Highlights from: IBM’s continuing quest to refresh its revenue mix

TPM has one of his usual, great round-ups of IBM’s business:

For the full 2016 year, IBM’s revenues were off 2.1 percent to $79.85 billion, but its “real” systems business, which includes servers, storage, switching, systems software, databases, transaction monitors, and tech support and financing for its own iron, fell by 8.3 percent to $26.1 billion.

Changing the revenue mix:

IBM’s efforts to promote SoftLayer cloud and Watson cognitive computing, mobile and social and marketing software and tools, and security wares – what it calls its strategic imperatives – are almost filling in the gap left behind as the core businesses shrink. IBM wanted these strategic imperative businesses to reach $40 billion and 40 percent of revenues by 2018, and in this quarter it already hit the 40 percent mark, with $33 billion in revenues for 2016–as much because of its overall revenue decline as for the growth in these businesses.

And, some info on their hardware revenue:

IBM sold just over $8 billion in Systems products, and brought $934 million to the middle line as pre-tax income

Also:

Schroeter said that Linux-based Power Systems machines now drove 15 percent of revenues, and that is pretty good considering that two years ago it was a few percent of sales.

Source: ”Drilling Down Into IBM’s System Group”( https://www.itjungle.com/2017/01/23/drilling-ibms-system-group/)

Hardware layoffs at Oracle

Oracle claims the company isn’t closing the Santa Clara facility with this reduction in force. Instead, “Oracle is refocusing its Hardware Systems business, and for that reason, has decided to lay off certain of its employees in the Hardware Systems Division.”

Those hardware employees appear to have been Oracle’s failing SPARC hardware department staffers. In mid 2016, Oracle claimed its new SPARC S7 processor would be offered on Oracle Cloud. The cloud is Oracle’s new revenue hope since its new software licensing revenue plummeted by 20 percent in its last quarter ended December 15. At the same time, Oracle’s hardware revenue had fallen 13 percent.

Link

How to be a hardware analyst…?

Eucalyptus cloud on Dell hardware

After reading an, as ever, great, deep coverage of some new fangled piece of hardware from TPM, I got to thinking: I don’t really know how hardware analysts approach their craft. What framing and context do they use to understand, evaluate, and judge any given chunk of hardware?

I’ve never been much of a hardware person (which was an odd strength while I was at Dell, being that I was there to work on software strategy). However, I keep coming across converged infrastructure companies and products that start to get my “that seems interesting” senses tingling. For example, in the piece I linked to above, it seems interesting the VMware is going to have an OCP compliant product in the market, through Quanta. I also spoke with several VCE people at VMworld, and their premium price business model is intriguing (it reminds me of the IBM model: we’ll send a plane full of people the instant you have a runny nose – which leads to lots of talk of time to value, ROI, etc.).

Being a software person and, worse, someone who was not formally trained in computer science, the only way I think about hardware is, essentially, is it faster and cheaper? Which I know is very naive.

In software, you can ask that question, but question is also more about the capabilities software gives you and how businesses either can benefit or be harmed by it (like using cloud to more quickly deliver new features to production), and “culture shifts” (like BYOD or going from Office to Google Apps, using SDN or virtualization to change how IT is architected and deployed, etc.).

Again, to me, a “software person,” any “advance” in hardware is just a question of being faster and cheaper…but I’m assuming there’s more to it.

(We discussed this in the opening of today’s Under Development podcast. Bill had some good answers.)

How Dell segments out the server market

As detailed by Dell’s Forrest Norrod:

We typically think in big animal terms. The true hyperscale market is a very small set of customers, maybe the top seven to ten players. The scale-out customers sit below these, and include Web tech, HPC, and the large financial institutions for their quant farms. The core enterprise comes next and includes converged, high-value workloads and volume workloads, and finally there is the SMB/value segment. All four of these segments are growing right now. The strongest unit growth is probably on that scale-out space below hyperscale and we are still seeing great opportunities for Web tech and technical computing. I think that HPC is becoming less and less a thing off in the corner and more of a critical component of almost everybody’s business. And the interesting thing from our perspective is not necessarily the exascale ambition and hundreds of millions of dollars in government projects. We are much more interested in the commercial, mid-scale, and educational technical computing areas and we think these are fast growing segments. Core enterprise has returned to growth.

How Dell segments out the server market