IBM (NYSE:IBM) used to sell Intel (NASDAQ:INTC) -powered low to mid-range servers. But last year, IBM sold that unit to Lenovo to focus on selling high-end servers and mainframes powered by its own Power processors instead.
Since then, IBM has positioned its remaining data center businesses directly against Intel, which holds a formidable 99% market share in server chips. In July, it announced the creation of a 7nm chip, which seemingly targeted Intel's plans to launch 10nm chips in 2017. It also expanded its "Open Power" initiative, which shares processor specs, firmware, and software with partners to fuel the third-party production of Power-based servers.
That's why it wasn't surprising when IBM recently partnered with Xilinx (NASDAQ:XLNX), a maker of FPGAs (field-programmable gate arrays), to counter Intel's acquisition of FPGA maker Altera. FPGAs are less powerful than IBM's or Intel's server chips, but they can be reprogrammed, making them well-suited for custom uses in connected cars, consumer devices, and airplanes. IBM and Intel are both using FPGAs to complement their server chips by accelerating workloads.
What Big Blue wants
IBM's revenue has fallen for 14 consecutive quarters, due to sluggish demand for its core IT services, software, and hardware. Big Blue wants investors to focus on the growth of its "strategic imperatives" -- cloud, analytics, mobile, social, and security -- which posted 17% annual sales growth last quarter, or 27% on a constant-currency basis excluding its divested System x (Intel-powered server) business. That growth was solid, but it wasn't enough to offset the steep declines in its other aging businesses.
Last quarter, IBM's hardware revenues plunged 39% annually and accounted for less than 8% of its top line. Power Systems revenues slipped 3% and system storage revenues fell 19%, but z Systems mainframe revenues rose 15%. The decline in Power Systems revenue was expected, due to Intel's dominance of the data center market. But the growth in mainframes was surprising, since analysts had predicted the death of fridge-sized mainframes for decades.
Read More: http://www.fool.com/investing/general/2015/11/24/ibm-vs-intel-corporation-the-data-center-battle-es.aspx?source=eptfxblnk0000004
Since then, IBM has positioned its remaining data center businesses directly against Intel, which holds a formidable 99% market share in server chips. In July, it announced the creation of a 7nm chip, which seemingly targeted Intel's plans to launch 10nm chips in 2017. It also expanded its "Open Power" initiative, which shares processor specs, firmware, and software with partners to fuel the third-party production of Power-based servers.
That's why it wasn't surprising when IBM recently partnered with Xilinx (NASDAQ:XLNX), a maker of FPGAs (field-programmable gate arrays), to counter Intel's acquisition of FPGA maker Altera. FPGAs are less powerful than IBM's or Intel's server chips, but they can be reprogrammed, making them well-suited for custom uses in connected cars, consumer devices, and airplanes. IBM and Intel are both using FPGAs to complement their server chips by accelerating workloads.
What Big Blue wants
IBM's revenue has fallen for 14 consecutive quarters, due to sluggish demand for its core IT services, software, and hardware. Big Blue wants investors to focus on the growth of its "strategic imperatives" -- cloud, analytics, mobile, social, and security -- which posted 17% annual sales growth last quarter, or 27% on a constant-currency basis excluding its divested System x (Intel-powered server) business. That growth was solid, but it wasn't enough to offset the steep declines in its other aging businesses.
Last quarter, IBM's hardware revenues plunged 39% annually and accounted for less than 8% of its top line. Power Systems revenues slipped 3% and system storage revenues fell 19%, but z Systems mainframe revenues rose 15%. The decline in Power Systems revenue was expected, due to Intel's dominance of the data center market. But the growth in mainframes was surprising, since analysts had predicted the death of fridge-sized mainframes for decades.
Read More: http://www.fool.com/investing/general/2015/11/24/ibm-vs-intel-corporation-the-data-center-battle-es.aspx?source=eptfxblnk0000004
