IBM's hardware unit is seeing revenue and market-share gains, which STG head Rod Adkins attributes to IBM innovation and the legal dispute between HP and Oracle over Itanium.
These are good
times for IBM's hardware business.
Systems and Technology Group (STG) was one of the main drivers behind IBM's strong second-quarter financial numbers
saw overall revenue grow 12 percent and net income jump 8 percent. Revenue for
IBM's STG grew 17 percent in the quarter, according to the tech giant's earning
report, which was released in July.
That was followed
Aug. 23 by a report from IDC, in which the market research firm said IBM,
fueled by a 24.5 percent jump in server revenue in the second quarter, surged into a statistical tie
Hewlett-Packard as the world's top server vendor.
All this comes
at a time when top competitors such as HP, Dell and Cisco Systems are
undergoing significant transformations, and Oracle continues to look for ways
to leverage the SPARC hardware business it inherited when it bought Sun
Microsystems last year.
Rod Adkins, senior vice president of IBM's STG, the company's success in
hardware can be traced to a steady drumbeat of strong innovations across all
segments-from the x86-based System x systems to the higher-end Power Systems to
the System z mainframe business-and solid product roadmaps in which customers
can put their faith.
group also has gotten some help from its rivals, in particular HP and Oracle,
whose ongoing feud over Oracle's decision to end support for Intel's high-end
Itanium processor platform has made customers of both nervous and helped fuel
migrations to IBM's Power portfolio, Adkins said in a recent interview with eWEEK
before the IDC numbers were
incredible momentum coming out of 2010, and we're still seeing momentum across
those platforms," Adkins said. "That's been driven by a fundamental part of our
strategy of continual investments in innovation, because we do believe research
and development as a key investment element is what allows us to deliver differentiated
systems. I think we're seeing that in a major way in the market acceptance of
He noted that
since the beginning of the year, IBM has rolled out new and upgraded systems
throughout its portfolio, from Power Systems to System x servers and, most
recently, in its mainframes, with the July rollout of the zEnterprise 114
, a mid-level offering in its
breakthrough zEnterprise System mainframe portfolio, which first launched a
the z114, IBM also unveiled support for System x blades within the zEnterprise
System running Linux, with support for Windows coming later this year. The
zEnteprise System is an example of IBM's "hub" architecture that addresses both
scale-up and scale-out environments, which is a key part of IBM's approach
going forward, according to Wayne Kernochan, an analyst with Infostructure
"In its new
formulation, a hub is a platform that carries out or manages most, but not all,
of the tasks of a particular workload type: data management, or security, or
administration, or email," Kenochan said in an Aug. 10 report. "The key
advantage of the new hub is its dynamic flexibility: the ability to move
workloads or parts of workloads more easily, rapidly and cost-effectively from
a scale-up to a scale-out platform, or vice versa, as necessary or advisable."
He said he
expects IBM to continue expanding on this idea as the rest of 2011 rolls out,
and indicated that the vendor is not resting. "It's not about IBM STG taking a
bow for recent accomplishments," Kenochan wrote. "It's about STG rolling up its
sleeves and going back to work for the rest of this year for the benefit of IBM
two of the key drivers behind IBM's market-share gains have been the innovative
roadmaps the company has for its products and the questions surrounding the
high-end platforms of HP and Oracle. A roadmap, he said, "means you have a
history of investment, but you also have some forward-looking views in terms of
capabilities to come, and that requires spending money in R&D. ... There's an
increased appetite in the marketplace for clients wanting to do more with less,
so they're looking for the types of solutions that will allow them to reduce
their overall costs."
between HP and Oracle also has helped IBM. Oracle officials in March announced
they would no longer support Itanium, saying they believe Intel plans to end
development of the platform relatively soon. The decision-which follows similar
ones by Microsoft and Red Hat-drew sharp rebukes from both Intel and HP, which
said that Itanium roadmaps go out for the rest of the decade. HP-which has
Itanium chips in its Integrity and NonStop systems-also has sued Oracle, saying
the decision violates an agreement between the two to continue supporting
technologies used by joint customers. The two companies share about 140,000
this month said Oracle's decision was a key reason HP's high-end server revenue
dropped 9 percent in the second quarter, and analysts have said that IBM will be the big winner
in the dispute.
providing what Oracle likely hoped would be a competitive edge for its Sun
hardware solutions, the company's battle with HP has instead given IBM an
unprecedented opportunity to move on HP/Oracle accounts with migration programs
designed to remove forever the discomfort and dangers of warring vendors
putting mission-critical systems at risk," Rob Enderle, principal analyst with
The Enderle Group, said in a June 22 report.
back up that assertion. According to company officials, in the second quarter,
IBM had a record 847 competitive displacements in the second quarter for
servers and storage systems, including 253 from Oracle and another 248 from HP.
IBM's Power Systems had 334 of those displacements-210 from Oracle and 110 from
"Oracle is a
bit stuck because SPARC is dead-ended, and a lot of benefit we continue to see
from a business-performance perspective is coming at the expense of Sun and how
we've been able to penetrate their customers base," Adkins said.
officials say they will continue investing in SPARC, and are looking to combine
the Sun hardware and Oracle software to offer tightly integrated systems-such
as the Exadata system for database workloads-in a manner similar to what IBM
does. Oracle is planning to roll out the SPARC T4 chip that, among other
things, reportedly will support Oracle's own database and middleware software.
that IBM has an advantage over Oracle and HP in this area because of the deep
integration of the hardware and software, which enables IBM to innovate and
optimize at all levels of the stack that goes beyond simply packaging hardware
and software together.
"We could put
things together around industry-standard capabilities, but we also have the
added advantage where we could do deeper integration and optimization because
we make investments and we innovate at every level of the system stack," he said.