Deconstructing IBM Storage:
1) It looks like IBM is the only buyer for its enterprise disk drives. This makes sense considering the persistent reports of quality problems with IBM disk drives for the last 18 months. Given the suspect quality of the disk drives that IBM is putting in its RAID boxes, one has to wonder how long IBM can sustain its jihad against EMC in enterprise storage.
Also, in terms of rotational speed, Seagate probably holds a 2-3 year lead over IBM. Note the problems that IBM is still having with the 10k rpm drives which were pioneered by Seagate in 1997! Seagate and Maxtor have already narrowed IBM's former lead in areal density so Big Blue is left with a severe disadvantage in manufacturing scale that translates to a dubious claim of a gross margin advantage in enterprise storage.
.....The other component of technology OEM is Storage.
Our ability to sell hard disk drives is highly dependent on the PC industry. This industry is in turmoil and this is impacting both our HDDs and our PC results. There is extreme price pressure, excess inventory and manufacturing capacity in this industry.
However, we expect that we continued to gain share due to the strong customer acceptance of our mobile and desktop drives........
......Yes, we have work to do in PCs and Hard Disk Drives. Revenues for PCs were down 14% at constant currency, and HDDs were down 2%......
2) Only an unabashed IBM cheerleader will compare Shark's growth rate against the growth rate of EMC's storage hardware sales. The same holds true for Hitachi. The proper comparison for Shark is against EMC's NIS (Networked Information Storage). After growing 55%, Shark now probably represents about $350M in quarterly revenue for IBM with about half being sold to mainframe ESCON environments. EMC's NIS still grew by 56% to $714M in 1Q2001 despite cooling down from the last 10 quarters.
Put another way, EMC's NIS grew faster than IBM's Shark until 2Q2001 during which NIS and Shark grew at practically the same rate despite the fact that NIS is more than 2x the size of Shark.
.....In Enterprise Storage we had a very strong quarter versus our competition. Our disk subsystem revenue grew 35% year-to-year. These gains were driven by strong competitive wins by our Shark systems which grew 55%.
Revenue from tape subsystems grew 12% this quarter.
We feel good about our progress in storage,
In 2000, we were playing catch up in terms of function.
In 2001, we matched the competition.
Now we’re adding function that will put us ahead of our competition.
Later this year we’ll roll out “native FICON” on Shark. This
fiber-optic attachment, when used with mainframes, provides six-times faster I/O over longer distances -- increasing both speed and flexibility for customers’ storage solutions. FICON is already up and running in some customer installations....
3) EMC does not compete against Tivoli in systems management. The proper basis for comparison is EMC Software vs Tivoli's Storage Management products. EMC Software grew by 42% despite being much bigger than Tivoli's Storage Management. IBM doesn't break out the numbers but it's quite clear that Tivoli is bleeding badly.
For example, Tivoli has fallen behind EMC (1999) and Veritas (2000) in the industry rankings from Gartner and IDC for the last two years in a row.
.....Tivoli continued to work on its product transition.
But on top of this, customers deferred work in areas like systems management because its complexity means a longer-term payback..... |
