IBM's x86 Server Exit Greatly Exaggerated, Observers Say

By Jessica Davis  |  Print this article Print

In spite of all the possible indicators pointing to IBM's exit from the x86 server business, IBM has strongly denied any such plans in a memo to channel partners. And observers say an exit from x86 servers by IBM just doesn't make sense, given the company's broad server lineup.

A widely leaked memo from IBM's Series x executive has reaffirmed IBM's commitment to the x86 server business, saying that any rumors about the company's plans to leave that business are untrue.

The memo comes at a tumultuous time for the computing hardware market. Many analysts have forecast sales declines in 2009 as IT organizations put off their PC and server refresh cycles yet again as part of their strategies to weather what looks to be a long and deep recession.

That kind of market uncertainty is just the thing that can ignite rumors such as the one IBM is trying to quell, says Charles King, president and principal analyst with Pund-IT.

"It's been a tough time to be in any kind of hardware business in the last six to nine months," King says. "This could be the case of somebody adding one plus one plus one and coming up with 4.3."

Fueling the fire of the rumor are IBM's own past actions – exiting the PC business by selling it to Lenovo, plus selling its hard drive business to Hitachi. The moves followed statements by IBM's CEO that IBM's future is not in the commoditized hardware business. And then there's IBM's move to end its distribution relationship for Series x with Synnex, considered one of the top distributors of its Series x products. And that happened just a few weeks after Synnex expressed its enthusiastic support of IBM at its National Conference in Charlotte, N.C.

And of course many could point to the state of the overall computer hardware business as a motivator for any company to want to get out.

Plus over the last several months IBM has licensed some of its Series x technology to Lenovo and Rackable Systems, making some question whether the company was diluting its own market.

"That said, I can't imagine any circumstance whereby IBM would exit the x86 market," King told Channel Insider. "It's the most dynamic in the server market and it makes perfect sense for the company to be in it."  That's because IBM also offers a range of other server hardware products, from mainframes to Unix-based systems.

King notes that Sun Microsystems is suffering a great deal today because it did not aggressively pursue the x86 business and now its proprietary UltraSparc business is in trouble.

King says that IBM's licensing of the intellectual property around its Series x technology to Lenovo and Rackable Systems marks a move by IBM to inexpensively enter new markets, and it in no way cannibalizes IBM's own end market.

Jessica Davis covers the channel for eWeek and Channel Insider. Her technology journalism career began well before anyone heard of the World Wide Web and has included stints at Infoworld, Electronic News/EDN, and the Philadelphia Business Journal. Her work has also appeared on CNN and Forbes.com. She has covered hardware, software and networking, as well as the business side of technology. She has won several journalism awards, including a national ASBPE award for best staff-written column, and was named Marketing Computers hardest working tech journalist on their inaugural list of top tech journalists. Jessica can be reached at jessica.davis@ziffdavisenterprise.com

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