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IBM’s x86 Server Exit Greatly Exaggerated, Observers Say

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 […]

Written By

Jessica Davis

Feb 5, 2009

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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.

IBM’s x86 Server Exit Greatly Exaggerated, Observers Say

Jessica Davis

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