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Is IBM travelling in the same direction as your business?

The sale of IBM’s x86 server division to Lenovo for $2.3 billion has caused many previously loyal customers to look for an alternative technology partner. At HP, we’re doing everything we can to help ease the transition based on our innovative technology designed to enable better business outcomes, extensive multi-vendor experience and global support presence. But the real question is:

 

Is IBM still committed to the hardware business?

 

Steve Mills, Senior Vice President & Group Executive of IBM Software & Systems, stated in an interview at IBM Pulse 2014 in Las Vegas in February 2014, that the strategy of moving x86 to Lenovo was in response to shrinking margins and a market with little opportunity for differentiation. But that doesn’t seem to just be a problem of the x86 server division. IBM’s system and technology group ended its 2013 Q4 and 2014 Q1 at -26% and -23% respectively year-on-year[1]. And although the bleeding slowed for 2014 Q2 to -11% year-on-year with the sale of the x86 server division to Lenovo, the question remains: What will be spun off next?

 

Even as IBM allocates research investment in the semiconductor business, rumors are rampant that it’s about to be sold off in favor of leveraging the OpenPOWER initiative to support proprietary technology. And with the Power Systems unit a bottomless pit with an increased investment of $2.4 billion and back in April and a revenue drop of 28% year-on-year, who knows what the future holds for Power.

 


451_Research_2012_CMYK.jpgThe key problem appears to be that IBM’s customers no longer believe that Big Blue can provide what they need to sustain their businesses in the digital age. According to 451 Research[2], a recent server and virtualization study revealed that 36% of respondents in North America – a 13% increase over 2013 - planned to spend less with IBM in 2014, and this at a time where x86 servers are the preferred data center platform for mixed workloads as well as cloud. That makes a major dent in Lenovo’s plans to become a major player in the x86 server market.

 

The major reason for this confidence drop, specifically with x86-based systems? Support. And lack of innovation.

 

Consider a couple of responses revealed by respondents to the 451 Research survey:

  • "The main reason we are switching to HP is for their blade technology. Switching from IBM due to support problems." – A Consumer Goods/Retail customer.
  • "IBM really missed the boat with the next generation of blades. PureFlex was their answer, but it is a 'Frankenstein' system. They only looked at the hardware. They never considered the ease of use. Overall, IBM still has great recognition, but this can be a weakness. They rely on that a bit too much; they need to be hungrier when it comes to new products." – A Telecom/Technology customer.

Read the full 451 Research report.

 

At HP, we do things differently. We are committed to innovation, and we’re committed to supporting your business. And we have the end-to-end support capability, strength of partners and stability to provide you with the technology and services that you need to drive a successful transition for accelerated business growth.

 

Visit the Project Smart Choice website and request a free half-day strategy session to find out how HP can help make your “Plan B” your “Plan A”.

 

 

[1] http://www.forbes.com/sites/alexkonrad/2014/07/17/ibm-shares-go-on-rollercoaster-ride-as-q2-earnings...

[2] Is it time for IBM to say ‘Goodbye to the Machine’?, 451 Research, July 10, 2014

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Greetings! I am on the HP Enterprise Group marketing team. Topics I am interested in include Converged Infrastructure, Converged Systems a...


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