IBM Brags About Its Power6 Server Shipments

November 5, 2007 Timothy Prickett Morgan

Server maker IBM has been pretty quiet about its System p and System i server lines in recent months with the exception of talking up its one product–the 570 machine bearing both labels known internally at Big Blue as the 9406-MMA that scales from one to four chasses and from two to 16 of the new Power6 processors. And IBM has been bragging in recent days that it has hit a major milestone in shipments for the 9406-MMA machines bearing the System p label.

Specifically, IBM said that it had shipped its 1,000th System p version of the 9406-MMA machine. (And by the way, IBM apparently hates when you call it that but honestly, are we supposed to say “the Power6-based System p 570” or “the Power6-based System i 570” every time we want to talk about this particular and only Power6 box in the IBM lineup?) In something of a cheater customer account that seemed to be designed to highlight one of IBM’s two master server distributors, Melville, New York, IT and electronics distribution giant Arrow Electronics got the 1,000th 9406-MMA machine bearing the System p name. AIX boxes are the backbone of Arrow’s business, and this particular machine will be used to support 3,000 users who access a set of applications running on numerous logical partitions on the 9406-MMA. Arrow’s Enterprise Computing Solutions division, as it turns out, is the largest distributor of System p boxes in the world, and this machine will be used to run its order management, procurement, planning, and financial applications.

IBM announced the 9406-MMA in the System p line in late May and began shipping it in late June. So hitting 1,000 machines shipped in about four months is a pretty good rate for such a powerful machine. And considering that AIX 5.3 has been backcast with limited Power6 support as IBM tries to work the kinks out of AIX 6.1, which is designed for the Power6 iron that is largely not here yet, this is even more amazing. (Ditto for whatever sales IBM has had with the System I variants of the 9406-MMA box and its i5/OS V5R4M5 update, which also has limited support for Power6 as we await i5/OS V6R1.)

It’s amazing what a vibrant installed base can do for a business, particularly one that is driven by system swaps or upgrades; it doesn’t hurt that the economy is not in recession, either. Back in May 2002, as we reported in this very newsletter at the time, IBM was making a similar announcement for its pSeries AIX server line. The revolutionary dual-core Power4 processor was announced in October 2001 in the high-end “Regatta-H” pSeries 690 server, and IBM started shipping it in December 2001. By May 2002, as IBM was getting ready to push the Power4 processors into midrange pSeries machines, IBM was bragging that it had sold 1,000 of the Regatta H machines in five months. This was a shipment rate unlike anything IBM had ever seen in the Unix market before, and now, it has become normal. That this Regatta-H shipment rate was done in the middle of a recession and a near-absolute freeze in IT spending, having shipped 1,000 of the 9406-MMA boxes in four months could be seen as an accomplishment–or an indicator that we are in an IT spending downturn. (That was a joke, people.)

IBM was able to sell Regatta-H boxes at such a high clip because it was offering two times the performance of other RISC/Unix iron, and it was selling machines at 50 percent of list in the recessional environment, thereby offering two to three times the bang for the buck compared to alternatives from Sun Microsystems and Hewlett-Packard, who were running the Unix market at the time. (Oh boy, were they in for a slapping from Big Blue from 2001 through 2004.)

Back in 2002, when the pSeries Regatta-H was hitting its 1,000 shipment milestone, the iSeries line was still using I-Star and S-Star single-core PowerPC processors and was not slated to get Power4 chips until January 2003. The iSeries got the Power4 chips in the iSeries 825 midrange machines and the 870 and 890 high-end machines, which ran OS/400 V5R2; smaller iSeries 800 and 810 entry models still used the S-Star processors. IBM didn’t get rid of those single-core S-Star chips until it moved everything in the iSeries line to the dual-core Power5 chips in May 2004. Power5+ processors refreshed the line, renamed the System i, in February 2006.

Even though IBM has broken the System i division in two and put the top end of the line–model 570 and 595 machines–into a Power Systems division that includes the entire System p AIX and Linux server product, IBM did not and would not talk specifics about how well or poorly the System i variants of the 9406-MMA box is selling. Which is why you keep me around. So let’s take a stab at it.

The 9406-MMA box with the System i label, software packaging, and pricing was launched at the end of May and began shipping in mid-September. So they have only been shipping for six weeks relative to the October 24 date of the 1,000th shipment for the System p-branded 9406 MMA boxes, which were shipping for 20 weeks from up until that October 24 date. If the System p and System i lines had similar-sized revenue streams, you could just prorate it by the number of weeks at 50 machines per week and say IBM has probably sold 300 machines or so. If you want to adjust that for relative revenues, IBM’s System i sales were 27.6 percent of System p sales in the third quarter, so the number could be as low as 83 machines. But, if you believe there is pent-up demand for customers who want to do consolidations on System i 570 machines with the horsepower of the 9406-MMA box–as I believe there is–my guess is that around 200 to 300 machines have sold in a relatively short period of time. And the reason I believe this is that i5/OS presents an integrated software stack, while AIX does not. Customers who are using i5/OS V5R4 can move to the new Power6 iron and i5/OS V5R4M5 a whole lot easier than AIX shops using Oracle databases and various third party development tools that are the norm in the AIX world.

If this is the case, then the two weeks of sales for the System i variants of the 9406-MMA machine could have represented a significant portion of the $240 million or so in hardware sales IBM had in the third quarter–maybe as much as a quarter of total revenues. And that probably means that the fourth quarter will be similarly top-heavy in terms of where the revenues come from. Which, alas, would explain why IBM has been monkeying around with i5 570 prices for the past three years, trying to get it just right.

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