Delivering On the Razor's Edge

IBM's hard focus on delivering razor-edge technology in its midrange servers, including dual-core processors and a number of 64-bit hardware and software technologies, has helped Big Blue put even more distance between itself and archrival Hewlett-Packard in the 2005 VARBusiness Annual Report Card (ARC) Midrange Servers category.

While HP has struggled to get users to migrate to its Itanium-based line over the past year, many analysts believe the company has not come close to its 2004 end-of-year goal to get half of its users onto the new chip. IBM, meanwhile, has made impressive sales on the higher-end versions of its pSeries and iSeries servers.

So it's no surprise IBM took the top two spots in this year's ARC, with its venerable iSeries and pSeries tying for first. VARs gave both systems high marks in Product Quality/Reliability and Loyalty.

"IBM was the first to go over to dual-core with the Power 4 technology and has continued on a rapid pace with Power 4 Plus, Power 5 and, shortly, Power 5 Plus," says Steve Jocelyn, research director at IDC's Global Enterprise Server Solutions practice in Framingham, Mass. "It has given them clear superiority in performance levels for the p- and iSeries."

IBM has done an admirable job, not only by delivering state-of the-art technology, but by helping VARs and users successfully integrate those technologies with a patchwork of different operating environments, some analysts believe.

"IBM has traditionally been better than anyone at managing architecture transitions, whether it is CISC to RISC or standardizing around one core platform," says James Governor, principal analyst at IT analyst firm RedMonk. "HP, however, has not necessarily found it easy to make these transitions."

What will make it a little tougher for HP to make up the distance between itself and IBM is Microsoft's announcement earlier this year that it has no plans to support Itanium servers.

"They are screwed on Itanium," Governor says. "At this point, I wouldn't be considering [Itanium] to be a strategic platform if I were an enterprise right now. So far, 2005 hasn't been kind to HP."

Because it has had more than a little difficulty getting its existing Unix/RISC-based users over to Itanium, HP has lost some of those users, particularly those with the old DEC's Alpha chip-based servers, to IBM and, to a lesser extent, Sun Microsystems, some observers say.

Also helping IBM's midrange strategies are some financial incentives for VARs who have made significant investments in systems, such as the series and its special-bid process.

"You could make a year's worth of investments on a series thing, the customer decides to purchase from you, but procurement steps in and puts it out to bid, where the low-cost guy who hasn't invested anything gets it," says Dan Love, vice president of business development for Siwel Consulting in New York. "But IBM has fixed that now with their special-bid process. They are trying to be a better partner by protecting margins."

Such moves have helped IBM fare better in this year's ARC survey, where the iSeries and pSeries were either first or second in the Partnership category.

Another emerging technology that has helped IBM in the midrange-server space, particularly with Linux, is virtualization. The company is expanding in this area through its Virtualization Engine, which traditionally allows a large system to look like many other smaller systems, typically through partitioning. While all of IBM's major competitors in both the open-source and proprietary realms have strategies in place for virtualization, many industry observers again believe IBM is a step ahead.

"[IBM] has moved quickly on dual-core and 64-bit technologies, but also with Linux virtualization stuff," RedMonk's Governor says. "Even some Oracle users I have talked with run their apps on an iSeries because they like it so much, and Oracle has said it wants to kill the iSeries."