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iSeries revenues explode in Q3

Thanks mostly to the success of the Power5 chip technology, iSeries revenue grew 25% in the third quarter of 2005, signaling a major reversal of fortunes for the platform.

Driven largely by the success of IBM's Power5 chip technology, iSeries revenue grew 25% in the third quarter of 2005, marking one of the strongest performances the platform has seen in five years.

Revenue for the iSeries has now increased in three straight quarters, after suffering a 17% decline in revenue in 2004.

At last month's COMMON user group expo, IBM pulled out all the stops trying to convince its installed base that the company is committed to pushing the iSeries forward technologically, while pursuing an aggressive marketing strategy to bring new users into what is largely considered a legacy system.

Based on the Q3 numbers, Big Blue's strategy appears to be paying off.

"I think some champagne is being poured over at the iSeries division," said Charles King, principal analyst with Hayward, Calif.-based Pund-IT Research. "From what I see, iSeries general manager Mark Shearer in his 11 months has revitalized the platform."

King also credited much of the recent success of the platform to Shearer's recent hiring of Peter Bingaman as vice president of iSeries marketing and Bill Donohue as vice president of sales.

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 2004's poor showing marked the third time in four years the platform saw a double-digit drop-off overall.

But the first quarter of 2005 saw the smallest spike in revenue possible -- 1% -- but the platform's momentum was reflected in a 10% increase in revenue in Q2. Hopes were high amongst the iSeries brass that the platform's increased revenue stream was indicative of a trend that said users were leaning back toward the iSeries.

Buoyed by Big Blue's generous public support for the iSeries, which included aggressive moves by pouring money into TV and print advertising spots, increased support for its independent software vendors, and significant internal software application, the iSeries was able to meet its revenue goal since the start of the decade.

"The iSeries is hot. They've got some aggressive application development [underway] and it's bringing in new customers," said Mike Kahn, managing director with Wellesley, Mass.-based Clipper Group.

IBM's total revenue in the third quarter was down 8% year-to-year as reported, but up 4% without the numbers from the PC business, which was sold to China-based Levono earlier this year.

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

News Editor Matt Stansberry contributed to this story.

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