Article

IBM finally pulls off an iSeries rebirth

Luke Meredith, News Writer

After what IBM is calling its best year-to-year growth in a decade, it's easy to imagine iSeries executives popping champagne in celebration of the platform's rebirth, following years of declining revenue. But with the iSeries community still buzzing over last week's news that third quarter iSeries revenue grew 25% from Q3 2004, questions remain about how Big Blue pulled off such a turnaround, and whether the impressive Q3 numbers are an anomaly -- or an indication that the IT community has truly rediscovered the "i."

Industry experts and IBM point to several factors that have led to the iSeries' resurgence, including the success of Power5 chip technology, increased focus on developing a stronger relationship with the iSeries developer community, a reshuffling of iSeries leadership and an aggressive marketing push.

"The iSeries is, for many customers, the ideal solution … the iSeries does a lot of things under one hood," said Mike Kahn, managing director at the Clipper Group. "The trend from the buyer side is that people are looking for better answers … such as things that make consolidating more manageable, offer lower operating costs and are more energy efficient, [and the iSeries provides that]."

The iSeries has always been praised for its reliability and overall performance, but the "White Box Mania," earlier in the decade -- organizations dealt with growing IT demands by buying dozens of smaller, inexpensive servers -- helped lead to a downturn in revenue. In the 16 fiscal quarters from 2001 to 2004, iSeries revenue dropped 10 times --including eight quarters that saw a falloff of 10% or more -- and a 17% decrease in revenue in 2004 marked the third time in four years the platform saw a double-digit drop-off.

The tide began to turn in Q1 2005, as the iSeries saw 1% year-to-year growth. It was hardly a cause for celebration among the IBM brass, but it shows that the line had finally stopped the bleeding. Then revenue jumped 10% in Q2, reaching the "double-digit growth" marker IBM has always seen as a sign of real progress, and blew off the charts in Q3.

"We've started a run, and we're gaining momentum," said Bill Donohue, who took over as iSeries vice president of worldwide sales in early July, following a highly successful stint on the pSeries. "The market is moving into our sweet spot, which is solutions based on integration and simplicity."

The iSeries has clearly benefited from an end-to-end refresh of its hardware, thanks to the success of the Power5 chip technology that IBM launched in October 2004. The Power5 design has allowed IBM to drastically improve its "price/performance" ratio -- the amount of computing power a server can generate relative to its cost.

It has also addressed what was one of the line's major deficiencies over the years, the lack of a strong relationship with its independent service vendors and developers, by launching the iSeries Initiative for Innovation in early 2005. IBM pledged to pour $125 million into the program, which is designed to reward partners that come up with new applications that can run on iSeries hardware by offering up to $50,000 in support services. According to Donohue, the initiative has already led to more than 300 new applications, with "500 more in the hopper."

All of this has happened under the watchful eye of iSeries general manager Mark Shearer, who is the line's third general manager since 2002. According to industry analysts, Shearer has brought much-needed stability to the line, while invigorating the platform by focusing on initiatives such as the iSeries Academic Initiative, which sponsors iSeries training sessions for college professors and students.

But a lot can be said for Shearer's team as well. Though Donohue has only been on the job for four months, the numbers appear to indicate that he's brought the same magic he worked with on the pSeries, which experienced 12 consecutive quarters of market share gains over its competition during his tenure, to the iSeries. And iSeries marketing guru Peter Bingaman, considered by many a rising star in the IBM firmament, has overseen an aggressive advertising push that has included TV spots in high-profile programming, such as the NFL playoffs, and increased media coverage of the iSeries.

For more information:

iSeries revenues explode in Q3

Shearer reflects on one year at the helm

The year hasn't been without its bumps in the road. Rumors this summer that IBM was pulling support for CGIDEV2, a popular iSeries tool, infuriated the iSeries community and forced Big Blue to save face by launching a Web site to support the application.

Another bump is the impending civil trial, filed by Fast400 founder Jim Stracka. The suit, which is set to begin in Texas in November, is over the development and use of an application that unlocks computing power Big Blue made inaccessible to its users.

But despite those lingering issues, things haven't looked this good for the iSeries in a long time. And there's little doubt that the line's momentum is at the point where it is safe to say that, as famed ABC sportscaster Keith Jackson might put it, "Uncle Mo's wearing an iSeries jersey."

According to Charles King, principal analyst for Hayward, Calif.-based Pund-IT Research, now that the industry is shifting back toward the iSeries in record numbers, the time has come for Big Blue to capitalize on its success and push the line's "bang for the buck" to the public more than ever.

Let us know what you think about the story; e-mail: Luke Meredith, News Writer


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