IBM's losing ground with Unix -- and Oracle may follow

Sales of IBM's Unix servers are down almost 20 percent for Q3 compared to last year as market for proprietary Unix hardware shrinks

IDC's report for the server market in Q3 2013 is in, and the big loser is IBM's Unix hardware.

Big Blue is down 19.1 percent year-over-year for Q3 2013, a development IDC attributes in part to the sales cycles softening in general as a market refresh approaches.

But most of IBM's losses for the quarter, according to the report, are a symptom of the continued softening of the market for proprietary Unix solutions, like IBM's Power servers running AIX.

Proprietary Unix and mainframe products have long been on the wane as Linux and commodity-cloud solutions have eclipsed them over the past several years. Most of the proprietary Unix market is taken up by non-x86 processors -- RISC, Itanium, or architectures like IBM's Power architecture -- and the overall market for such Unix hardware has ebbed to the lowest point since IDC began reporting such figures.

Despite its losses, IBM remains the No. 2 vendor of servers (23.4 percent), second only to Hewlett-Packard (28.1 percent). And sales of IBM's System Z mainframes, running IBM's proprietary z/OS, actually grew for a fourth consecutive quarter, with those systems making up some 6.8 percent of all server revenue for Q3 2013.

What's more, even as the market for Unix itself shrinks and is replaced by commodity Linux, IBM's determined to keep its Unix hardware lines alive and well -- though for different ends. IBM's further ramping up the Power processor line by adding Nvidia GPUs to server models slated to ship next year and has invested $1 billion in Linux for Power.

The Linux server market is solidly on the rise as a percentage of total server sales -- up to 28 percent of total revenue -- so any investment that can improve market share is going to be worthwhile, even as the lion's share of Linux servers continues to be commodity x86 hardware.

On the other hand, Fujitsu -- an IBM competitor in the Sparc-powered Unix hardware space (it falls somewhere in the 16 percent of server market listed as "others" by IDC) -- continues to plan future Sparc64 processors for that market despite its contraction. To Fujitsu, it's a fight back against IBM's near monopoly, especially because Fujitsu and Oracle are hardware partners.

Oracle hasn't fared well in IDC's survey, either. Its server sales are down 16 percent from last year, and it commands a meager 4.1 percent of the server market. It may still be difficult for people to tear themselves away from Oracle as an application vendor, but it seems nowhere near as tough to leave its hardware behind.

That hasn't stopped Oracle from making plans for its next line of RISC-powered systems, which provide the company with generous profit margins -- far more so than with commodity x86 hardware -- even as its sales are slumping.

Chuck Jones of Forbes further attributes the decline to the big Web companies (Google, Microsoft, Apple, Facebook, and so on) bypassing traditional server vendors and developing their own systems in-house.

Jones is also convinced it's yet another sign of Oracle's waning influence as a seller of iron. "If this trend continues," he claims, "Oracle could fall out of the top five server vendors in a year or two."

This story, "IBM's losing ground with Unix -- and Oracle may follow," was originally published at Get the first word on what the important tech news really means with the InfoWorld Tech Watch blog. For the latest developments in business technology news, follow on Twitter.


Copyright © 2013 IDG Communications, Inc.

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