IBM’s public announcement that external storage systems revenue grew by 7% in Q1 2017 and 8% in Q2 2017 reverses an ongoing downward trend. Now, past performance is no predictor of future performance as famous financial disclaimers always state. However, this is excellent news for IBM, especially since it does not seem to be a case where the tide raised all the storage ships, but rather one in which the company appears to be a positive exception.
That is also good news for IBM’s storage customers since the company should continue what has been a successful direction in its storage R&D. Thus, customers should feel more comfortable with both their current IBM storage investments and continuing future storage innovation.
That may seem to be a bubbly interpretation of just 2 quarters of positive revenue growth, but it comes on the heels of confirmation of IBM’s leadership status in software-defined storage (SDS), which is one of the major driving trends in the storage market (see http://mesabigroup.com/ibm-continues-its-leadership-in-software-defined-storage/ ). This upward SDS trend has continued for some time. There does not appear to be any reasons why IBM cannot maintain a successful leadership role in SDS. In fact, there are a number of reasons why IBM should continue its successful run.
Tectonic changes enable IBM to play on all server platforms
All storage systems work in conjunction with servers. A quarter century ago, then direct-attached storage (DAS) was dominant, server and storage vendors were the same. Then EMC came along and started to dominate the mainframe storage market in the era of shared storage and Fibre Channel (FC) networking.
The result was that server and storage customer-facing companies (namely Dell, HP, IBM, and Sun) had to focus on trying to protect storage sales that connected to their own brands of server. Thus, in general, IBM did not sell storage to HP server customers and vice versa. However, storage-focused companies (EMC, as well as Hitachi Data Systems (HDS), and NetApp) prospered by selling their storage solutions in conjunction with any and all server platforms.
Companies with a perceived server heritage, such as IBM, were put on the defensive. But that model is no longer valid. As a result of significant acquisitions and internal investments, IBM is now on the offensive in selling storage across all server platforms, as well as recapturing business on its own server platforms.
How did that come to pass? The old model eroded in the last decade due to ongoing major trends in the information infrastructure as a whole and storage in particular. First, the vast majority of non-IBM POWER servers are Intel-based, and the focus is on operating systems from Microsoft and open source vendors, like RedHat, as well as server virtualization, such as from VMware. IBM has worked very hard to provide a broad and robust range of storage solutions suited for these environments.
But the key is that IBM is positioned to take advantage of broader trends in the information infrastructure that parallel trends in storage. Enterprises want to move forward with both their traditional applications that have long sustained their businesses (current processes) as well as new generation application workloads to transform the business (such as cognitive era processes to gather and apply insights to generate new sources of revenue).
Traditional applications are efficiency-driven with high levels of service delivery being a key objective. All flash storage, such as provided by IBM, is one way to achieve this objective while preserving legacy software. (See http://mesabigroup.com/ibm-extends-flash-storage-across-all-primary-storage/). On the other hand, new generation applications and workloads, like big data analytics, can take advantage of the new software-defined infrastructure alternatives, where IBM offers a variety of SDS choices. (As before, see http://mesabigroup.com/ibm-continues-its-leadership-in-software-defined-storage/ ).
A corollary to the old adage that “No one ever got fired for buying IBM,” was that no one who did not have IBM servers already would consider buying storage from IBM. In sharp contrast, today customers will consider IBM as a potential storage alternative whether or not they have done business with IBM before.
Regaining the mainframe storage patch
Of course, IBM wants to take advantage of working with new customers who have never previously used its storage solutions, but that does not mean that it ignores its own storage patch. A key example is the effort that IBM has been making to recapture and strengthen its position in Z Systems mainframe storage. One of the ways that it has done so is through the use of all-flash for its DS8880F products. (See http://mesabigroup.com/ibm-ds8880f-all-flash-storage-serves-the-mainframe/ ).
In addition, the company has also offered innovations, like Transparent Cloud Tiering, with the DS8880 products, which takes advantage of key trends in hybrid cloud and cannot be easily duplicated by competitors. (See http://mesabigroup.com/ibm-introduces-transparent-cloud-tiering-for-ds8880-storage-systems/ ). IBM’s July announcements included enhanced storage performance, such as up to 50% cut in response time, and increased capacity: up to 2PB in a single enclosure, which is a 3.8X improvement over past-generation storage systems.
Mesabi musings
The storage market continues to grow rapidly in terms of volume, but improvements in price per volume of storage and the diversity of competitors have made it challenging for established vendors. IBM appears to have more than risen to those challenges and seems to be thriving.
One reason is the company’s success with delivering storage innovations for established customers, notably the DS8880 storage for Z Systems mainframes. But it also seems that IBM now appeals to all storage customers and not just the ones who have traditionally bought its servers. This is a good thing for customers since they now have access to a broad and diverse range of IBM hardware and software options, and an energized company bent on delivering future innovations. Customers are provided more choices in the storage decision-making process, and that also increases the likelihood that they will stick with IBM.