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Will IBM System x sink without trace before Lenovo can grab the helm?

Server market doom plunge slows, but Big Blue's doesn't

Internet Security Threat Report 2014

It's squeaky bottom time for Lenovo execs waiting to get their hands on IBM's System X division, as Big Blue's sales train continues to head south, making sporadic station stops at Double Digit Declines-ville and Commodity Central.

IBM's server biz continued to fall from grace in the first calendar quarter of 2014, with Gartner estimating a year-on-year shipment decline of 27.8 per cent to around 116k systems, as revenues shrank 25.6 per cent to $2.24bn.

Abacus-rattlers at rival market watcher IDC came relatively close to those scores, with Big Blue factory revenues seen down 25.4 per cent to $2.08bn, leaving the US firm with a 19.1 per cent share of the spoils.

This compares to a total global server market that was down 2.2 per cent in revenues during the quarter to $10.89bn - which shows the rate of decline slowing, at least according to IDC's reckoning.

Overall market trends are playing more to the strengths of the stack 'em high brigade: global x86 revenues were up 4.9 per cent to $8.9bn as unit sales lifted 2.5 per cent to 2.1million servers, IDC data showed.

This is a segment still dominated by the likes of HP and Dell, firms that are more willing when necessary to slug it out on price. In the quarter HP led the way with nearly 30 per cent market share compared to Dell's 22 per cent.

In contrast, global revenues in the non-x86 space declined 25.2 per cent $2bn: the eleventh consecutive drop in spending. Here, IBM is king with more than a 57 per cent share of market revenues, even after the value of its shipments fell 31 per cent in Q1.

"Demand for IBM's x86-based Systems x servers and System z mainframes declined sharply," said IDC.

Chinese server wannabe Lenovo is paying $2.3bn to take System x off IBM's hands, and though the acquisition is still in the lap of the US regulators, the more time passes the more the business seems to slip.

The System x biz has not posted growth since Q3 2011 and all eyes among the customer base and channel partners will be focused on whether Lenovo can pull a similar turnaround trick to that it managed with IBM's flagging PC biz.

For the quarter on a worldwide basis, HP revenues declined two per cent to $2.88bn and held a 26.5 per cent market share, third-placed Dell shrank 3.2 per cent to $1.96bn and Cisco grew 37 per cent to $617m. The ODM Direct portion grew 75.4 per cent to $799m. ®

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