System iNetwork

July 28, 2008

When a 47 Percent Decline Isn't Exactly Accurate

Although IBM had a fantastic Q2 2008, the 47 percent decline in System i revenue was a bit of a shocker, if only because IBM still broke it out for individual reporting. Didn't IBM converge the System i and p divisions about this time last year? Still, the actual hardware unification went down much more recently--announced in April at COMMON in Nashville, which also happens to be in the second quarter (so time is still flying). In any event, I spoke briefly with Ross Mauri, general manager of IBM Power Systems, for a quick update on the System i, IBM i, and Power Systems world.

Mauri revealed a few interesting nuggets, the biggest of which had to do with Q2 2008: The System i and IBM i second quarter was particularly busy for IBM, in which IBM announced the Power Systems lineup at COMMON and then went around the world for five weeks to talk to 10,000 customers in 20 countries at launch events, not to mention delivering new training for IBM's Business Partners.

"We were very tired when we were done with that five-week road show," Mauri joked.

In addition to spreading the message, IBM has been working on getting the actual newly converged line of hardware out, too. The point is, the second quarter saw a huge transition for our world at IBM, which trickled down. I'm sure quite a few customers took a pause to evaluate IBM's new 6.1 and hardware pricing messages and packages. For example, just considering a BladeCenter running a new POWER6-based blade is enough to burn up weeks, if not months, of evaluation time.

Still, what gives with "down 47 percent" and IBM i on Power Systems?

"From a legacy i point of view, we had an OK quarter. We had double-digit growth in Asia-Pacific, in particular China, Southeast Asia, and India. We saw some worldwide double-digit growth in some key industry segments--in banking, travel and transportation, and industrial products," Mauri said.

"The way legacy i is reported, that's simply all the old products, the POWER5 and POWER5+ products that were in market before our April announcement. So from a reporting point of view it was down but from an overall i client base point of view, we have some significant and attractive products and we're seeing good uptake on them, including the new Blade option--the JS12 sitting in a BladeCenter S or H--and we're seeing good growth in the mid market around our very successful Vertical Industry Program, which is driving customer solutions with local ISVs and local Business Partners," he added.

More important, Mauri acknowledged that there are some issues about IBM reporting POWER5/5+ System i revenue in massive "declines" . . . because that message doesn't exactly reflect what's going on with IBM's new i-focused sales. New IBM i-based Power Systems are getting reported under System p, which grew 29 percent for the quarter. So what gives with IBM lumping it all together? How long will that continue? Indefinitely, it seems.

"We'll continue externally reporting that way . . . that's how we can track straight to ledger and all those types of things," Mauri said, noting that he'll personally have to find new ways to communicate with the various communities and client bases that are part of the converged brand.

"I'll have to find other indicators that will show success in Unix, in Linux, and success in i so that we'll have some type of relative measure to watch--but it'll be different than in the past," he said. "I'm working on that right now."

Your Indicators

So if future IBM financial reports aren't going to paint a clear picture of what's happening in the IBM i-focused world, what kinds of indicators might Mauri share with us?

Posted by cmaxcer at July 28, 2008 9:39 AM