International Business Machines Corp. (IBM) and Inspur Group, Ltd. are opting to band together instead of duking it out for customers in China. This partnership is perceived to benefit both companies' businesses in that country.

In statements to Bloomberg, Inspur agreed to use IBM's database and WebSphere on its servers, the first high-end hardware to be wholly developed and produced by a Chinese company. The Chinese firm will also be using IBM's Power8 chips to help design its own systems.

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Bloomberg reported that Inspur went after IBM's customers with its marketing campaign "IMB to Inspur", which came after the U.S. and Chinese governments protested against each side's alleged cyberspying and hacking activities. The campaign came after the newswire reported that China's government was concerned whether national security may be compromised by its banking industry's reliance on IBM's technology.

IBM said then it did not know the Chinese government had instituted a policy against the use of its servers within the country's banking industry. China Daily, meanwhile, reported yesterday that IBM continues to supply new servers to Chinese banks.

The newswire said the deal may help reverse IBM's declining revenues in China, which heavily affects CEO Ginni Rometty's profit goals. IBM'srevenues in China, half of which come from hardware sales, are lower by 11 and 20 percent in the first and second quarters from last year, respectively.

Bloomberg added that Inspur will benefit from the deal as customers may buy its hardware that carries IBM's software. Inspur will design its own systems based on technology from the OpenPower Foundation, which has 53 members and supports open-source technology, according to the statement.

The arrangement facilitates the integration of IBM's software on the new Inspur servers. IBM's sales of application infrastructure and middleware, products Inspur will sell, accounted for the biggest share of the worldwide market last year at 30 percent, Bloomberg cited researcher Gartner Inc saying.

Tagscyber spying, hacking, Inspur