IBM's Q4 highlights enterprise hardware pecking order

IBM's Q4 highlights enterprise hardware pecking order

Summary: IBM's PureSystems are ramping quickly and System z mainframes may highlight a new pecking order in the data center.

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Integrated systems are in, mainframes are back and server sales aren't lighting up the scoreboard. Those takeaways are relatively obvious following IBM's fourth quarter results.

puresystems

Big Blue reported a strong fourth quarter, but the hardware business delivered the most surprises even though systems sales overall were down 1 percent. Sure, the System z mainframe was going to benefit from a new product cycle, but analysts underestimated the strength. Meanwhile, IBM's PureSystems (right), launched in May, have ramped strong relative to Oracle's Exadata boxes and other rival machines.

Consider:

  • System z revenue was up 56 percent and MIPS (million instructions per second) were up 66 percent, which is the largest MIPS volume ever.
  • As for System z, mainframe sales were up more than 50 percent in major markets and more than 65 percent in growth markets. IBM said that it landed net new customers for its mainframe. Also: IBM revamps mainframe for cloud, launches zEnterprise EC12
  • PureSystems sold more than 2,300 units in more than 70 countries since the May launch. Macquarie analyst Brad Zelnick noted that that those results compare favorably to "Oracle Exa and Cisco UCS with much slower initial ramps." Also: IBM launches PureSystems, touts integration, flexibility | Can IBM redefine datacenter convergence with PureSystems?
  • The hardware nit for IBM is that its Power line of server saw sales fall 19 percent, but the company said its new P7+ and product refresh will help sales.
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Overall though, IBM's hardware results stood out. Meanwhile, IBM seems to be working the trench warfare game against Oracle/Sun and HP. IBM CFO Mark Loughridge said:

Our success in competitive take-outs continued in the fourth quarter. We had over 350 competitive displacements, resulting in over $335 million of business, about half of which came from Oracle/Sun and half from HP. For the year, we had nearly 1,200 competitive displacements, resulting in over $1 billion of business.

The game for IBM is clear. Establish a hardware beachhead in an enterprise and follow up with software and services.

Topics: Servers, Cloud, Data Centers, Hardware, IBM, Linux

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2 comments
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  • competitive displacements

    So each of the big 3 (IBM, HP, Oracle) always claim to be displacing systems of the other vendors. How can this be true, unless they are simply trading customers every few years. If they were growing the enterprise server market then there would be real progress.

    But it seems more and more of the companies needing compute power are simply pooling commodity hardware, i.e. the Google and Facebook approaches.
    robajoseph15
  • VCE - Leader in Integrated Infrastructure Systems

    It seems like IBM is playing catch up here. Gartner clearly named VCE the leader with 57.4% of market share.

    http://www.cnbc.com/id/100390427/Gartner_Names_VCE_Market_Share_Leader_For_Integrated_Infrastructure_Systems

    Secondly Cisco UCS is not an Integrated Infrastructure System by itself. It is a the fabric computing component of the VCE vBlock which has a bigger market share than the IBM Puresystems.

    These results however beg the question - Was 2012 Year of the Converged Infrastructure Solutions? - http://blogs.cisco.com/datacenter/was-2012-year-of-the-converged-infrastructure-solutions/

    Ranjit
    ranjitn