IBM issues its fourth quarter results tomorrow at 1630 EST as reports said that it is again trying to sell off its x86 server business.
Reports that the firm is again in talks to sell off the unit that makes Intel processor-based boxes, part of the Systems and Technology Group (STG) division with China's Lenovo and Dell named as possible buyers.
A few days ago on January 16th IBM announced new developments with the Sixth generation of its enterprise X architecture in anticipation of the next generation of Intel’s processors expected next month. (see details below).
IBM refers to its x86 server business as the SystemX business.
Last year it was reported that IBM and Lenovo were discussing a deal for the sale of SystemX but that talks collapsed over price. Now the story has re-emerged with reports naming Dell as an interested party because of the scale it could exploit in a business with tight margins.
SystemX products include traditional pizza box servers, blade systems and X86 based modules which are integrated with the Pure Systems converged computer, storage and network products.
IBM Pure Systems also branded as FLEX primarily run on its own POWER processors which use a proprietary architecture as opposed to its X systems for which, like other server manufacturers, IBM relies on Intel’s processor development efforts and product road map.
Hard times in hardware
FOCUS has been tracking server hardware market numbers for some time now and there appears to be no sign of uplift for world’s biggest tin makers. Both HP and IBM appointed new leaders to their hardware businesses with Tom Rosamilia taking over at IBM STG.
Last time out IBM’s Q3 2013 financials from October last year show lowlights including China hardware sales down 40%, total Systems and Technology Group Revenues down 17% ( this was off the back of a Q2 with year on year sales down 16%) and System X (IBM’s Intel X86 business) sales crashing 40% globally.
Power (IBM’s own processor architecture) revenue was down 37 percent at constant currency. High Performance Computing accounted for 10 points of the decline. “To improve future performance, we are continuing to invest to expand our Power platform to go after the Linux opportunity, which is now larger than UNIX, and growing more rapidly,” IBM said.
“System X was down 16 percent at constant currency. Storage hardware revenue was down 10 percent at constant currency. The decline was driven by the growth markets. In the major markets, Storage revenue was up. Storwize product again delivered double-digit growth, and we also continued to grow our flash solutions. These were offset by declines in our legacy OEM mid-range offerings and softness in the high-end.”
A bright spot the company said was in Pure Systems. “In the major markets, we grew more than 30 percent sequentially. Globally, we shipped over 2000 systems in third quarter, with over 8,000 total shipments since announcement.”
Geographically IBM said China was down 22%. “Hardware which was down about 40%, and which makes up about 40% of our business in China.”
Revenues from the Systems and Technology segment totaled $3.2 billion for the quarter, down 17 percent (down 16 percent, adjusting for currency) from the third-quarter of 2012. Systems and Technology pre-tax income decreased $291 million to a loss of $167 million. Revenues for STG in Q2 2013 were $3.5bn and itself represented a 16% drop compared with 2012’s Q2.
Total systems revenues decreased 19 percent (down 18 percent, adjusting for currency). Revenues from Power Systems were down 38 percent compared with the 2012 period. Revenues from System x were down 18 percent. Revenues from System z mainframe server products increased 6 percent compared with the year.
System X Product Update January 15th 2014
Last week IBM announced new developments with the sixth generation of its enterprise X architecture in anticipation of the next generation of Intel’s processors expected next month.
"Our enterprise X-Architecture for x86-based servers and solutions delivers high performance and the highest customer satisfaction in the industry, making us number one in high-end x86 systems," said Adalio Sanchez, general manager for IBM System x and PureFlex. "We continue to innovate and deliver leadership performance, reliability and investment protection for mission-critical workloads with X6."
The X6 architecture represents IBM's continuing R&D investment and industry leadership in x86-based systems, and is specifically designed to provide new levels of performance and resiliency for enterprise applications, the firm said on January 16th.
Developments with the latest X6 architecture are:
Integrated eXFlash memory-channel storage. DIMM-based storage provides up to 12.8 terabytes of ultrafast flash storage close to the processor, increasing application performance by providing the lowest system write latency available. Targeted at lower latency for database operations, which can lower licensing costs and reduce storage costs by reducing or eliminating the need for external SAN/NAS storage units.
Support for multiple generations of CPUs. ‘An industry first.’
Server models supported by this new architecture are the System x3850 X6 four-socket system, System x3950 X6 eight-socket system, and the IBM Flex System x880 scalable compute nodes.
IBM also is introducing the System x3650 M4 BD storage server, a two-socket rack server supporting up to 14 drives delivering up to 56 terabytes of high-density storage. It provides 46 percent greater performance than previous comparable IBM System x servers and is ideally suited for distributed scale-out of big data workloads. 
IBM has announced the general availability of an all flash array the new IBM FlashSystem 840 which provides 1.1M IOPS. It supports up to 48 terabytes of capacity in a 2U unit. The FlashSystem Enterprise Performance Solution bundles the FlashSystem 840 and IBM System Storage SAN Volume Controller (SVC) technology.