In its most recent financial quarter, IBM reported that revenue from the iSeries midrange servers had decreased 18 percent from the previous quarter. That's a change from the previous two quarters, when iSeries revenue was up 25 percent and 10 percent, respectively.

IBM said it now has 245,000 iSeries customers, with 2,500 of them new customers who were added last year. Mostl of those new customers were small to midsize companies.

Among the improvements to the operating system is improved integration with Windows. On previous models, IBM relied on a technology called the Integrated xSeries Server and Integrated xSeries Adaptor to connect to an xSeries server. The System i5, by contrast, will replace IBM's proprietary interfaces with Internet SCSI to connect to the xSeries BladeCenter. That improves the i5's ability to consolidate management of xSeries systems and will be available midyear, an IBM official said.

The i5/OS also offers improved security and auditing, including automatic detection of denial-of-service attacks and other security issues. The system also includes virtual tape support that allows saving direct to disk instead of the tape drive.

One user who has been testing the new operating system is Beverly Russell, IT director at E.D. Smith & Sons Ltd., a food products manufacturer in Winona, Ontario. Russell is especially pleased with the system's new storage capabilities, and she praised its ability to write to disk instead of tape. That speeds backup operations and opens the door to the possibility of electronically sending backups to the company's disaster recovery site, she said.