Maxed Out
Because the System i can run at redline speed all day long . . .
July 23, 2007
IBM 2Q07: IBM Up, i Down, Reorg Raises Questions
IBM reported a great overall second quarter last week, recording a 19 percent leap in earnings on a 9 percent increase in revenue. System p, x, and z posted gains while the System i division's revenue dropped yet again, earning only a brief mention in the IBM 2Q 2007 Earnings Announcement webcast:
"System i declined, but we'll be bringing POWER6 technology to this platform later
this quarter," Mark Loughridge, IBM's senior vice president and chief financial
officer, noted.
AS/400-iSeries-System i revenue has typically been cyclical, which points back to the install base of loyal customers who consistently upgrade on a combination of lease and technology upgrade cycles. With the POWER6 to be announced this week, as Mark Shearer noted, the IBM System i world will be in a great position to see some fourth quarter gains.
The Vertical Industry Program (VIP) is off to a decent start, Shearer said last week, but he didn't share a lot of detail — the massive reorganization news was his top priority, of course.
Oh, Yeah, That Reorganization
IBM's reorganization of the Systems and Technology Group (which means that in the i world IBM ends up with the Power Systems unit for enterprise-class computing and the Business Systems unit for small and medium-sized businesses) and the cross-platform focus those adjustments will bring may usher in some interesting changes to IBM's financial reporting.
Will IBM continue to break out System i and System p revenue? Or will it get lumped under some kind of new "POWER processor" category?
Either way, the future success of the System i . . . or future struggles . . . will likely be masked by the new business units.
Will It Matter?
IBM's reorganization, in addition to the financial breakout questions, may effectively jam a stick in the spokes of System i marketing and brand identity — or maybe not.
With the changes, IBM will be serving its customers with the "what do you want and need?" approach, which throws into doubt any possible hopes that the company will attempt to lead with the System i. The System i world has been hoping that IBM would hold the System i out in front of its server lineup as a flagship system, and while that hope was never particularly strong, its thin cord has now been effectively sliced down to a thread.
Shearer noted that the reorganization may lead to customers seeing "i5/OS pop up in unexpected places." Would that be on a POWER-based blade sometime in the future? Or elsewhere?
Will VOIP on System i end up fitting into more small and medium businesses as IBM adjusts to a more holistic approach? Will IBM's new Business Systems unit lead on total cost of ownership, where System i-related solutions excel, or will it shift toward solutions that leave more room for follow-up services?
Will any of this be intentional . . . or will it just sort of happen? Will it be a butterfly simply gliding on a strong breeze or one flapping its wings and changing the weather a whole world away?
Posted by cmaxcer at July 23, 2007 9:12 AM
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