IBM Chairman & CEO Opens First Development Laboratory In Russia

MOSCOW -- (MARKET WIRE) -- Jun 20, 2006 -- IBM Chairman & CEO Samuel J. Palmisano today opened IBM's first development lab in Russia as the company continues to increase its investment in high-growth countries.

IBM will invest $40 million over the next three years in the Russian Systems & Technology Laboratory, which will employ up to 200 people by the end of 2008. The lab will focus on mainframe technology development and continues IBM's emphasis on utilizing skills and expertise around the globe, especially in high-growth countries such as Russia, Brazil, China and India.

The lab is the fourth major development operation announced by IBM in recent months. Other new facilities include a Linux Technology Center in Sao Paulo, Brazil; a Solutions & Technology Center in Bangalore, India; and a mainframe development lab in Shanghai, China.

"As a globally integrated company, IBM needs to have the best talent and knowledge in the world, regardless of where it resides," Mr. Palmisano said. "There is a wealth of technology and programming skill in the Russian Federation and throughout Central and Eastern Europe. It's our goal to identify that talent and link it to the best skills around the world, so that we can develop the most innovative solutions possible for our clients."

"Russia is also a fast-growing marketplace, where business is being transformed almost daily. We're here to contribute to Russia's growth, and to make use of our Russian colleagues' innovation as a key resource for our worldwide efforts."

The new lab will draw on Russian talent to develop hardware and software for enterprise and scientific computing. In particular, the new facility will benefit from advanced mainframe skills and technical expertise built up in Russia over decades through the development of the ES-EVM -- a clone of the IBM System/360 mainframe. Russian mainframe skills are expected to give a significant boost to the development of IBM System z technology. The new lab will also strengthen IBM's presence in the Russian market where it has a number of mainframe customers, including the Central Bank of Russian Federation; Russian Railways and the oil and gas company Surgutneftegaz which depend on the mainframe's reliability and security to run their core business applications.

"The Russian Federation offers a favorable economic environment, highly trained technical workers and excellent educational institutions," said Rod Adkins, Vice President of Worldwide Development, IBM Systems & Technology Group. "The lab joins a globally integrated network of IBM R&D facilities around the world that drive the development of IBM's most advanced computing systems."

The Russian lab already is staffed by more than 40 employees. One of its first projects will focus on part of the operating system for the System z mainframe. The Russian team will help enhance the Data Facility Storage Management System (DFSMS) to increase speed and capacity in line with expectations of mainframe clients worldwide. Russian engineers also will collaborate with colleagues in the U.S. and Germany on development and testing for the next generation of IBM BladeCenter systems.

To support the establishment of the new lab, IBM will work closely with some of the leading Russian educational institutions, including Moscow Bauman University, Moscow State University, Moscow Institute of Electronics and Mathematics, Novosibirsk State University, Nizhny Novgorod State University, St. Petersburg State University and the Russian Academy of Sciences. IBM also will extend its search for talent to the Commonwealth Independent States (CIS), including Kazakhstan, Uzbekistan, Belorussia and the Ukraine.

"The establishment of the new lab clearly demonstrates the value that IBM places on the technical talent and expertise in Russia," said Kirill Korniliev, Country General Manager, IBM East Europe/Asia. "It is worth noting that 50 percent of university students in Russia are studying science and technology and that Russia has one of the highest levels of researchers in the active population anywhere in the world. We want to tap those skills."

Creation of the lab strengthens IBM presence in Russia, where it was first established in 1974. It currently has direct presence in the 10 largest cities of Russia as well as in the Ukraine, Uzbekistan and Kazakhstan. Over the past five years, IBM Russia's annual revenue has grown in double-digit figures, including 29 percent in 2005 and 75 percent in 2004.

IBM has established a number of strategic facilities in Russia in recent years, including the IBM Linux Competency Center in 2003, the IBM Innovation Center for Business Partners in 2004 and the Energy Competency Center in 2005 in collaboration with Intel. IBM's business partner network in Russia and CIS consists of over 600 companies.

For more information, please contact:

Galina Danilina
Communications, IBM East Europe/Asia

Email Contact
Phone: +7 495 775-8800 ext 1771
Mobile: +7 495 920-0199

James E. Smith
IBM Systems media relations, STG

Email Contact
Phone: (914) 766-4231
Mobile: (203) 232-7000


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