The lead lining in IBM's earnings

IBM reported good overall earnings, but weakness in its x86 server line that may portend bad news for open source.

The technology industry cheered as IBM reported strong earnings this week, but this supposedly silver lining came with a fair amount of lead to weigh down enthusiasm, as The Register's Timothy Prickett Morgan reports,

While IBM tries to pitch itself as a services and software company, the truth is that systems - meaning the combination of servers, systems software, and services relating to those platforms - are really what drive a lot of Big Blue's sales each quarter. And servers are the foundation of that business, so what happens here matters. IBM's Systems and Technology Group, which makes and markets servers, storage, processors, and other hardware, saw sales decline by 10 per cent in the quarter to $4.4bn.

In other words, the foundation for IBM's steady growth is in decline. Perhaps most worrisome for others in the industry, including open-source vendors like Red Hat and Novell, while IBM's mainframe sales grew 25 percent, "a line of cheaper servers built with industry-standard x86 processors fell 18 percent, and IBM said it expects weakness in that area to continue," according to the Associated Press.

The x86 server market has been the bedrock for open-source software. A hit there will hurt more than IBM.

In particular, IBM holds the number slot in the Unix and Linux server markets, so IBM's rise or fall in x86 servers will affect the Linux vendors, as well as Microsoft. True, IBM's high-end servers also run Linux, perhaps helping the Linux vendors to the detriment of Little Endian Windows, but I'd rather see growth in IBM's x86 product line, even if Microsoft, which today doesn't run on IBM mainframes, benefits in the process.

A big, open, and growing market is best for everyone. Let's get the lead out, IBM!

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About the author

    Matt Asay is chief operating officer at Canonical, the company behind the Ubuntu Linux operating system. Prior to Canonical, Matt was general manager of the Americas division and vice president of business development at Alfresco, an open-source applications company. Matt brings a decade of in-the-trenches open-source business and legal experience to The Open Road, with an emphasis on emerging open-source business strategies and opportunities. He is a member of the CNET Blog Network and is not an employee of CNET. You can follow Matt on Twitter @mjasay.

     

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