It kind of amazes me how much fear, uncertainty and doubt (FUD) is moving through the market right now thanks largely to the strategic changes at IBM. Earlier this week, I touched on the Lenovo acquisition of IBM’s x86 server business and the advantages this would create for that company. Now I’d like to cut through the muck surrounding Inspur’s interesting move away from Itanium to Open Power in China, which opens up what may be a terminal problem for SPARC and Itanium as Intel and IBM go to the mat against each other.
Let’s talk about how the server market is breaking out and why a pitched battle between IBM and Intel could mean the end of SPARC and Itanium.
IBM and Intel are two of the most powerful vendors in the market. Intel has traditionally led by leveraging partners, which at one time included IBM, to control the markets it touches. IBM is the father of modern-day computing at scale and, in the enterprise space, it has proven to be the stickiest of all of the vendors and the only one that has shown success in long-term licensing technology to its competitors.
When two companies of this scale go to war, the outcome is years into the future, but you can typically point out the collateral damage in the near term. This time, it should be the technologies that are already contracting. Both SPARC, which has been increasingly struggling since Oracle’s acquisition of Sun, and Itanium, which became a dead-end technology last year, are at most risk because of the massive resources that will be focused by IBM and Intel to assure their own core technologies win the war.
While Intel currently owns the most partners, IBM is putting up a massive effort and as a result its Open Power initiative went from five to 53 members in one year.
Inspur is taking the lead position in China to move its aging infrastructure to current generation technology. Initial stories, which turned out to be in error, had it using Itanium, but it is moving to Power instead, which should give Power an impressive beach head in what many feel will be the most lucrative market going forward, but one that will increasingly favor Chinese vendors. IBM now goes from being a potential competitor to a strategic partner in the move, making it far more likely to be successful, because this kind of a migration is one of the most difficult. IBM likely has more experience with this kind of a move than Inspur likely does. In any case, the combination of the two companies will be far stronger than either one of them alone would be.
IBM’s Partnering Past
IBM has a deep history of successfully finding ways to license technology to others. Much of the magnetic disk technology for decades came from IBM, and there likely wouldn’t have been a successful storage market had IBM not licensed and sold core components to its competitors. At that time, it had developed a unique methodology that concealed its involvement so that competitors were comfortable buying from IBM. This time, it has used an ARM-like consortium model to accomplish a similar task, because this method appears to be both more appropriate and more consistent with other efforts like it in the market.
Given the massive power both IBM and Intel have had and IBM’s initial success with its Open Power consortium, the fight between the two vendors is going to be long and well-funded by both sides—neither of which can afford to lose. Itanium, which gave way to Xeon in Intel’s long-term strategy, and SPARC are the most at risk because they both appear to already be contracting. ARM will be interesting to watch because it provides similar benefits to Power, but doesn’t have a similar beach head yet in the server space, and as a result, it could end up being a wild card as this battle matures.
Intel has more resources, but IBM, with its x86 divestiture, has more focus. Both companies can’t afford to lose. That’s likely what makes it scary for anyone not aligned with either firm.
Rob Enderle is President and Principal Analyst of the Enderle Group, a forward-looking emerging technology advisory firm. With over 30 years’ experience in emerging technologies, he has provided regional and global companies with guidance in how to better target customer needs; create new business opportunities; anticipate technology changes; select vendors and products; and present their products in the best possible light. Rob covers the technology industry broadly. Before founding the Enderle Group, Rob was the Senior Research Fellow for Forrester Research and the Giga Information Group, and held senior positions at IBM and ROLM. Follow Rob on Twitter @enderle, on Facebook and on Google+