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IBM Reports Storage Revenue Growth In Q3

IBM showed it can grow its storage business even without an x86-based server business to pull sales.

IBM on Tuesday reported its storage business grew 4 percent year-over-year in contrast to the overall decline in storage sales by the traditional top vendors.

IBM's overall hardware in its third fiscal quarter of 2017, which ended September 30, grew 14 percent year-over-year to $1.3 billion, driven by growth in the company's storage and z Systems mainframes.

That included a 4 percent rise in storage revenue and a 62 percent year-over-year rise in z Systems mainframe sales, thanks to the product line's latest version which focuses on high-performance with encrypted data. The gains were partially offset by an 8 percent drop in Power-based server sales.

[Related: IBM's New z14 Almost Halted Big Blue's Revenue Slump]

IBM no longer offers general-purpose x86-based servers since it sold that business to Lenovo in 2014.

The storage business has seen slower growth recently, with second-quarter calendar year 2017 worldwide storage revenue up 2.9 percent, year-over-year, to $10.8 billion, according to IDC.

The growth in the business has shifted away from the traditional leaders in the business, with NetApp the only traditional vendor to see a significant increase in storage sales. The original design manufacturer, or ODM, part of the market grew by 73.5 percent year-over-year.

NetApp had sales of $695 million, up 16.7 percent over last year. That made NetApp the only branded storage vendor among the top five companies to see growth, according to IDC. IBM had $556 million in storage sales during the quarter, which was down year-over-year by 0.4 percent, which was still much better than the other top-five storage vendors, IDC said.

IBM, however, said on Tuesday that its third fiscal 2017 storage sales represented the third consecutive quarter of storage growth.

Champion Solutions Group, a Boca Raton, Fla.-based solution provider and IBM channel partner, has of late been enjoying strong IBM storage sales growth, said Mike Piltoff, senior vice president for strategic marketing for the partner. IBM has an excellent storage portfolio, particularly with its all-flash storage technology, Piltoff told CRN.

"IBM has a lot of nice flash storage," Piltoff said. "And that business is going mainstream."


IBM's storage business is growing despite IBM's not having an x86-based server business, Piltoff said.

About 75 percent of Champion's storage business goes attached to x86-based servers, while only 25 percent was attached to IBM Power-based servers, he said.

"We've been good at focusing on storage and data management regardless of whose logo is on the servers," he said. "And everything is going VMware anyway, so the server brand is not so important."

Another big advantage IBM has in its storage business, Piltoff said, is Eric Herzog, the company's chief marketing officer and vice president of worldwide storage channels.

"IBM has good leadership in Eric Herzog," he said. "It seems he has been changing the pace, the dissemination of information, the pricing, and the bundles. Eric is big on not selling storage, but on selling solutions. With Eric, it's not about the speeds and feeds. It's, 'Let's sell solutions.'"

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