IBM Finds Own Path To Market Success

The move worked.

When Saturn was introduced to the financial services firm, it was "leaning toward Sun," according to Saturn President and CEO Alan Krieger, who also co-founded the company. "We were able to show them that the [IBM] pSeries would have better performance." Krieger said Saturn also helped assure the customer that if it went with IBM, its system would be well-supported by the solution provider. That assurance of support definitely helped clinch the deal for IBM, he said.

IBM may very well want to continue replicating that approach, since it appears to be a winning one. According to new research from Gartner, the Unix-RISC server segment is fighting a tide of declining revenue this year, with all major vendors suffering from a drop-off in sales earlier in the year,all except IBM, that is.

The recent Gartner study found that the Unix-RISC server space turned in $3.9 billion for the first quarter of the year. That marked a 10 percent decline on a year-over-year basis.

The reason for sluggish sales isn't only because the IT market is still struggling through a down economy. The Unix-RISC space has also had to contend with stiff competition in the form of sales of rival servers based on Santa Clara, Calif.-based Intel's 64-bit Itanium 2 platform and, more recently, Sunnyvale, Calif.-based Advanced Micro Devices' 64-bit Opteron platform.

However, IBM, Armonk, N.Y., whose flagship Unix-RISC servers are the pSeries models, grew its sales in that space by 19 percent compared with the same period in 2002.

The company, with $971 million in Unix-RISC revenue in the first quarter, still trailed revenue leaders Sun, Santa Clara, ($1.34 billion) and Hewlett-Packard, Palo Alto, Calif., ($1.16 billion) in sales during the period.

However, Sun's revenue in the space declined by 20 percent year-over-year and HP's dropped by 12 percent.

Krieger said Saturn has been driving sales by promoting IBM's commitment to the Unix-RISC space, in which its pSeries server line runs the company's AIX operating system or Linux.

"The thing we talk to customers about, first of all, is that IBM has all this investment in the product line," Krieger said. "IBM pushes that hard. They tell me to ask people, 'Is Sun really making the investment?' "

Eric Perna, an account manager at 411 Computers, LaGrange, Ill., said IBM has also been trying to make sure solution providers working with the vendor note the differentiation in IBM's technology from its competitors.

"As far as processors go, with the Power4 %85 as far as I/O per second, a 16-way IBM pSeries can really compete with other 32-way offerings by other competitors," Perna said. That, he said, combined with a market that is focusing on server consolidation and total cost of ownership, makes a difference in driving sales, and helps tip the scales in IBM's favor.

In addition to the shrinking Unix-RISC server market depicted by Gartner, CRN research paints a picture of a turbulent first four months of the year for Unix-RISC vendors inside the solution provider channel.

In one month alone, the percentage of solution providers citing HP's Unix-RISC servers as their best-sellers fell by half, from 32 percent to 16 percent from February to March. HP's numbers did rebound a bit in April, the results showed.

For its part, the percentage of solution providers citing Sun units as their best-sellers fell from 25 percent in January to 18 percent in February, although the numbers rebounded in March.

Throughout that time, the CRN Monthly Solution Provider Survey found, the percentage for IBM remained steady, coming in between 18 percent and 19 percent.

The CRN Monthly Solution Provider Survey is based on interviews with more than 200 solution providers, most of which sell into the small- and midsize-business space.