IBM System x biz sales: The numbers are out... and they're not pretty

HP and Dell reaped the benefit

The extent of the slide in System x sales in Blighty during the final year under IBM ownership was laid bare today, and the eye-watering declines were bad: bad meaning bad, not bad meaning good.

The UK server market didn't exactly enjoy a vintage fourth quarter; spending declined 5.3 per cent to $503m and unit shipments went backwards too, dropping 11.5 per cent to 72.9k.

But though HP and Dell held their nerve to report gains on the same period a year earlier, IBM presided over a collapse in demand for its x86 line-up, figures from Gartner indicate.

In Q4 2013, IBM’s System x biz turned over $61m but fast forward a year and this had dwindled to a little over $31m, the beanie told us. For its part, Lenovo made $1.4m from its standalone server operation.

“As vendors go through a transition a lot there is a lot that occurs that will delay products both from an accounting and delivery perspective,” said Gartner research director Errol Rasit.

Two things customers demand of vendors are consistency and predictability, but there’s always a degree of upheaval during the transfer of a business from one owner to another.

“Lenovo was struggling to retain those customers through the transition so all its focus will be on executing this year after completing the acquisition,” added Rasit.

IBM agreed to offload the division in January 2014 but didn't complete the sales in most of the world until October, and was delayed in Europe until the start of this year.

Gartner said that with Windows Server 2003 support ending, Intel refreshing its Xeon range and cloud service providers building out data centres, sales were expected to do better in the quarter.

But some customers deferred purchases due to some lingering economic uncertainty and some decided to virtualise their estate more widely. Despite this, HP and Dell made ground.

HP, which itself is to trade as two separate companies from November and could be faced with customer issues of its own, grew factory revenues seven per cent to $182.6m, and Dell grew 9.6 per cent to $96.3m.

“HP and Dell benefited from the organisations that sought to defer spending with IBM and then Lenovo,” said Rasit.

We emailed Lenovo PRs in the UK, Europe and the US but have yet to hear back from them. ®

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