IBM storage revenues decreased 4% in the first quarter. It’s noteworthy for a few reasons.
Ir reinforces the results posted by Gartner last month that shows soft demand for external-controller based disk storage. The market grew only 4.8%. Gartner expected growth of 7.6%.
In that report, EMC’s market share grew about 4% with an overall increase in revenues of about 21% compared to last year. IBM’s market share dropped 0.9%. Revenues were off 0.7%.
Those results correlate to IBM’s earnings results but also highlight IBM’s shift away from hardware. IBM’ storage software revenue rose 18%, showing the company’s focus in that arena.
According to my sources, it’s not unusual for IBM to start the year slow. But it’s curious why momentum did not continue as it had for IBM through the first nine months of the year. External factors for the slowdown include the move from hardware, the disk drive shortage following the Thailand floods.
It’s also important to consider that IBM is focusing deeply on its Pure Systems offerings that it launched last week.
The future for IBM’s storage play is in convergence. The company is divesting from hardware. IBM Pure Systems will soak up that part of the business into its PureSystems technology.
The real play here is about who controls the data center. IBM is gunning for Oracle. As Wikibon’s Stu Miniman points out, PureApplication with DB2 targets Oracle database customers, especially those who are considering Exadata.
In total, IBM’s earnings reflect more about its strategy to focus on its storage software and PureSystems and less on disk storage.