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San Francisco, June 9: Walden International, Asia's biggest venture capital firm, said on Thursday it is ready to invest $100 million in companies building products designed to work on compact IBM computer servers.

Walden, a San Francisco-based venture capital firm that invests widely across Asia, said it was setting up a new fund to invest in partners of IBM that are building network, storage and software applications to run on IBM ''blade'' servers.

Blade computers are small, hardcover-book sized personal computers that can be packed into refrigerator-like racks to provide businesses with maximum processing power in a small space.

Walden, with $1.6 billion in venture capital to invest, has pledged to spend more than 50 percent of its $100 million blade commitment in Asia, as part of plans to expand the market for blade servers outside the United States, IBM and Walden said.

For more than a year, IBM has been working with 20 venture capital firms to encourage them to fund start-up companies globally that rely on IBM blade hardware. IBM envisions hundreds of companies selling peripherals such as network and storage cards, communications switches and software.

Bill Zeitler, senior vice president of International Business Machines Corp.'s Systems and Technology Group is set to announce Walden's financial support at a speech in Tokyo on Friday.

IBM, which competes with major computer rivals such as Hewlett-Packard Co. in the market, builds the basic computer box with slots for special cards designed by hundreds of partners to deliver specialized features.

Market researcher IDC sees the blade market growing to $10 billion in revenue by 2010 from $2.2 billion in 2005. IBM ranked No. 1 in the blade server market in the first quarter, with a 40.1 percent share, Hewlett-Packard was close behind with 35.6 percent and Dell was No. 3, with 11.1 percent.

Companies are using blade servers to consolidate computing operations into easier-to-manage banks of machines. Computer makers are looking to cram more software, networking and storage into blade servers.

IBM sees the blades market as resembling the PC industry in its potential for vast growth. IBM believes the telecommunications industry is ripe to be transformed, just as the PC revolution took over from bigger machines 20 years ago.

Blade computers allow companies like Cisco Systems and Nortel to focus on modular components that slot into mass-market computers built by the likes of IBM or H-P.

''Blades are flexible hardware,'' said Andrew Kau, a managing director of Walden International based in Palo Alto, California, who focuses on communications and semiconductors.

''We are seeing the telecom industry reorganized, just like the PC industry did 20 years ago,'' Kau said in an interview.

''If this leads to lower cost equipment, more developers and more interoperability (between machines from different makers), then it's going to lead to a great market where we will be able to grow markets and make a lot of money,'' Kau said.

One example of Walden's early investments in blades is OpenClovis, a Petaluma, California-based company with employees in Bangalore, India. Kau sits on Clovis's board of directors.

It makes open source middleware to give blade computers the features telecoms carriers count on, such as constant readiness, the ability to swap out machines for service without interruption and the capacity to handle heavy messaging traffic.

Reuters