HP To IBM Hardware Boss: The Mainframe Is Going Down

Hewlett-Packard has a message for IBM's feisty hardware czar: HP's server share is on the way up and IBM's mainframe business is on the way down.

At least that's the way HP sees it. Paul Miller, HP vice president of worldwide marketing for enterprise storage and servers, says that HP's server share is up dramatically since HP CEO Mark Hurd took the helm in April 2005.

"We have significantly closed the gap on overall server revenue to the point where it was a tie in the last quarter," said Miller. Three years ago, HP was roughly 5 market-share points behind IBM, said Miller.

Miller's comments came in response to heated comments from IBM Senior Vice President and Group Executive, Systems & Technology Group, Robert Moffat Jr., regarding server market share. Iin an interview with ChannelWeb earlier this week, Moffat said IBM's Z Series mainframes "kicked [Hurd's] ass."

Market researcher IDC said that in 2005 worldwide server systems factory revenue IBM had a 32.9 percent market share compared to HP's 27.7 percent market share. In 2007, IBM stood at 31.9 percent market share and HP stood at 28.3 percent market share, said IDC. And more recently, HP and IBM finished in what IDC called a statistical tie with 30.7 percent share for HP and 30.2 percent share for IBM in the third quarter of 2008.

Miller says the mainframe business that IBM is still touting as a data center consolidation platform is on the way out. HP, in fact, claims that more than 250 companies worldwide have migrated to HP Integrity systems from IBM mainframes over the past two years.

Miller says HP has a plan to accelerate that bid to drive more customers off IBM mainframes to HP Integrity systems. "We are seeing a pipeline that supports an accelerated goal," he said.

Moffat, who took over IBM's Systems & Technology Group this summer, vigorously defended IBM's mainframe business as well as IBM's overall server market share.

"Let me make sure I get this on the record," said Moffat. "The stuff that Mr. Hurd said was going away kicked his ass: Z Series outgrew anything that he sells. [IBM] Power [servers] outgrew anything that he sells. So he didn't gain share despite the fact that we screwed up execution in [x86 Intel-based server] X Series. So the rhetoric of buying a services company [EDS] and putting it into your results didn't quite give him the desired effect it may have."

Miller says that he sees Moffat's comments as a sign that the IBM hardware chief is "feeling a lot of pressure" from IBM Chairman and CEO Sam Palmisano and his sales force to "make bold statements in the marketplace."

By any measure, analysts' market share statistics do not support Moffat's claims, Miller says.

"In all due respect, Moffat needs to get his facts straight," said Miller. "We are gaining share and they are losing share across the board."

Moffat, for his part, calls the mainframe the "gold standard of computing" and claims that IBM is moving hundreds of customers a quarter off HP and Sun Microsystems on to IBM servers. Those customers are moving equally to IBM Z mainframes, midrange Power systems and X Series industry standard systems, said Moffat.

As part of a move to accelerate that trend, Moffat says IBM is making available to partners migration tools that were previously only available to IBM's direct sales and services team aimed at moving customers off HP and Sun servers.

Miller says that customers looking for cost savings and next-generation architecture are not investing in mainframes that carry proprietary software and high annual service fees. "Customers are looking for a way to take costs out of their infrastructure long term and that is why they are moving to next-generation architectures," he said. "We moved to a bladed architecture with our Integrity NonStop [platform] this year and we have just seen tremendous growth in that architecture. It is significantly outgrowing mainframes."

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