Not All IBM Partners Sharing In Big Blue's Bang Up Quarter
Several IBM partners said that as a percentage of their total sales their IBM business has shrunk considerably since the sale of the IBM PC business to Lenovo two years ago. They say IBM is simply makes up less of their business and is just not as relevant to them or their customers.
Sources said that IBM is planning to make an SMB sales restructuring early Thursday morning that could quell some of the partner discontent. ChannelWeb will have full details at 1 a.m.
One senior executive for a one time large IBM partner said his IBM and Lenovo business combined is down as a percentage of his company's total sales by 20 percent to 30 percent in the last two years. This at a time when the solution provider has grown its sales by more than 100 percent during that period.
"They are a non issue," asserted the solution provider executive. "I don't need them anymore. There was a time when they were your best friend. Then they were necessary. Now they are neither your best friend nor necessary. Their storage is irrelevant with declining market share [in the SMB market]. Their servers are irrelevant. HP owns that. They have gotten rid of their laptops and desktops. The only thing they have got firing on all cylinders is their software."
The solution provider executive said he sees a lack of channel leadership at IBM particularly when stacked side by side against rival Hewlett Packard. "There is no articulate clear message driving down to the channel from IBM's channel leadership," said the executive. "At HP, the message is clear, everything is defined and everything runs smoothly. At IBM the left hand doesn't talk to the right hand. They don't know their own programs. The IBM channel reps working with the resellers are not working functionally with the product reps. It is a disorganized ugly mess. It is clear to me that there is zero leadership. Nobody is holding anybody accountable and there is no management of people happening."
Another solution provider executive said after selling more than $20 million in IBM product during the first quarter, his IBM business fell off the cliff in the second quarter. "I've done almost nothing in the second quarter; it's frightening," said the solution provider who asked not to be identified.
He said the biggest problem is that IBM seems to want to take all large deals direct. "There is a 20 percent delta between IBM direct pricing and channel pricing," he said. "Channel pricing should be cheaper, not more expensive than IBM direct."
He noted that IBM is slow when it comes to providing him with server pricing, often causing him to miss out on deals. "I don't know whether they are screwed up or purposely dragging their feet so they can take the deal direct," he said. "IBM doesn't know how to close a deal. They don't know how to deliver product. They've become just a big software company."
That solution provider angst, however, is not showing up in second quarter results. For the second fiscal quarter ended June 30, IBM posted a 9 percent increase in sales to $23.8 billion. That sales growth was the best revenue growth performance for Big Blue in the last seven years.
Earnings were also strong, surpassing Wall Street expectations with IBM posting a 12 percent increase in net income to to $2.26 billion ($1.55 per share) compared with $2.02 billion ($1.30 per share) in the year ago quarter. What's more, IBM's gross profit margin increased year to year for the 12th consecutive quarter. IBM shares were up $3.33 cents in after hours trading to $114.41, a new 52-week high.
IBM saw robust sales growth in its software business, which was up 13 percent to $4.8 billion in the quarter and in its total Global Services business, which was up 10 percent tp $4.3 billion. Sales for the company's Systems and Technology business were up only 2 percent to $5.1 billion.
Loughridge said blade server sales were up 15 percent compared with the same quarter a year ago. Furthermore, he said IBM saw strength in four and eight way servers.
Loughridge applauded the U.S. Americas team for delivering what he called impressive 6 percent sales growth. He said IBM saw a relatively improving IT spending environment and economy in the quarter. He said the U.S .Americas team has the right account structure and is executing well particularly with greater sales into existing accounts.