IBM Will Build Mainframes for Rival Mitsubishi : Technology: The deal with the Japanese firm signals a new effort by IBM to expand its sales by making equipment for other manufacturers to sell under their own labels.

International Business Machines said Friday that its Japanese subsidiary will build mainframe computers for rival Mitsubishi Electric Corp., the first time IBM has manufactured machines for others from its most-advanced family of products.

IBM said the deal underscores its aggressive push to jump-start sluggish international sales, which have been partly responsible for a revenue and profit slump at the world’s largest computer maker.

IBM, the No. 2 mainframe supplier in Japan, said that by teaming with the No. 5 maker, it can extend its potential sales reach into Japanese companies that have not been IBM customers.

“This is one way we can get into customer locations that would otherwise be more difficult for IBM, as an American company, to get into,” a spokesman said.

Although analysts downplayed the potential financial impact of the deal, IBM officials said the Mitsubishi pact highlights a new effort by Big Blue to expand its sales by making equipment for other manufacturers to sell under their own labels.

“We’ve done this before but never at this level in our technology,” the IBM spokesman said. “There’s a growing movement in the company to expand these opportunities to increase our customer base. You will see more deals like this.”

The deal with Mitsubishi is not the first time IBM has agreed to manufacture equipment for a competitor’s label. For the last three years, the company has been making its AS400 mid-range computers for Ricoh, and IBM’s European subsidiary makes memory storage devices for Germany’s Siemens and France’s Groupe Bull.

IBM said the deal with Mitsubishi covers its Model 9370, a machine introduced in 1987 that is technically considered a mainframe but that has little of the power and speed normally associated with these top-of-the-line computers. Packaged with the computer will be the MVS/ESA operating system, IBM’s traditional software to run mainframes.

Analysts said IBM was not providing Mitsubishi with advanced, top-of-the-line technology in the deal. The Model 9370 was described as a relatively old, slow and unsophisticated computer that even when introduced in the United States was criticized for its lack of power and speed.

“It’s a very modest product,” said John Jones, a technology analyst at Montgomery Securities in San Francisco. He estimated that IBM has sold fewer than 20,000 of the machines since their introduction.

However, the arrangement is still expected to serve Mitsubishi well. According to analysts, the pact should help the Japanese firm strengthen its computer line while earning it political dividends for buying from a U.S. supplier.

IBM officials said they expect Mitsubishi to market the computer within its own family of companies in the Mitsubishi Group, a multibillion-dollar empire that includes banks and trading companies as well as electronics and automobile manufacturing.

Mitsubishi has less than 5% of the $6-billion annual mainframe business in Japan, the world’s second-largest market after the United States. Fujitsu is the country’s largest supplier, followed in order by IBM, NEC and Hitachi. IBM is said to have about 20% of Japan’s mainframe market while commanding more than 50% for the rest of the world.

IBM and Mitsubishi have collaborated in business dealings since the 1970s. In 1983, the companies entered into a joint venture for Mitsubishi to distribute certain IBM products in Japan. The companies also have a joint venture covering telecommunications and networking services in Japan.