Avnet Describes IBM i Server Market Trends

April 1, 2013 Dan Burger

IBM i business is not the easiest thing to track these days. IBM and its business partners in the sales channel only want to talk in terms of Power Systems, so instead of having numbers to compare from one year to the next, we have estimations and best guesses based on the old finger-in-the-wind method. Some of our insights come from ISVs, IBM i shops, and consultants. Last week, I talked with several ranking members from Avnet, one of the master resellers in the IBM business channel.

Mark Martin is the vice president of marketing and business development for IBM solutions for Avnet Technology Solutions, Americas. His responsibilities include marketing and channel enablement activities for all IBM brands, including the development and implementation of education and enablement, opportunity identification and sales progression programs and tactics.

Along with Martin, Avnet’s Pat Fleming, manager of business development for IBM Power, and Colin Blair, brand director for IBM system storage and servers, joined in the conversation about their view of the IBM i community.

Between the time IBM began rolling out Power7 servers in the first quarter of 2010 and when the entry and midrange Power7+ servers became generally available the first quarter of 2013, Martin says nearly all of the high-end IBM i customers reloaded, leaving only a few to consider Power7+ machines.

“We’ve have had solid success moving high-end shops from Power5 and Power6 to Power7,” Martin says as he looks back over the past two years. “Most of our high-end customers have moved to Power7. In fact, I can find hardly any who have yet to move. The opportunity is now in the small to midsize market and we didn’t have a solid option for that until the Power7+ arrived last month. The 710 boxes, we believe, will provide the platform to move the Power5 and Power6 boxes in smaller IBM i shops to Power7+. We really didn’t have that with the early Power7s. Now the hardware is priced right.”

Martin made a point of noting Avnet is IBM’s largest distributor for IBM i products and has been for a long time. (If no one keeps track of such numbers these days, as is claimed by IBM and the business partners, I have to wonder how he knows that.)

“The big push in the SMB market will occur over the next one to two quarters,” Martin predicted. “You’ll see a lot of activity in the market.”

Most of Avnet’s small and mid-level customers that currently have Power5 and Power6 boxes are leasing the equipment. Some of the Power6 box leases have not expired but those opportunities are on the horizon.

The expected surge in SMB server purchases will be fueled by the Power 710+. But according to Fleming it is the pricing not the processor that will drive sales.

“The fact that the Power7+ provides more MIPS and throughput, in my opinion, doesn’t matter to these guys (potential buyers). Eighty percent of the IBM i low-end customers are running on one core. Whether it is a 710 or 710+ system, they have plenty of performance in either one of them,” he says.

From Fleming’s perspective, the market will be stimulated by the attractive price and performance of the 710 and the incentives in the channel to make it profitable for the partners.

It is also true that many of the existing servers, particularly the Power5 units are ready to be retired and the IBM i installed base recognizes in many instances that boxes have been in service for a longer cycle this last time around and it’s time to upgrade.

Fleming is also aware that one of the key differentiators between the 710 and the 720 is I/O. It’s the top factor in the decision that a company would make to choose a 720 over a 710, he says while pointing out the new adapter technology and the throughput attributable to the Power7+ chip allows the 710 to “cover a lot of the space for anyone coming off the old hardware.”

“We are starting to see more integration with the Power i in SAN environments,” was the observation added by Blair, which supported the sales of the larger Power 720 entry-level box. “Market momentum is driving everything toward consolidation and merged infrastructure. Sharing resources and system management among the IBM i and Intel servers in a PureFlex type implementation is a big opportunity for us. The trick is to expand the thinking that the i should not be running in isolation.”

Along that same line, Martin believes that server sales are going to be influenced to a much greater degree by a line of business perspective, which means companies will be taking a much closer look at how IT is architected and financed. If it goes in that direction, platform-based silos–the old IT religious wars–will no longer be tolerated.

“I don’t have the breakouts of i and AIX, but we are seeing a huge uptick in Flex,” Martin says. “The Flex business has potential for shops that run both i and AIX and are looking at lowering cost of operations. That will continue to be a priority for Avnet. The silos of IT control are under pressure and will continue to be under pressure.”

Blair backed up that opinion.

“There are a lot of companies looking at the traditional 710 and 720 boxes, but there is interest in Flex and PureFlex configurations. The X86 proliferation and drive for infrastructure reduction is being researched. There are proposals being generated. We are seeing a lot of activity.”

IBM’s Flex System is a combination of hardware, infrastructure, and systems management capabilities wrapped into one package. It’s always seemed to me to be a much better package for the AIX side of the Power Systems aisle, but the Avnet folks believe it is going to gain traction in IBM i shops as well. Perhaps in the upper reaches of the midsize market and the enterprise level shops, but it seems unlikely in the real SMB where the majority of this conversation has focused.

“As an aggregate Power Systems statement, our unit count sales on Power continues to grow,” Martin added. “To do that you have to get into the lower level. IBM’s strategy with Power, to own the high end and move down, has worked over the years. But to grow, you have to go low. And we now have stronger low-end offerings.”