Ask TPM: System i5--Good Investment or Not?

Published: October 9, 2006

by Timothy Prickett Morgan

With this issue of The Four Hundred, I am introducing a new kind of column. I get a lot of questions from readers regarding tactical and strategic advice in the server, operating system, and related systems and application software areas, and I usually reply to these in private. But the questions that readers ask are often very good ones, and I think that it would be useful to answer these questions publicly in this newsletter.

This is exactly the thing that the programming and system administration experts who put together our Four Hundred Guru do for readers regarding technical matters. Why I didn't think of doing an "Ask TPM" column years ago is beyond me. I guess I had to get tired enough from doing grand jury duty, writing newsletters, and running my household to see a way to generate a new kind of interesting--or, more precisely, what I hope will be interesting--content. So, if you have a question you want me to answer, click the Contact button at the top of all of the IT Jungle pages and fire away. If I can answer it, I will, and if I can't, I will find someone who can.

So, without further ado, here's the first Ask TPM question:

Your article on IBM ISV providers was a very interesting article. Thanks. This was invaluable to me, as I am considering purchasing an IBM iSeries and pSeries franchise. I am well versed in high tech, but not in these two IBM series platforms. My biggest concern is growth in this market and the continuing threats from open source servers, Hewlett-Packard, and the lot.

Are my concerns justified or is this is a growth opportunity. I am only asking for your opinion, not advice and would really appreciate your feedback.

Best regards,

--Mike

Hi Mike. I am not exactly sure what ISV article you are referring to, because we have done quite a few such articles. But your question is an interesting one, and one that deserves and honest answer.

Growth in regard to any part of the server business is something that no one should be counting on. If you look at the quarterly server sales statistics from IDC and Gartner, server sales for mainframes, iSeries, and Unix servers are in decline--with the notable exception of Sun Microsystems, which has been slammed so far down that it being up hardly counts as a cause for celebration. While, in aggregate, Windows and Linux platforms are still growing, Linux sales have started to slow and Windows sales have been slowing for several quarters.

I happen to believe that the mature server platforms that have had virtualization technology are seeing declines because of the consolidation they engender, and that Windows and Linux platforms, thanks to various virtual machine hypervisors, are going to eventually see such a contraction. At first, companies will invest in bigger systems with 64-bit processing and hardware-assisted virtualization technologies, which are just starting to ship this summer. With somewhere around 20 million X86 and X64 servers installed in the world (that's my guess), companies will be buying a very large number of virtualized machines on which to consolidate those 20 million workloads. (Many of those machines are running as the main server at small businesses or in departments, and they will not be consolidated.) Suffice it to say, there is plenty of money left to be spent on X64 servers. But, once people do the spending and virtualize, there is going to be, in my opinion, a contraction in server sales commensurate with the decline in server footprints.

No one should invest in a reseller of any server platform because the server itself is inherently a growth opportunity over the long term. Selling virtualized servers to companies that want and need them is an opportunity, but the bigger opportunity is serving customers and selling them a mix of hardware, software, and services. You get into the reseller game to get access to and serve customers, to build a relationship that will span platforms and rise above platforms. People are certainly going to continue to invest in IT, especially when it comes to modernizing their applications, integrating with customers and partners, and simplifying their IT infrastructure. In this regard, the System i5 and the System p5 platforms are just as valid a place to start investing in as any other platform--and in some regards, because of the vastness of their installed bases, they are a better place to start. There are probably 215,000 i5/OS and OS/400 shops out there, with maybe a half million servers and maybe 80,000 to 100,000 AIX shops with maybe 350,000 servers. This is a very, very large installed base. The Power platform probably presents the largest single installed base, perhaps even a bit larger than Sun's Sparc customer base.

I hope this helps. And thanks for the question.

--TPM