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

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

Internet Security Threat Report 2014

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. ®

Internet Security Threat Report 2014

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