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IBM partners warn over health of System x

Paul Kunert

Business partners have urged IBM to breathe new life into its flagging System x range or risk becoming irrelevant in the volume server market.

In the third quarter IDC data showed that System x shipments declined 37% in the UK - 21% across Western Europe - and market share fell to 11%.

Last night IBM indicated that its Intel-based servers were continuing to face their fair share of difficulties as it released fourth quarter data which revealed System X sales had tanked 32% with blades down 27%.

Mark Loughridge, senior vice president at IBM, said "our system z and converged system p servers did well but our x86 platform declined" which indicated industry standard hardware was "more susceptible to an economic downturn".

In the tough macro-environment, customers were focusing on reducing the cost of running their IT infrastructure he added and System z and POWER architectures were the perfect platforms for virtualisation which is "the key enabler of efficiency".

"Both these platforms leverage the entire system, from their custom semiconductors right through the software stack, to achieve these high levels of efficiency, and lower cost of ownership," said Loughridge.

"By contrast, the distributed computing model, with many small servers and typical utilisation rates of less than 20%, simply cannot offer the same level of efficiency and value," he added.

That seems to be pretty emphatic and IBM is picking up on the trend in the market and customers are looking at the benefits of a centralised model, but resellers point out that the x86 segment accounts for more than half of all shipments.

One concern is that IBM does not appear to have a consistent policy for System x; one quarter offering heavy discounts and the next going for margin recovery.

"IBM has the naive view that its technology is best of breed but in reality there is very little difference among the top vendors. Intel server business in the last three years has become no more sophisticated than PCs, it is about price," said one IBM partner.

With a market share of 11% in the UK, another Business Partner said he needed to make around 10 calls before he could find an IBM x86 customer. "This is supposed to be a volume business, not value but IBM doesn't seem to realise this."

Another reseller believed the System x brand needed some serious attention, "IBM is losing market share faster than any other vendor and needs to be careful or it will be out of the market".

According to Nathaniel Martinex, programme director for European storage research at IDC, Big Blue has been focusing on the high-end of the x86 market where sales are often cannibalised by higher margin System P or mainframe platforms.

"IBM has put a lot of marketing focus towards that type of technology but because of the economic crisis it will need to look at System X again," he said.

Indeed IBM is trying to reinvigorate the platform and appointed Richard Potts, to head up the System x team at the start of the year, reporting to Simon Pendlebury, who was recently put in charge of the Systems Technology Group.

IBM did not agree to an interview to answer specific issues raised by the channel but sent a statement to Microscope:

"IBM is fully committed to the x86 server business. The nearly $33bn x86 server segment will represent 57% of the overall server market by 2010, according to IDC."

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