Last year IBM Edge was a storage conference held in Orlando, Florida, attended by a couple of thousand storage professionals. Now it is an infrastructure conference that takes place in Las Vegas – home of the mega conference and attracts 5,000-plus attendees.

One reason why the conference has grown is the inclusion of detailed information about IBM PureSystems, its converged compute, network and storage system. IBM is moving fast in response to its shocking decline in non-System Z (mainframe) server revenues, as reported by market watchers Gartner and reflected in IBM’s Q1 2013 financial results.

(Note: This article was written before last week’s Q2 figures were released. Go here for coverage of the latest results.)

IBM itself said that its 2013 Q1 hardware sales had fallen by 17%. In its Q1 financial statement issued on April 18 this year, IBM said revenues from the Systems and Technology Group totalled US$3.1bn for the quarter, down 17% from the first quarter of 2012. Systems and Technology pre-tax loss increased $0.3bn.
Total systems revenues decreased 13%. Revenues from System Z mainframe server products increased 7% compared with the same period a year ago. Total delivery of System Z computing power, as measured in MIPS (millions of instructions per second), increased 27%. Revenues from Power Systems were down 32%, compared with the 2012 period. Revenues from System X (x86) were down 9%. Revenues from System Storage decreased 11% and revenues from Microelectronics OEM decreased 16%.

IBM Lead
Gartner found that IBM had the lead in the worldwide server market based on revenue. The company totalled just over $3bn in server vendor revenue worldwide, with a total share of 25.5% in the first quarter of 2013. This share was down 2.5 percentage points fromthe same period in 2012. In the first quarter of 2013, System X accounted for 29.3% of IBM’s total server revenue.

IDC, the other main market watcher, said the server market has declined overall. It placed HP at the top with 26.9% of share by revenue compared with IBM’s 25.5%. IDC broke down the server market, saying Q1 volume shipments revenue declined 3.1%, midrange systems revenue was down 18.3%, and highend systems revenue declined 17.1%.

As server technology form factor types fragment, it is increasingly difficult to make meaningful comparisons across the stack.

The A-Z Team
Systems and Technology Group is described by IBM as being “in transition”. What this actually means is that the division has a new leadership team.
Among the executive team is recently appointed SVP Tom Rosamilia, who is leading the division. Working alongside Rosamilia is general manager for storage and networking Ambuj Goyal. Stephen Leonard, a former IBM UK MD, is another one of the new appointments in the Systems and Technology Group, with responsibility for sales. At the conference, Rosamilia said he was only 40 days into the job, and Goyal had not been there for much longer at the time.

Rosamilia’s background includes stints as head of strategy at IBM, heading up its mainframe business, and managing IBM’s integrated supply chain – a responsibility he retains. IBM spends $55bn a year on ‘stuff’ for itself and its clients.
 

This year will see IBM pushing hard on Flash, pushing equally hard on its PureSystems solutions and offering lots of reminders that IBM is a big R&D spender: “I get $4bn a year,” says IBM Fellow Bernie Meyerson. He adds that despite IBM CEO Ginni Rometty telling him that “you can do anything” with $4bn, he still wants more. Naturally, the message on R&D is wrapped up in big data and analytics. “Today’s data centers were not built for this big data world,” we’re told.

 

IBM’s strategy for its poorly performing hardware division has several strands. Flash is being heavily promoted, as is its PureSystems converged platform. The company also wants to turn its reseller channel into managed services providers. It believes there are between 30,000 and 40,000 services providers it can tap. Although just how many of these product shifters are ready to transition to being Infrastructure-as-a-Service and Platform-asa-Service (IAAS or PAAS) suppliers is yet to be determined.

On the product front, it is clear that the key storage message is: ‘Everything Flash.’ IBM says it has spent $1bn on Flash R&D and that it has already established 12 Flash Centers around the world. The company believes in All Flash storage as a game-changer that is as much about economics as technology, and that we have reached a tipping point. Flash, we are told, impacts everything and is the obvious alternative to 15,000 RPM disk arrays. The tipping point assertion was put into context by a customer from a major UK financial institution that runs a lot of mainframe-attached 15,000 RPM disk drives. “I agree that Flash is the future, but it will be two years before we’re ready to switch,” the customer says.

“A petabyte of storage on a floor tile” is how IBM describes its Flash offering. This is its StorWize XIV. Its performance enhancements mean having to spend less on virtualization and database software. If you invest in Flash you could, for example, need fewer Oracle licenses, IBM says. Flash can be the answer to poorly written software. All of these encouragements are offered.

An added advantage is major savings in power and cooling through fewer units on the data center floor, and no mechanical parts to generate heat and require cooling.

The StorWize XIV offering from IBM is promising 36x less energy use. It says All Flash will use 1.4kw compared with 37kw for a combined spindle and SSD mix and 74kw for spindles alone.

Ambuj Goyal, general manager of Storage and Networking with the Systems and Technology Group, says: “I wondered why I was put in charge of storage. Is it a punishment? When they offered me the role, they said: ‘You have done hardware, you have done software, and now you are ready for storage.’”
It is the word ‘storage’ that Goyal objects to? He says he wants to see it dropped. “It is about data. The big issues are data loss and data management. These are the crown jewels of an organization. Storage is no longer an afterthought; it is a forethought.
Processors are just a commodity. Data is the new currency of business. All Flash storage is the way forward because mechanical storage can’t keep up. It is not about dollar per gigabyte; it is about dollar per workload.”
 

“If properly leveraged, data can create value. What data do we really need? Can we trust it? What do we need to keep for risk and audit. What can we throw away?
“Vendors say ‘Just buy my storage’. But storage is like an attic. You don’t know what’s in there, or what value it might have. Storage is a word that should disappear from the industry. The inherent cost is data management, and that is greater than cost per gigabyte because you can’t treat all data in the same way.”

“Different data for different needs – that’s data economics. For a bank, a storage architecture for continuous operations includes ATM, branch and batch. For an airline it is operations, routes and pricing. For a cable company it is cable TV on demand. Data is no longer about hierarchical tiering; it is about managing the seamless movement of data,” Goyal says. “Policy-based data management is running out of steam, and it is operational analytics that can help define data management. In Flash, VC investments have tripled in two years. There are many solutions based on different infrastructures.”
But it is when discussing the innovation the industry must deliver that Goyal says the only way forward is through collaboration – no single company can do all the innovation in the industry. It is about creating a framework that is not IBM-specific, or any other vendorspecific.
It is about creating a discussion.
“The time has come for a common and open infrastructure management that the whole industry can innovate around. No proprietary effort can overtake the velocity of open innovation. We must have development with the industry that is open and collaborative. Growth will be in execution. Now it is about letting the innovations add value.”
Goyal cites IBM’s support of Apache, Eclipse and Linux, and involvement with the Open Stack and Open Daylight projects as its commitment to openness.

IBM won’t comment on the rumours that it was negotiating a sale to Lenovo of its x86 server business. Nor will the company be drawn on the potential market size for its PureSystems platform.
It says it has spent $2bn on research and development into PureSystems, and that it has shipped 4,000 units since launch and has another 3,800 requests for information. It says it will continue to develop PureSystems based on x86 and Power architectures. And though not confirmed, it seems only a matter of time before a Flash-only PureSystem comes to market.
IBM once made most of its revenue from its AS/400 hardware platform. As the server market fragments between low energy mass produced systems on chip servers such as HP’s Moonshot, industry standard x86 pizza box and blade servers and big tin converged systems alongside mainframes IBM is putting much of its effort into its converged systems, which, like its AS/400 ancestor, are high value and high margin all the while continuing (for now) to sell x86 servers and retaining its grip on the mainframe market.

As for its storage push, the ‘All Flash’ message is here – for the next five years at least – before we get to the next technologies such as Racetrack, nanotubes or putting bits on as few as 12 atoms, which is the minimum before you start to run into quantum issues, we are told.

What is obvious is that the financial performance of the Systems and Technology Group has been unacceptable, and the new executive team has been put in place to turn the business around and deliver to IBM a return on its considerable investments – and to do so quickly.

The full article which includes case studies on how companies such as Prudential, Bally Hotel and Casinos and Centerline use technology for business advantage is in the current FOCUS magazine. Access the digital editions or the newly launched iPAD version.