Friday, 24 January 2014

IBM leaves the x86 market at long last, signalling the end of x86′s profitability

IBM Research data center, croppedServer market shareOur glorious leader, Sebastian Anthony, violating Watson at IBM ResearchIBM has announced the sale of Big Blue’s x86 server division to Chinese manufacturer Lenovo, thus terminating IBM’s long-running relationship (and one-time rivalry) with Intel and freeing the company to further focus on it softwares divisions. The deal only covers IBM’s x86 server business; the company will retain control of its own Power-based servers and hardware (which still make a boat load of cash). Its research and development arm should be unaffected.
It’s only been a year since IBM was posting record gains in sever market share, but those gains have been obliterated by significant drop-offs in x86 server revenue. According to IBM’s Q4 transcript, revenue fell $750M in Q4 from hardware sales, and $1.7B year on year. Not all that decline is attributed to x86 — System z sales were hit as well — but it’s a hard hit for the company.
Thus, IBM is doing in servers what it did years ago in desktops and laptops — getting out, rather than attempting to compete on margins. This chart is from last September, but it shows the stark contrast between the non-x86 server market (where IBM dominates) and the x86 market, where it’s a niche player.

No comments:

Disqus

comments powered by Disqus