With only months to go before IBM completes the sale of its x86 server business to Lenovo, IBM CEO Ginni Rometty had a message for investors in her annual letter to shareholders: "We are not exiting hardware."
Rometty was countering nagging rumors that IBM was looking to jettison its struggling storage business and focus instead on high-margin areas such as software and services. Instead, Rometty stressed, storage was a company imperative: "IBM will remain a leader in high-performance and high-end systems, storage and cognitive computing," she wrote in the March letter.
Soon after, IBM's storage strategy kicked into high gear.
In May the Armonk, N.Y.-based company began a major storage offensive against competitors EMC, NetApp and Hewlett-Packard, refreshing its entire hardware line of storage products and introducing new software-defined Elastic Storage technology. The push also included new partner incentives, so-called funded head counts, and a boost to margins on storage hardware by as much as 20 percent.
The moves are all part of a concerted effort, IBM said, to make storage one of its biggest new lines of business within its hardware-centric Systems and Technology Group. IBM executives also said storage is a channel partner’s biggest new IBM opportunity. "Partners are saying, 'Help me get a seat at the table with the people that have a bigger share of the IT wallet and can invest more,' " said Jamie Thomas, general manager of storage and software-defined systems in IBM's Systems and Technology Group. "Those investments are increasingly around storage. That includes analytics, clouds and people who are dealing with this data explosion. It's a huge opportunity for IBM and partners."
That storage opportunity, according to experts, is aimed at buoying IBM's ailing hardware business and an attempt to stanch the bleeding of its struggling Systems and Technology Group from nearly eight consecutive quarterly losses, with a loss of $2.4 billion reported in its most recent quarter in April.
NEW STORAGE PRODUCT PARADE
At IBM's platform-focused partner conference Edge 2014 in Las Vegas in May, IBM unveiled updates to its flagship V7000 storage hardware that include real-time compression (without sacrificing performance, according to IBM); rolled out new DS8870 Flash enclosures for companies with the speediest of storage needs; and unleashed what it said was "breakthrough" tape technology that allows data management of tape libraries to be more efficient.
IBM also took the wraps off its software-defined Elastic Storage technology at Edge 2014. Elastic Storage is based on IBM's General Parallel File System technology and runs on its own FlashSystem flash array. The software allows a company to quickly scale its storage needs automatically and intelligently, supporting any vendor's storage system and allowing access to any type of data across all of an enterprise's storage systems in multiple locations, according to IBM. With its Elastic Storage technology, IBM touts a 90 percent storage cost savings based on the technology's ability to automatically move less-used data from across storage pools into less-expensive commodity storage, leaving faster and more expensive resources such as flash for more urgently needed tasks.
NEXT: Can Lenovo Save IBM's Storage Business?