30
Sat, Nov
0 New Articles

IBM Reports Strong iSeries Sales

Analysis of News Events
Typography
  • Smaller Small Medium Big Bigger
  • Default Helvetica Segoe Georgia Times

Last week, IBM delivered good news to Wall Street when it reported better than expected earnings for its fiscal third quarter. While it was at it, the company gave its mid-market customers something to cheer about by announcing that iSeries sales for the quarter were a whopping 25% higher than the same quarter last year. The sales growth indicates that IBM's strategy for reenergizing the iSeries is beginning to gain traction.

For the quarter, the computer giant officially reported a net income of $1.52 billion, which was 2.5% lower than the same quarter last year. However, the income figure included a one-time charge of $525 million for taxes that IBM will have to pay when it repatriates some of its foreign earnings. When this and other one-time items are excluded, IBM's earnings per share actually grew by 22%. On a similar note, the company had to report a revenue decline of 8% due to the sale of its PC business to Lenovo. However, when PC revenues are stripped out of last year's figures, IBM's revenues from continuing operations grew by 4% over the previous year. While revenues were on the soft side, adjusted net income exceeded the estimates of financial analysts.

Among IBM's many product segments, the iSeries stood out as a top contributor. The server's 25% revenue spurt capped three consecutive quarters of sales growth for the product family. As this article goes to press, the iSeries Division has not provided information about the performance of different industries and regions. However, sources inside the company have told me that growth was fairly even across most segments. There were also reports of significant growth in new iSeries accounts, especially among smaller firms.

While last quarter's iSeries sales were encouraging, not all of the 25% revenue growth was due to customers snapping up more servers than usual. Instead, much of it was due to a favorable comparison to a disastrous third quarter of 2004. In that quarter, iSeries sales were 26% lower than they were in the third quarter of 2003. The main cause for the sales slump was the fact that for much of the quarter, the largest eServer i5 that IBM could ship was a 2/4-way Model 570. Larger Model 570s did not ship until September of that year and IBM did not announce the Model 595 until October. As a result, Big Blue spent much of the quarter selling only part of a new product line (and the less lucrative part at that). Given the situation, a sales slump was virtually inevitable.

Seen in this context, sales growth during the last quarter--as well as growth during the first half of 2005--is returning iSeries revenues to levels that are similar to those of 2003. If you read the article I wrote about iSeries sales near the end of that year, you will learn that 2003 revenues were up significantly compared to 2002, which was the absolute worst year for iSeries sales. When you put these facts together, it becomes clear that 2005 is turning into the year when iSeries sales resumed their climb out of the revenue trough of 2002 after experiencing a tough 2004 due to the POWER5 product transition.

What are the factors behind this resumption of sales growth? Clearly, some of the growth is due to the increasing familiarity of customers with the eServer i5 models and the inevitable need to upgrade servers every several years. However, much of the growth can be credited to IBM's multi-million dollar campaign to promote the iSeries among customers and partners. Through its iSeries Initiative for Innovation, IBM has increased the rate at which new and modernized iSeries applications are being delivered to the market. In addition, the company has stepped up marketing efforts to bring added visibility to the server.

As part of those efforts, IBM aired an iSeries television commercial during Sunday football games for the first time on October 16. The commercial--which features a humorous take on the phrase, "I (as in iSeries) am the man"--focuses on how iSeries can consolidate proliferating servers and storage platforms. IBM may post the commercial on the iSeries Web site, so check the site for it.

In addition, IBM's efforts to expand sales of its products and services to small and medium-size businesses have also provided significant marketing "air cover" for the iSeries. Through its Express portfolio of solutions and its campaigns to recruit more Business Partners, the company has increased its mind share and market share among SMB firms over the last three years. As evidence of this trend, sales to SMB firms during the third quarter grew by 10% over the same quarter last year. This marks the second consecutive quarter that SMB sales have experienced double-digit growth. It is no coincidence that the iSeries Division has also experienced two consecutive quarters of double-digit growth and, as a result, will probably realize its objective of double-digit growth for 2005 as a whole.

In short, 2005 is shaping up to be a year of both recovery and growth for the iSeries. However, if IBM is to sustain similar growth levels in 2006, it will have to execute flawlessly on marketing, sales, and product development fronts over the coming months. Such execution will be all the more critical because next year's quarterly sales will not be able to benefit from favorable comparisons to disappointing prior-year results.

As this article goes to press, the iSeries Division's executive team is finalizing its strategies for the coming year. Let's hope that those strategies have the right ingredients and funding to keep the revival of the iSeries on track.

Lee Kroon is a Senior Industry Analyst for Andrews Consulting Group, a firm that helps mid-sized companies manage business transformation through technology. You can reach him at This email address is being protected from spambots. You need JavaScript enabled to view it..

LEE KROON
Lee Kroon is a Senior Industry Analyst for Andrews Consulting Group, a firm that helps mid-sized companies manage business transformation through technology.
BLOG COMMENTS POWERED BY DISQUS

LATEST COMMENTS

Support MC Press Online

$

Book Reviews

Resource Center

  • SB Profound WC 5536 Have you been wondering about Node.js? Our free Node.js Webinar Series takes you from total beginner to creating a fully-functional IBM i Node.js business application. You can find Part 1 here. In Part 2 of our free Node.js Webinar Series, Brian May teaches you the different tooling options available for writing code, debugging, and using Git for version control. Brian will briefly discuss the different tools available, and demonstrate his preferred setup for Node development on IBM i or any platform. Attend this webinar to learn:

  • SB Profound WP 5539More than ever, there is a demand for IT to deliver innovation. Your IBM i has been an essential part of your business operations for years. However, your organization may struggle to maintain the current system and implement new projects. The thousands of customers we've worked with and surveyed state that expectations regarding the digital footprint and vision of the company are not aligned with the current IT environment.

  • SB HelpSystems ROBOT Generic IBM announced the E1080 servers using the latest Power10 processor in September 2021. The most powerful processor from IBM to date, Power10 is designed to handle the demands of doing business in today’s high-tech atmosphere, including running cloud applications, supporting big data, and managing AI workloads. But what does Power10 mean for your data center? In this recorded webinar, IBMers Dan Sundt and Dylan Boday join IBM Power Champion Tom Huntington for a discussion on why Power10 technology is the right strategic investment if you run IBM i, AIX, or Linux. In this action-packed hour, Tom will share trends from the IBM i and AIX user communities while Dan and Dylan dive into the tech specs for key hardware, including:

  • Magic MarkTRY the one package that solves all your document design and printing challenges on all your platforms. Produce bar code labels, electronic forms, ad hoc reports, and RFID tags – without programming! MarkMagic is the only document design and print solution that combines report writing, WYSIWYG label and forms design, and conditional printing in one integrated product. Make sure your data survives when catastrophe hits. Request your trial now!  Request Now.

  • SB HelpSystems ROBOT GenericForms of ransomware has been around for over 30 years, and with more and more organizations suffering attacks each year, it continues to endure. What has made ransomware such a durable threat and what is the best way to combat it? In order to prevent ransomware, organizations must first understand how it works.

  • SB HelpSystems ROBOT GenericIT security is a top priority for businesses around the world, but most IBM i pros don’t know where to begin—and most cybersecurity experts don’t know IBM i. In this session, Robin Tatam explores the business impact of lax IBM i security, the top vulnerabilities putting IBM i at risk, and the steps you can take to protect your organization. If you’re looking to avoid unexpected downtime or corrupted data, you don’t want to miss this session.

  • SB HelpSystems ROBOT GenericCan you trust all of your users all of the time? A typical end user receives 16 malicious emails each month, but only 17 percent of these phishing campaigns are reported to IT. Once an attack is underway, most organizations won’t discover the breach until six months later. A staggering amount of damage can occur in that time. Despite these risks, 93 percent of organizations are leaving their IBM i systems vulnerable to cybercrime. In this on-demand webinar, IBM i security experts Robin Tatam and Sandi Moore will reveal:

  • FORTRA Disaster protection is vital to every business. Yet, it often consists of patched together procedures that are prone to error. From automatic backups to data encryption to media management, Robot automates the routine (yet often complex) tasks of iSeries backup and recovery, saving you time and money and making the process safer and more reliable. Automate your backups with the Robot Backup and Recovery Solution. Key features include:

  • FORTRAManaging messages on your IBM i can be more than a full-time job if you have to do it manually. Messages need a response and resources must be monitored—often over multiple systems and across platforms. How can you be sure you won’t miss important system events? Automate your message center with the Robot Message Management Solution. Key features include:

  • FORTRAThe thought of printing, distributing, and storing iSeries reports manually may reduce you to tears. Paper and labor costs associated with report generation can spiral out of control. Mountains of paper threaten to swamp your files. Robot automates report bursting, distribution, bundling, and archiving, and offers secure, selective online report viewing. Manage your reports with the Robot Report Management Solution. Key features include:

  • FORTRAFor over 30 years, Robot has been a leader in systems management for IBM i. With batch job creation and scheduling at its core, the Robot Job Scheduling Solution reduces the opportunity for human error and helps you maintain service levels, automating even the biggest, most complex runbooks. Manage your job schedule with the Robot Job Scheduling Solution. Key features include:

  • LANSA Business users want new applications now. Market and regulatory pressures require faster application updates and delivery into production. Your IBM i developers may be approaching retirement, and you see no sure way to fill their positions with experienced developers. In addition, you may be caught between maintaining your existing applications and the uncertainty of moving to something new.

  • LANSAWhen it comes to creating your business applications, there are hundreds of coding platforms and programming languages to choose from. These options range from very complex traditional programming languages to Low-Code platforms where sometimes no traditional coding experience is needed. Download our whitepaper, The Power of Writing Code in a Low-Code Solution, and:

  • LANSASupply Chain is becoming increasingly complex and unpredictable. From raw materials for manufacturing to food supply chains, the journey from source to production to delivery to consumers is marred with inefficiencies, manual processes, shortages, recalls, counterfeits, and scandals. In this webinar, we discuss how:

  • The MC Resource Centers bring you the widest selection of white papers, trial software, and on-demand webcasts for you to choose from. >> Review the list of White Papers, Trial Software or On-Demand Webcast at the MC Press Resource Center. >> Add the items to yru Cart and complet he checkout process and submit

  • Profound Logic Have you been wondering about Node.js? Our free Node.js Webinar Series takes you from total beginner to creating a fully-functional IBM i Node.js business application.

  • SB Profound WC 5536Join us for this hour-long webcast that will explore:

  • Fortra IT managers hoping to find new IBM i talent are discovering that the pool of experienced RPG programmers and operators or administrators with intimate knowledge of the operating system and the applications that run on it is small. This begs the question: How will you manage the platform that supports such a big part of your business? This guide offers strategies and software suggestions to help you plan IT staffing and resources and smooth the transition after your AS/400 talent retires. Read on to learn: