IBM not giving up on Power servers
Big Blue has still got the Power but for how much longer? Larry Walsh analyses the state of play
The global server market is anything but consistent, as demand rises and falls each quarter.
The constant over the last year, though, has been IBM's steady decline in revenue and unit shipments. Its customers have been defecting to rivals with comparable equipment at lower prices.
Big Blue isn't accepting this erosion easily. Last week, it introduced the Power Express 710, a low-cost server in its Power Systems product family that starts at $5,947 and is intended to challenge lOracle's lower-end Sparc and HP's Integrity servers.
Rod Atkins, senior vice president of the systems and technology group at IBM, said: "With these new systems, IBM is forging an aggressive expansion of its Power and Storage Systems business into SMB and growth markets."
Despite its troubles in servers, IBM remains the top vendor in terms of generating revenue. According to Gartner, IBM's third quarter global server revenue was $3.48 billion, or 27.6 per cent market share.
IBM beat HP ($3.3 billion), Dell ($2.1 billion), and Oracle ($592 million). Yet IBM's gross server revenues declined 9.5 per cent; it was the third consecutive quarter of revenue declines, with IBM's server revenue falling 7.2 per cent in the second quarter and 5.1 per cent in the first quarter.
IBM is steadily declining in server unit shipments, too. Over the same three quarters, IBM's shipments declined 2.5, 1.7 and 16.7 per cent, respectively.
This server news isn't good for rivals, either. HP and Oracle have posted steady declines in server revenues and shipments over the first three quarters of 2012.
Oracle continues to battle with market perceptions, integration issues and channel conflict related to Sparc, the high-performance server line it acquired from Sun Microsystems in 2009. In the third quarter alone, Oracle saw server revenues plummet 22.5 per cent.
The company didn't make the top five vendors by market share for the same period.
HP's server revenues plunged 12.4 per cent and shipments dropped 8.4 per cent in the third quarter. Sales of Integrity and other Business Critical Server products, built on the Intel Itanium chip, suffered during the protracted lawsuit between HP and Oracle over the future of the architecture.
HP ultimately won the Itanium lawsuit, extracting as much as $4 billion in court-ordered awards. However, HP said sales of BCS products were off by 30 per cent compared to before the lawsuit.
Only Dell, which deals mostly in commodity servers, saw appreciable revenue and market share gains in 2012 among the top five server vendors.
Analysts agree that IBM's introduction of the Power Express 710 is more defensive than offensive, signalling that IBM intends to compete against long-time rivals and upstarts and keep customers from switching to alternatives.
While analysts believe IBM is aiming at HP and Oracle with the launch, it might be defending against the moves of others as well. Lenovo, EMC, and Fujitsu are moving up in the server market. In the wings are companies such as Huawei, which may market servers more broadly.
As part of our special editorial partnership, CRN is publishing this recent article from Channelnomics.