IBM Storage Makes Gains Vs. HP, EMC
By Brian Deagon
Investor's Business Daily
Tue Mar 18,10:18 AM ET
IBM Corp. (NYSE:IBM - News) gained the most ground of any data storage vendor in the fourth quarter, enough to tie with Hewlett-Packard Co. for the lead in market share.
So says a report this month from market tracker International Data Corp. It gave both companies 25% of the revenue from total fourth-quarter sales of data storage systems, which include everything from high-end networked storage gear to disk drives that back up server systems.
IBM gained four percentage points in the fourth quarter vs. the third, while HP fell two percentage points. HP led slightly in total revenue, $1.37 billion to $1.34 billion, but HP sales rose just 6% vs. 34% for IBM. EMC Corp. ranks No. 3, with quarterly sales of $614 million.
Big Blue executives loved the showing. They credited the gains to IBM's strategy of being a one-stop shop for all sorts of computer products and services.
That same desire to be a one-stop shop prodded HP's $19 billion purchase last year of Compaq Computer, but the companies are still ironing out that merger, the computer industry's largest ever.
IBM, on the other hand, set its strategy in motion a decade ago when it decided that offering services would be essential to its success.
"Our storage product portfolio has never been better in our history," said Bob Samson, vice president of sales for the IBM Systems Group. "But the No. 1 reason for our success is our ability to integrate these components with solutions and services."
In a separate report this month, Merrill Lynch & Co. writes that IBM executives say the company could double the size of its storage business through one-stop bundling, such as selling servers and storage in a package deal.
IDC analyst Charlotte Rancourt agreed with Samson.
"Their products are doing very well," she said. "And when IBM merged its storage business into its server division, they did so with the intent of emphasizing the capabilities of fully integrated solutions. That's very appealing to a lot of customers."
IBM's market gains come at a tough time for the data storage industry. Full-year 2002 sales fell 15% vs. 2001, says IDC.
On the other hand, IDC had expected a 21% decline. And fourth-quarter revenue rose 12% from the year-ago period.
Meanwhile, IBM and HP have jockeyed for the lead. HP took the lead from IBM in the second quarter of 2002.
Leadership in this sector has been IBM's quest since it lost the top spot to EMC in the late 1990s.
"It's a gritty comeback for us that started four years ago," Samson said.
The fourth quarter was the first time IBM's line of high-end storage systems, known as Shark, outsold EMC's line of similar products, called Symmetrix.
Still, IBM is hardly out of the woods in the high end. Last month EMC unveiled the long-awaited update to its line of Symmetrix high-end storage products. And No. 4 player Hitachi Ltd. is expected to refresh its high-end line in early 2004.
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