Power Systems Off to an Impressive Start

Analysis of News Events
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While users may have gasped when they read that System i server revenues plummeted during the second quarter, it's all business as usual, according to the group's GM.


IBM Power Systems had a "great quarter," according to Ross Mauri, general manager of IBM Power Systems, who recently returned from a five-week trip around the world, speaking with more than 10,000 customers in 20 countries.


The trip, during which Mauri and staff also gave IBM Business Partners a few pointers on how to enhance the value of IBM products and services, sounded like part victory tour, part sales trip, and, undoubtedly, part fact-finding mission that probably exceeded the miles flown by most world leaders trying to generate support for a major foreign policy initiative.


When he came home, Mauri was pleased with the numbers being reported in the second quarter company financials, which show that the "revenue from the converged System p server products increased 29 percent compared with the 2007 period." He was not fazed in the least by the number in the same report that said "revenues from the System i servers decreased 47 percent." That number stunned a few people, including this reporter, but it was, in Mauri's view, a statistical result on par with comparing apples to oranges in that it didn't include anything sold after the April 2 platform-convergence announcement and was basically only Power5 servers.


No matter, sales of legacy i systems are showing "double-digit" growth where they should be-in the growth markets, places like China, Southeast Asia, and India. Future U.S. customers, it seems, are likely to be preexisting IBM i customers who want to upgrade or companies that intend to use the IBM i platform for a new technology solution such as VOIP. And, by the way, converged communications services are doing great, and Mauri cited the Nortel telephony solution as one that is gaining traction because it's "integrated, inexpensive to buy, and simple to run."


One of the big success stories of last year and this year as well is that of the Vertical Industry Program, or VIP. The program encourages IBM and Business Partners to collaborate on a specific industry, even a specific geographical region, with very specific solutions and to demonstrate the best solutions for a particular industry segment. IBM introduced the program first in 10 countries, which represented mature market areas, and then added six more growth markets and then another six countries and continued to invest in the program, which is now showing very good results.


"We have been very thoughtful and focused in the execution of the VIP," says Mauri. The program started "with the Partners who are already with us," but in the world's growth markets, such as Asia, "I can see where there might be a place for new partners," Mauri says.


Among the three major platforms on Power Systems--IBM i, AIX, and Linux--AIX appears to be the sleeping giant. Basically a UNIX operating system with IBM's colophon, AIX has shown growth in the past eight consecutive quarters, Mauri notes. While typically being the platform preferred by larger organizations, AIX is now finding its way into the SMB market thanks to, among other things, the creative efforts of IBM Business Partners who are crafting solutions to run on it.


"AIX is well into the midsize market and will continue to grow there," says Mauri. Meanwhile, IBM continues to gain market share in the UNIX space, where it recently gained 12 market share points compared to a loss of four points for HP and one point down for Sun.


"We went from a distant third place to being the front-runner," says Mauri. "We saw it continue in the second quarter, where we had great results." He says customers like the price-to-performance ratio of the Power6 AIX servers and the performance-to-expenditure ratio of energy (read: savings).


But, Mauri notes, for ease of use, low maintenance, reliability, and low cost of ownership--a system that will handle a large job with a very lean staff--there's nothing like the IBM Power Systems platform, and the newer Asian customers apparently recognize and appreciate the economical aspect to the platform.


Also popular among new customers of Power System servers is PowerVM, the IBM virtualization solution that permits users to run multiple operating systems on a single server at the same time, all sharing resources. More than half the Power Systems servers being sold go out the door with PowerVM, Mauri notes. Yet while PowerVM may work, MC Press Online has heard that users are reporting challenges implementing it, particularly since they also have to run VMware when running Windows in a virtualized environment. Mauri says IBM is "looking at how we can make it simpler to manage across all technologies," noting that Tivoli management software provides today's best state-of-the-art solutions.


While virtualization can be used to provide high availability and disaster recovery solutions, Mauri says that IBM leading Business Partners that offer HA solutions through journaling and other approaches will continue to provide a good value-add for customers.


Blades running Power6 processors, which clock at 4.0 GHz and 4.7 GHz--twice the speed of the Power5+ processors, running at 1.9 and 2.2 GHz--offer a tremendous amount of power in a very small form factor. Customers currently opting for Power BladeCenter products are those that are interested in doing high-performance computing, or HPC, such as research and scientific organizations, and are likely to cluster row upon row of blades together to achieve incredible processing results.

"With the Power6 chip, the Power6 blades are great for high-performance computing because you can really crunch numbers," says Mauri. "The blade has a small footprint, ease of integration, you can mix architectures. There is quite a market there for this, and we expect it to expand." Mauri adds that having the ability to operate a blade in a virtualized environment with PowerVM "sets it apart."


While the rest of the country displayed a few aches and pains during the second quarter, it's clear that IBM had one of its better quarters on record. Part of that was due to the company's systems and technology segment, which added more than $5 billion to the bottom line.