IBM 2009 Annual Report Download - page 46

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Systems and Technology
($ in millions)
Yr.-to-Yr.
Yr.-to-Yr. Change Adjusted
For the year ended December 31: 2008 2007 Change for Currency
Systems and Technology external revenue: $19,287 $21,317 (9.5)% (10.8)%
System z 12.5% 10.6%
Legacy System i (66.1) (67.5)
Converged System p 11.2 10.7
System x (16.9) (18.9)
System Storage (3.4) (4.7)
Retail Store Solutions (15.0) (15.8)
Total Systems (4.9) (6.3)
Microelectronics OEM (25.1) (25.4)
Printing Systems NM NM
NM—Not meaningful
Systems and Technology revenue decreased 9.5 percent (down
11 percent adjusted for currency) in 2008 versus 2007. In June
2007, the company divested its printing business. Systems and
Tech nology revenue, excluding the divested printing business,
decreased 7.8 percent (9 percent adjusted for currency) in 2008
versus 2007. Total Systems revenue decreased 4.9 percent (6
percent adjusted for currency) in 2008 versus 2007.
In the current economic environment, clients are focused on
reducing the cost of running their IT infrastructure. Virtualization,
which provides the capability to run multiple workloads on a
single server, is a key enabler of efficiency. System z is the lead-
ing platform for virtualization as it is able to support thousands
of images and operate fully utilized. The company’s POWER
architecture supports hundreds of partitions, often driving utiliza-
tion rates of over 60 percent. Both of these platforms leverage
the entire system, from the company’s custom semiconductors
through the software stack, to achieve these high levels of effi-
ciency and lower cost of ownership. The distributed computing
model, which utilizes many small servers, cannot offer the same
level of efficiency and value.
System z revenue increased 12.5 percent (11 percent adjusted
for currency) in 2008 versus 2007. System z revenue growth was
particularly strong in the Americas (up 19 percent), as well as
in the Financial Services and Industrial sectors globally. Clients
in emerging markets also leveraged this platform’s stability and
efficiency during 2008. MIPS (millions of instructions per second)
shipments increased 25 percent in 2008 versus 2007, posting
double-digit growth in each quarter, reflecting strength in both
traditional and specialty workloads. Specialty MIPS increased 68
percent in 2008, as clients exploit the capabilities of System z to
bring new Linux and Java applications to this highly efficient and
cost effective platform.
Converged System p revenue increased 11.2 percent (11
percent adjusted for currency) in 2008 versus 2007, reflecting
solid demand for the energy efficiencies and multi-operating
system capabilities of POWER6 technology. Clients concluded
that POWER6 technology is the right solution for a multitude of
workloads. The revenue growth was primarily driven by mid-
range servers which increased 32 percent and high-end servers
which increased 3 percent in 2008 versus 2007.
Legacy System i revenue decreased 66.1 percent (67 per-
cent adjusted for currency) in 2008 versus 2007, as the company
continues to transition the System i customer base to the con-
verged POWER platform within System p.
System x revenue decreased 16.9 percent (19 percent adjusted
for currency) in 2008 versus 2007. System x server revenue
declined 15 percent and blades revenue decreased 3 percent,
in 2008 versus 2007, respectively. The decline in server revenue
reflects a significant slowdown in the x86 market, especially in
the second half of 2008, as clients are virtualizing and consoli-
dating workloads onto more efficient platforms such as POWER
and mainframe.
System Storage revenue decreased 3.4 percent (5 percent
adjusted for currency) in 2008 versus 2007. Total disk revenue
was essentially flat in 2008 versus 2007. Enterprise Disk revenue
increased 2 percent primarily due to increased demand for the
DS8000 product, while mid-range disk revenue declined 15 per-
cent. Tape revenue declined 10 percent in 2008 primarily due
to reduced demand and clients deciding to purchase additional
media to expand the utilization of their existing devices.
Microelectronics OEM revenue decreased 25.1 percent (25
percent adjusted for currency) in 2008 versus 2007. The primary
mission of this business is to provide leadership technology for
the systems business, as demonstrated during 2008 in the new
System z10 mainframe and POWER6 systems.
44