Oracle might feel confident in overtaking IBM in the high-end server market but analysts say it is Big Blue's to lose and called on the former to focus on its integrated systems strategy instead.
Oracle CEO Larry Ellison said last week in an interview with tech news site All Things Digital that the company aims to overtake IBM in the high-end server space just as it did in database and middleware. "We think we can beat IBM in servers. That is the next thing for us--Exadata, Exalytics and Exalogic," he said.
Analysts ZDNet Asia spoke to had mixed reactions over Ellison's and Oracle's aspirations though.
Krista Macomber, analyst for computing and storage practice at Technology Business Research (TBR), said based on both companies' background and core competencies, it is less likely that Oracle will surpass its rival in the stated arena. This is because Oracle's strength is in software while IBM has had a long-standing lead position in the server market, she explained.
Another observer, Greg Schulz, agreed. The senior advisor at the Server and StorageIO Group said IBM remains in the lead though Oracle is in its rearview mirror. "Right now, it is IBM's market share to lose, similar to how Oracle gained market share from IBM with databases and middleware."
After all, the high-end server market in which Big Blue sells its zSeries mainframe devices to existing customers is a relatively closed market. In order for Oracle to gain a share of the pie, it will need to encourage these customers to move away from its rival's proprietary platforms and toward its open source-based servers or a cloud platform using its technologies, he stated.
The situation is similar in the high-performance computing (HPC) and scale out compute markets where Oracle has the option to head-to-head with IBM, Schulz pointed out.
Asked if Ellison was overconfident in making the claim, Schulz said: "If you look up the word 'overconfident' in the dictionary, there is a picture of Larry Ellison. However, if you also look up in the same dictionary the word 'success' there is also a picture of Larry Ellison. The two go hand in hand."
Integrated systems better bet
Instead of going after Big Blue's market share in the top server range, Schulz said Oracle might do better if it focused on its integrated products that include servers, storage and software that are customized for particular applications.
Macomber, too, pointed out that IBM might have the bigger share in the proprietary server market but "the picture is really bigger than just a singular market".
"As IT decision-makers face diminishing time and budgets in tandem with increasingly complex IT challenges, they are demanding consolidation, simplicity and increased support from their vendors," she said. It is in leveraging integrated products to meet customer needs that will help both IBM and Oracle to grow their hardware and corporate revenue and margin growth, the analyst added.
In a phone interview with ZDNet Asia, Joe Chan, competitive leader for Power Systems at IBM, said Big Blue was a pioneer in integrated systems. While making bold statements is "impressive", IBM is more focused on helping customers and developing innovation, he said.
The latter is achieved through research and development, he said, adding that half of IBM's US$6 billion R&D investment is pumped into its systems and technology business.
Peter Sondergaard, senior vice president at Gartner, said that while Oracle's overall datacenter hardware results are challenged by IBM, its Exadata and Exalogic products are "bright spots" and driving good growth.
That said, even with Oracle's strong integrated systems play, he pointed out that the company's big issue is in turning around the hardware business acquired from Sun Microsystems which has been in decline for a long time.
"The outlook for Unix remains weak so Oracle needs to drive more growth in new business areas," Sondergaard added.
To do so, Oracle will need to make its hardware proposition more attractive to potential customers currently using other vendors' software stacks, the Gartner executive said. This is not the IT vendor's main focus now though, he said.