IBM's ownership of x86 biz comes to a bloody end

Things can only get better... but maybe not for a few quarters – Gartner

Lenovo execs must be counting down the days before they can grab the System x business from IBM across Europe as it continues to disproportionately bleed unit sales and revenues in a tough market.

Gartner Q3 EMEA market stats show recovery in the prior three months was nothing but a flash in the pan: shipments fell four per cent to 526k boxes, and factory revenues edged up just 1.16 per cent to $2.86bn.

There were winners in the quarter, and there was IBM, shoved by Dell into the third spot as its server cash haul slumped nearly 22 per cent to $440.8m, and shipments dropped 15 per cent to just shy of 38k machines.

The last time IBM reported meaningful growth was in Q3 2011, so the upheaval caused by selling the x86 business to Lenovo - announced at the beginning of this year - could not shoulder all of the blame in Q3.

Errol Rasit, Gartner research director, told us Big Blue was also impacted by “renovation” of its RISC business amid the “still glacial decline” of Unix demand. He added mainframe customers postponed spending in anticipation of a System z refresh from IBM.

System x was due to transition to Lenovo at the start of December but this was delayed by a month because IBM did not want to disrupt sales in the run up to calendar and its fiscal year.

But the Gartner man reckons the sales pain will potentially continue for the short term when under new ownership.

“Many organisations have not dealt with Lenovo before, they will get to know them over the next few quarters and decide if they want to continue [that relationship], will do due diligence,” he said.

Market leader HP grew above the market rate by 6.38 per cent to $1.165bn revenues, despite a shipment decline, meaning it sold a “richer” set of systems, and fended off attacks from Cisco.

Slipping into second, Dell grew 9.1 per cent to $454m, due to the “channel acquisition strategy”, and “more credibility in storage and networking”. Fujitsu grew 2.73 per cent to $201m revenues with its German base performing well, and relatively new entrant Cisco grew 32.4 per cent to $161.4m.

Long gone are the days of double digit market expansion - for most - so vendors that maintain or slightly enhance their position are doing relatively well. Rasit said demand remained fragile, and many of the growth drivers - cloud computing, digital business and refreshes - were long term projects that did not convert into short-term upticks in spending.

“Today, these effects are not positive enough to radically outpace budgetary caution and server consolidation,” he added. ®

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