Feeds

NO WONDER Big Blue dropped it: IBM server biz BOMBED in Q4

Ta for the $2.3bn, Lenovo... just take IT OFF US

Boost IT visibility and business value

There's little wonder that IBM execs were so quick to snap up Lenovo's $2.3bn offer for the sickly volume server biz. Factory revenues and shipments apparently crashed during Big Blue's last full quarter behind the wheel.

Ending a thoroughly unpleasant 2013 for Big Blue server peeps, Gartner calendar Q4 numbers show revenues fell by 26.4 per cent to $3.61bn and unit sales dropped 16.3 per cent to a little over 231k.

This capped another quarter of misery for IBM, which has failed to grow its server biz in any three-month period since Q3 2011. It is only surprising that execs at the firm failed to strike a deal with Lenovo the first time round.

Clearly Lenovo will again have its work cut out if it wants to convert Big Blue's x86 division into a fast growing, profitable sales engine, at a time when cloud and white box builders in China are a growing threat.

Not that many server makers covered themselves in glory in a quarter where the total market declined 6.6 per cent in turnover terms to $13.6bn, despite a 3.2 per cent rise in shipments to 2.58m boxes.

"We've seen ongoing growth in web-scale IT deployments, while the enterprise remained relatively constrained," said Jeffrey Hewitt, research veep at Gartner, echoing comments made alongside prelim Q4 data.

The Mainframe and RISC Itanium Unix platform market "kept overall revenue growth in check", he added.

Server market boss HP and Cisco were the only named vendors to post growth, up 6 and 34.5 per cent respectively, to reach $3.89bn and $646m. The "others" section – which includes numerous fast growing Chinese brands – was also up, 6.2 per cent to $2.9bn.

If HP CEO Meg Whitman is worried about Lenovo's deal with IBM, she didn't show it on a fiscal Q1 results call with analysts last week.

"What I have learned about this business is instability and questions about the future make it very difficult because people want to bet on a roadmap, and they worry that as a change occurs, is the roadmap the same, [is] investment the same".

"I think we have a near term opportunity here to gain share in our enterprise services or in our server business, so we are all over it," she added. "Long term obviously Lenovo is going to be a powerful competitor, and we aim to be set up by the time the deal is done to compete really aggressively".

Privately owned Dell took its eye off the ball in Q4 as revenues declined 0.5 per cent to $2.07bn and shipments dropped 5.4 per cent to just over 504k.

And Oracle, which has taken Sun's hardware biz out of the game since acquiring it, again saw factory revenues drop 4.7 per cent to $574.7m. It no longer registers in the top five shipments firms.

EMEA market recorded its tenth consecutive quarter of revenue declines, down 6.4 per cent to $3.6bn. Unit server sales declined 2.5 per cent to 613k. In this region, HP held a near 40 per cent share of box sales, declining at the market average, and 34.5 per cent of revenues.

For the year, worldwide revenues declined 4.5 per cent to $50.1bn as shipments grew 2.1 per cent to 9.8m units. ®

Boost IT visibility and business value

More from The Register

next story
Pay to play: The hidden cost of software defined everything
Enter credit card details if you want that system you bought to actually be useful
HP busts out new ProLiant Gen9 servers
Think those are cool? Wait till you get a load of our racks
Shoot-em-up: Sony Online Entertainment hit by 'large scale DDoS attack'
Games disrupted as firm struggles to control network
Community chest: Storage firms need to pay open-source debts
Samba implementation? Time to get some devs on the job
Like condoms, data now comes in big and HUGE sizes
Linux Foundation lights a fire under storage devs with new conference
Silicon Valley jolted by magnitude 6.1 quake – its biggest in 25 years
Did the earth move for you at VMworld – oh, OK. It just did. A lot
prev story

Whitepapers

Gartner critical capabilities for enterprise endpoint backup
Learn why inSync received the highest overall rating from Druva and is the top choice for the mobile workforce.
Implementing global e-invoicing with guaranteed legal certainty
Explaining the role local tax compliance plays in successful supply chain management and e-business and how leading global brands are addressing this.
Rethinking backup and recovery in the modern data center
Combining intelligence, operational analytics, and automation to enable efficient, data-driven IT organizations using the HP ABR approach.
Consolidation: The Foundation for IT Business Transformation
In this whitepaper learn how effective consolidation of IT and business resources can enable multiple, meaningful business benefits.
Next gen security for virtualised datacentres
Legacy security solutions are inefficient due to the architectural differences between physical and virtual environments.