IBM Slumps, Cisco Gains In 2014 Server Sales - InformationWeek

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IBM Slumps, Cisco Gains In 2014 Server Sales
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D. Henschen
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D. Henschen,
User Rank: Author
3/9/2015 | 12:57:53 PM
Software component and integrated system penetration
Garnter confirmed that it does tease out the server hardware cost vs. other hardware and the software cost component when compiling server shipment and revenue reports. I asked for more detail on integrated systems (like Cisco UCS and Oracle Engineered Systems). Gartner says these are a fast-growing component of the x86 market, but they're still less than 10% of the hardware market overall.
PhilHD
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PhilHD,
User Rank: Strategist
3/4/2015 | 5:15:50 AM
Re: Money makers vs. box movers
Regarding your question " I wonder how Gartner and others count the revenue for a "server" shipped as part of an integrated system", Gartner tracks Worldwide Integrated Infrastructure and Platforms separately and so I believe its not "double counting" between these two market shipment analysis.

Gartners latest Worldwide Integrated Infrastructure and Platforms report, which is still for 3rd Quarter of 2014, is here: http://www.idc.com/getdoc.jsp?containerId=prUS25347414

The "Overall" server market report is very misleading as it groups sales of all servers from $1 to $100M and so if all a vendor focusses on is the "higher" end of the market, the vendor may be low on the unit ranking but that clearly won't define the ranking of the revenue as you point out regarding Oracle.

For example.  Oracle has pretty much abandoned the "volume/commodity" x86 marketplace as seen by the trend in volume and revenue and while they still do sell certain x86 systems, they are much higher end configurations designed to go into Oracle's Engineered Systems like Exadata, Exalogic, Oracle Database Appliance, etc.

And so the big units/revenue #'s for Oracles x86 business don't show up in the "server" marketshare reports, but in the Integrated Infrastructure and Platforms report. Same for Oracle's SPARC business where there is a clear shift from selling just "servers" to Integrated Infrastructure and Platforms like Oracle SuperCluster.

Regarding HP's RISC/UNIX/EPIC #'s, its evident that Itanium (and therefor HP-UX) is basically dying/dead fast as there hasn't been an Itanium update in over 3 years now and with HP's focus on x86, its clearly showing the massive decline in Unix/RISC/EPIC marketshare.

Same for IBM as they have sold off their x86 business, and whats left with Power is being focused more on Linux and third party OpenPower developers, and so IBM's "commoditization" of Power is clearly hurting their numbers.

One thing that you should point out is that a vendor can make all the revenue (and volume) in the world but if you can't make any profit(margin) from it, it's a dead business, cause you can't invest in R&D without profit. No R&D means no innovation which means you arent competitive.

Just look at the past 5+ years of server leaders in revenue/marketshare and how poorly the companies are doing today. Dell was #1 for many years and they had to go private. HP just announced yet another quarter of revenue losses and are splitting company in half this year and IBM, well they just announced 10th straight quarter of revenue losses. Look at the companies financial statements for profit margin and R&D investments and you'll see what really matters.
Charlie Babcock
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Charlie Babcock,
User Rank: Author
3/3/2015 | 6:15:47 PM
Cisco caught a wave
Cisco's UCS caught the virtualization wave and serves as a platform for consolidating servers in the data center. Virtualized UCS servers have strong network support. The virtual switch in the hypervisor offloads its switching tasks to a Ciasco hardware switch, speeding virtualization functions. Other vendors have converged infrastructure, but for timing on entering the server market, it's hard to critique Cisco's.
D. Henschen
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D. Henschen,
User Rank: Author
3/3/2015 | 12:41:18 PM
Money makers vs. box movers
It's interesting to see who makes the top five in units shipped versus who makes the top five in revenue. Lenovo and Huawei get the box-mover awards, showing up as #4 and #5, respectively, in units shipped. Cisco and Oracle get the money-maker awards, showing up #4 and #5 in revenue, respectively, despite not being among the top five in units. I wonder how Gartner and others count the revenue for a "server" shipped as part of an integrated system. I'll make a point of asking Gartner about that before the next report.


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