel, general manager of ebusiness hosting services at IBM.