IBM STG Cashes in on HP-Oracle Woes

The System z and the entire IBM Systems and Technology Group (STG) under Rod Adkins is sweeping the field while HP and Oracle bicker over the fate of Itanium (doomed now, no matter what HP and Intel say officially) and HP flounders in search of a meaningful business direction. The latest financials and IDC market sizing trends don’t tell a pretty picture for either company.

Meanwhile IBM continues to ride the zEnterprise 196 and now the z114 to some of the best numbers it has seen in years. And when IBM finally gets its act together around the zBX it could soar to even greater heights. (For that it has to position and market the zBX for more than the 50-100 very largest z shops.)

Still, nobody can quibble if Adkins did some boasting around the latest numbers: z revenue grew 61% in 2Q11 while MIPS grew 86%, which amounted to a 7 point share gain. System z gained 14 new customers in that time, 68 since the z196 launch a year earlier.

The Power Systems numbers also looked good as revenue grew 12% and the group gained 3 points of market share. It had run up over 250 competitive displacements, 2/3 at the expense of Oracle and 1/3 at the expense of HP.

IDC added to Adkins triumph by noting that IBM had finally pulled into a virtual tie with HP for the worldwide server market lead, with 30.5% (IBM) and 29.8% (HP) of factory revenue share respectively for 2Q11. IDC declared it a statistical tie. IBM experienced 24.5% year-over-year growth in factory revenue gaining 1.6 points of share in the quarter on the performance of System x, Power Systems, and System z, a hat trick for Adkins with all three of STG’s server groups contributing.

Behind IBM and HP was Dell, which maintained third place with 13.8% factory revenue market share in 2Q11. Dell’s factory revenue increased 5.1% compared to 2Q10, driven in part by strong demand from SMB customers. Oracle, which talked brashly of taking on the System z following its Sun acquisition, ended up with the number 4 position jointly with Fujitsu. Oracle’s 2Q11 factory revenue increased 4.2% compared to 2Q10, driven in part by improved demand for x86-based Exadata systems, according to IDC.

While some questioned whether STG’s successes would tail off now that the big new products have been successfully introduced and each product group has been refreshed, Adkins clearly doesn’t agree. Just last month the System z group rolled out the z114, giving the hybrid zEnterprise line a fully capable entry-level machine. When packaged as a Solution Edition deal for enterprise Linux or SAP combining hardware, software, middleware, and maintenance for three years at a deeply discounted price it should be very effective in new competitive wins, especially Linux consolidation wins against HP and SAP wins against Oracle.

STG also handles storage and there too it has racked up wins and introduced a flurry of products. Revenue is 2Q11 grew 10%. Maybe more importantly it handled 4,500 XIV installations with 1,100 new customers. And just last month STG announced XIV Gen 3 scalable storage that includes a host of advanced features at no additional costs. In fact, IBM reports it has reduced the total cost of ownership by 60% when compared to its biggest storage competitor, EMC. As important, IBM made it fully autonomic, meaning it can pretty much run itself, allowing for even more cost savings.

In the latest IDC study of worldwide storage disk systems EMC maintained its lead in the external disk market with 26.0% revenue share in the fourth quarter, followed by IBM in second and HP in third with 16.3% and 11.6% market share respectively. Oracle, which acquired a storage business when it acquired Sun, didn’t even register.

While IBM and STG are on a roll, it is increasingly clear that Oracle and HP are sputtering for now. Oracle can’t seem to gain any leverage from its Sun acquisition. HP just recently realized that PCs, tablets, and smartphones aren’t going to bail it out. Printers anyone?

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