IBM is beginning a long-awaited upgrade to a range of servers and other hardware to make them more energy-efficient and competitive than rival products by Hewlett-Packard and Sun Microsystems Inc.

International Business Machines Corp said on Monday its new POWER7 system, including new microprocessors, storage and middleware, will be able to process more data than its predecessor POWER6, making them useful for utilities with electrical grids or banks conducting electronic trading.

The innovation starts at the chip level, said Ross Mauri, general manager of IBM's Power systems business. And they can dynamically adjust their own electrical usage based on the workload.

IBM's business has increasingly shifted to software and services from hardware over the past decade. But advanced servers are still a crucial part of its sales strategy as it competes with HP, Sun, and, more recently, Cisco Systems Inc to offer a comprehensive set of technology products.

Sun is due to be bought by Oracle.

(Reporting by Ritsuko Ando; Editing by Bernard Orr)