IBM v HP Itanium Highlights
- Aims to win server business from HP Itanium users
- Aims to win database business from Sun/Oracle
- Part of a developing server battle reminiscent of the 1990s
- Illustrates a clash between old horizontal and new vertical integration ideas
- Migration Factory offers competitive displacement
- Stop & Think offers to reduce data and management costs
- Breakfree offers special deals for customers migrating to IBM
- Sweep the Floor buy back or disposal of HP Itanium servers included among Global Finances offerings
- Results will come slowly and be difficult to assess
We wrote earlier about the developing issues surrounding Oracle’s decision to discontinue its development of future databases on HP’s Itanium servers and HP’s decision to take legal proceedings as a result. We also mentioned the certainty that other systems vendors would react in a similar way to their attacks on Sun in the long lead up to its acquisition by Oracle. IBM shared some of its intentions with us, which I thought our readers would like to consider. As with our piece on Dell’s vStart Cloud offering through channels, this is about Sales of course.
What Is IBM Proposing?
IBM believes that there are 10k HP Itanium server users (which tallies well with HP’s statement that there are 14k in total when filing its legal case against Oracle). We believe there are currently about 120k installed worldwide. See Figure 1 for a comparison of the installed base of non-x86 severs for IBM, Sun/Oracle and HP.
IBM is proposing a wide range of alternatives, hoping to take advantage of what it perceives as HP’s weakness. In particular:
- Servers – it believes that each of its System z, Power and System x (in particular its eX5) machines can replace HP’s Itanium
- Database – it claims 97% compatibility for DB2 9.7 and Oracle; it hasn’t dropped support for HP-UX, giving it an equal status alongside AIX, Windows, Solaris and Linux operating systems
- Middleware – it positions WebSphere and Tivoli as alternatives to HP middleware used on Itanium servers
It also has a number of resources and campaigns in place to help its positioning and user migration. In particular:
- Its Migration Factory, which has engaged in around 850 competitive displacement activities in Q1 2011, which split roughly 50:50 between Sun/Oracle and HP
- Its ‘Stop & Think’ campaign in the middleware area, which offers to ‘reduce your data and application management costs by as much as 30% or more’ and offers free Conversion Readiness Assessments for customers running Oracle middleware and databases
- For customers who want to go all Blue – its ‘Breakfree’ offering with special pricing, suggesting up to 50% savings in Total Cost of Acquisition (TCA) over a 3 year period – in its example comparing a 32 core Superdome 12 running Oracle with a 16 core Power 770 running DB2
- Global Financing offers include the chance to defer paying until 2012, a ‘Sweep the Floor’ buyback or disposal of HP Itanium servers when migrating, 0% interest on IBM software purchases and ‘no or low rate’ interest in certain local countries for IBM hardware
If you’re an HP-UX customer running Oracle databases you should get lots of attention from IBM as a result. It will be blogging profusely and offering Discovery Days, Technical Chats and even a Breakfree World Tour 2011.
Many of these activities are the same as those its been running to win over Sun SPARC users of course.
Fierce Server Competition Like The 1990s
The strongest period of competition in the server marketplace was probably the 1990s. In particular:
- HP launched a Mainframe Alternative campaign
- Sun led the server market and analysts ran seminars on how other vendors could learn from its success
- IBM beat the plug-compatible vendors – its ‘Sweep the Floor’ activity shows that it hasn’t forgotten that destroying machines is the best way of guaranteeing they don’t get a chance for a second life with a different user.
This time it’s building up as UNIX sales in general have failed to grow significantly after the recession and vendors are becoming increasing vertically integrated.
IBM has some difficult balancing to do. In particular in persuading various users that:
- Its servers are a great platform for Oracle databases, despite its overt attempts to convert them to DB2
- That HP Itanium is a great place to run DB2, despite its intentions to migrate them to IBM hardware and trash
For us this is partially a clash between the ‘horizontal’ software market, where traditionally vendors still need to make their products available across the widest number of platforms and the ‘vertical’ hardware market, where integrated solutions, appliances and workload optimised systems are becoming increasingly important.
Oracle’s revenues from HP’s Integrity servers are significantly bigger than Microsoft’s or Red Hat’s (which only sells to those customers who didn’t want to run HP-UX on these machines). Unlike IBM and Oracle, HP doesn’t have its own database, which means its Itanium value proposition is significantly damaged by Oracle’s decision to cut development. The results of HP’s legal action may tell us whether Oracle’s decision to cut development is based on competitive issues, an inadequate or decreasing revenue stream, or both.
Looking outside the server space, perhaps Smart Phones and Tablets are becoming more popular than PCs because new users are less interested in general purpose opportunities than something that ‘just works’.
Some Conclusions – Things Will Move Slowly
The server market has a small number of big vendors and campaigns like IBM’s are difficult to measure. In the past, one supplier’s campaign was usually offset by the others’ – ‘net wins’ are almost impossible for a market researcher to count. Therefore we expect IBM’s enthusiasm to deliver slower results than it hopes.
HP-UX Oracle users have more time to consider their choices than many think, since they will continue to be supported until 2015 by upgrading to the latest Oracle products. In any case many of the larger ones will already be running Oracle on other platforms to which they can switch.
HP could react buy buying a database company or choosing to move HP-UX to x86, where it might win back Oracle’s attention; but believe both are unlikely.
We’ll try to cover more on this subject – in particular Oracle and Dell’s view of the developing storm and aim to remain ‘Switzerland’ as always.