IBM quarterly storage HW revenues drop out of sight – Blocks and Files

IBM quarterly storage HW revenues drop out of sight – Blocks and Files

IBM is no longer publishing quarterly storage hardware revenues.

Until now, each quarter IBM revealed its storage hardware revenues in terms of percentageY/Y change. However in the first 2021 quarter earnings, the company has not disclosed this number, merely say that “Power and Storage Systems declined.”

Storage HW is a tiny fraction of IBM’s results. For the last 2020 quarter we calculated its storage revenues at $390m, 1.9 per cent of its $20.37bn revenues for the quarter. The company apparently now views storage hardware revenues to be so small as not to be worth calling out any more.

IBM noted in the earnings presentation yesterday that “Storage and Power performance reflects product cycle dynamics.” Sales of the recently launched FlashSystem 5200 have not pushed storage hardware revenues higher as the product was not fully available in the quarter.

Storage hardware is part of IBM’s Systems business, the smallest of its four main business segments. In its first 2021 quarter, ended March 31, IBM reported revenues of $17.7bn, up 1 per cent Y/Y and its first growth quarter after declines in all four 2020 quarters

Segment revenue results:

  • Cloud and Cognitive Services – $5.4bn – up 34 per cent Y/Y
  • Global Business Services – $4.2bn – down 1 per cent 
  • Global Technology Services – $6.4bn – down 5 per cent
  • Systems – $1.4bn – up 2 per cent
  • Global Financing – $240m – down 20 per cent

Within the systems segment, hardware revenues rose 10 per cent Y/Y while operating systems software declined 18 per cent. Z mainframe business revenues were up 49 per cent Y/Y, acting as the Systems segment growth engine. CFO James Kavanaugh said in prepared remarks: “That’s very strong growth, especially more than six quarters into the z15 product cycle.’

The sales jump was attributed to customers appreciating mainframe reliability and security in the time of the pandemic with increased online purchases and remote working.

IBM chairman and CEO Arvind Krishna is concerned with big picture issues, such as spinning off Global Technology Services – Kyndryl – and returning IBM to growth in a hybrid cloud world, using AI, Red Hat and quantum computing.

His prepared remarks included this comment: “We see the hybrid cloud opportunity at a trillion dollars, with less than 25 per cent of workloads having moved to the cloud so far. … We are reshaping our future as a hybrid cloud platform and AI company. … IBM’s approach is platform-centric. Linux, Containers and Kubernetes are the foundation of our hybrid cloud platform which is based on Red Hat OpenShift. We have a vast software portfolio, Cloud Paks, modernised to run cloud-native anywhere.”

Storage hardware sales are just not important enough to figure in this picture. They have seen an overall consistent and long-term decline, as a chart showing them by quarter each year shows;

There was a rise from Q1 2019  to Q1 2020 but that has not been repeated over the Q1 2020 to Q1 2021 period. There has been another decline but IBM isn’t saying by how much, although storage hardware revenues must be lower than the year-ago $417.6m.

IBM also sells storage software, such as Spectrum Scale, and storage services such as its IBM Cloud Object Storage. There is also a storage element in Red Hat’s sales. These various storage software revenues are not aggregated and revealed by IBM, and so we cannot know how IBM’s total storage business; hardware and software, is doing. All-in-all, it is a confusing and incomplete picture with a disappointing storage hardware element.

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