In-Depth

System z Key to Big Blue’s Server Market Surge

As a strong server market showing demonstrates, it’s becoming increasingly difficult to ignore Big Blue’s Big Iron renaissance

• By Stephen Swoyer
• 09/11/2007

You can't keep the enterprise server market down. Server sales slumped through most of the early part of this decade, but they've recently rebounded and enjoyed five consecutive quarters of growth. That's positive, to be sure, but IDC's latest market survey was even more encouraging: server sales in the second quarter reached a level not seen since the second quarter of 2000.

To a surprising degree, Q2's surge in server revenues was fueled by strong sales of System z mainframes from IBM Corp. According to IDC, System z realized its fifth consecutive quarter of positive revenue growth, notching a 4 percent improvement (year-over-year) to $1.2 billion. One reason for this, IDC researchers say, is that z/OS-powered System z mainframes accounted for almost 10 percent of all server revenue in the second quarter. That makes System z the only platform outside of the Linux and Windows volume server segment to enjoy positive revenue growth in the quarter just past.

"This was a very, very strong quarter [for System z]. Not only was it another [quarter] where we saw solid MIPS growth, but we also had strong [growth in] revenues," said Mary Moore, System z security initiative leader with IBM, in an interview last month. "When IDC came out with their second quarter worldwide server market [survey] for the entire server market, the IBM z/OS mainframe was almost 10 percent of all server revenues—only outdone by Linux and Windows."

According to Moore, there's a reason for this. "Security is critically important to our customers. They're dealing with the challenges of protecting their sensitive data, and a lot of them just feel overwhelmed [doing so] in the distributed world. That's a big reason why our customers are turning back to their mainframes. It's why a lot of them are looking for ways to leverage and grow their mainframes."

It's for this reason that Moore and other IBM officials talk up another back-to-the-mainframe benefit: the centralization of security management and enforcement. (http://www.esj.com/Enterprise/article.aspx?EditorialsID=2782) While it’s too early to put such claims to the test—Big Blue delivered a new, security-centric z/OS 1.9 just last month, and other (related) initiatives, such as the zSeries Integrated Information Processor (zIIP), are just starting to have an impact—IDC’s research does suggest that Big Iron is thriving.

Indeed, System z’s performance helped IBM hold on to its server market lead—driven, IDC says, by the "solid" performance of its System z, System p, and System x lines. Big Blue controlled nearly one-third (31 percent) of the worldwide server systems market, followed by arch-rival Hewlett-Packard Co. at 28.2 percent. Once and future Unix king Sun Microsystems Inc. grew its server revenue by nearly 6 percent, to 13.1 percent of all Q2 server revenues. IDC particularly cited Sun’s T1000 and T2000 Niagara-based systems, which it says met with "strong" demand during the second quarter. (http://www.esj.com/Enterprise/article.aspx?EditorialsID=2783)

Sun’s encouraging performance came even as the ailing non-x86 server market continues to decline. Both Sun and IBM are anomalies in this respect: according to IDC; they each grew their non-x86 server revenues (by 1.3 percent and 2.8 percent respectively), while competitors such as HP lost ground. Thanks to its System z mainframe, System p RISC/Unix and System i RISC lines, Big Blue remains by far the most dominant non-x86 server player, controlling nearly half (45.8 percent) of the market. Even though it generates less than half the server revenue of HP, Sun is still number two in the non-x86 segment, with 24 percent of all sales.

"Sun maintained its leadership position in the Unix market posting slight growth, but gaining 1.6 percent points of share, while IBM remained in second position by growing 6.7 percent and gaining 3.1 percent points in year-over-year comparisons," said Steve Josselyn, research director for Enterprise Platforms at IDC, in a statement. "Sun remains committed to expanding the Unix ecosystem as evidenced by the recent agreement with IBM to support Solaris on System x. While we still believe that spending for Unix-based servers will decline over time, the competition for leadership between the top suppliers for the largest share of this $4 billion in quarterly spending is expected to remain heated for some time."

Elsewhere, HP lost nearly a point of non-x86 market share, which dropped its overall tally to 20.7 percent. Thanks to its acquisitions (and the acquisitions of its acquisitions), HP is at least as heavily invested in non-x86 platforms as IBM. In addition to its Itanium-based HP-UX Unix operating environment, HP also fields several other non-x86 platforms—including the former Digital Equipment Corp.’s Tru64 Unix and OpenVMS, as well as the former Tandem Computer Corp.’s NonStop Himalaya operating environments.

HP is faring considerably better in the volume segments, however: Its ProLiant (formerly Compaq) servers continue to be strong volume sellers, and HP is also number one in blades.