The Bloor Perspective: IBM Global Services - the reckoning, Sun re-branding and Unix wars

Unlike the rest of the IT industry, Big Blue appeared to ride out the storm of last year's economic slowdown with ex-CEO, Lou Gerstner, leaving on a high note and much expected of new man Sam Palmisano. But with its recent profits warning came pressure on Big Blue's much vaunted professional services arm to reinvent itself.

IBM Global Services has been fundamental to Big Blue's recovery over the last 10 years. Lou Gerstner realised, as many other hardware vendors have in the last couple of years, that services is the way to go. Gerstner's transformation of IBM from tin shifter to services giant was significant in the company's survival and subsequent prosperity. Now that fortunes appear to be flagging at IBM, many are now looking at the services model again to see if it really is as robust as it appears at first glance.

In IBM, Global Services is the largest organisation, accounting for approximately 40 per cent of its revenue. The group is key to IBM's success not just as a revenue stream but also as a driver for hardware and software developments.

Obviously outsourcing plays a key role in the Global Service's offering but the group also offers everything from strategic consultancy through to technical services.

While Global Services has always been a sound performer in the past, it has shown signs of decline in recent quarters. In the first quarter of 2001, it grew 12 per cent but fell through the rest of the year until it showed a 1 per cent decline year-on-year for the last quarter.

One of the problems facing the large service providers is that there are only a limited number of mega-outsourcing deals around. IBM has been particularly active in the last 12 months with high value deals with Amex, Fiat, NTL and others. While the pipeline hasn't dried up, IBM, like any other good services organisation, is going to have to repackage itself and realign its services in response to market demands.

We've already seen some evidence of this with the development of IBM's web hosting business into IT as the fifth utility and an evolution of the ROI strategy with IBM's Optimisation Programme. But it's going to take more than that to improve fortunes.

*Sun ONE branding*
It's taken a while but Sun Microsystems has finally got around to rebranding all of its service-enabled product lines to adopt the Sun ONE tag. This represents a big step forward in terms of architecture marketing and for the end user community, which can now get a much better view of what Sun ONE is really about.

For too long the problem with Sun ONE (Open Net Environment) has been that nobody has been able to see how it can be applied. But the new branding announcement resolves that problem nicely.

The new branding brings together the iPlanet products in combination with Forte, StarOffice and Chili!Soft to create a single web services infrastructure covering everything from component connectivity and enterprise integration, through to office productivity and Active Server Pages.

The new infrastructure belies previous comments about Sun ONE being too closely tied to Solaris because it highlights iPlanet's support for AIX, HP-UX, Linux and Windows as well as the Solaris operating system.

It also brings together the complete service on demand picture. In most cases, the rebranding involves substituting the iPlanet name with Sun ONE. This applies to the web server, portal server, application server, directory server, identity server, messaging server, calendar server and integration server.

The Forte IDE becomes Sun ONE Studio, The Chili!Soft ASP product is renamed to Sun ONE Active Server Pages and the next release of StarOffice, amazingly, hangs onto its name but is tagged 'a Sun ONE Software Offering'. The StarOffice release is due in May 2002.

From a market perspective, this has got to be good news all round. Simply by applying the branding to all of the various components, it has become clear where Sun sees the Sun ONE product range starting and ending. There is a feeling that much of the cloud surrounding Sun ONE has cleared. Now that we can understand what Sun is up to, there is a pretty good chance they'll sell some of it to us.

*Unix wars heat up*
Last week witnessed a fresh outbreak of marketing wars between many of the major UNIX server suppliers. The hype and marketing kicked off with the announcement by Sun Microsystems of the launch of the Sun Fire 12000.

A simple description of the new server might be that it is, at heart, half of a Sun Fire 15000, better know as the StarCat, the company's top end offering. Sun has told the world that the new machine can be shipped to customers within 16 days, making this relatively powerful box available very quickly indeed.

The server's price is also reported to come in at around 50 per cent of that of the StarCat, placing the offerings in the half a million to just over $1m price bracket. Sun has clearly recognised the demand in the market for less expensive machines capable of hosting high availability, critical applications. Interestingly Sun claims the 12000 can be field upgraded to full StarCat status.

Meanwhile, IBM has brought out additions to its own pSeries UNIX Power4 servers. The new servers fit into the middle bracket of the Regatta range and are expected to start shipping latter this month. It is now rumoured that IBM may bring forward announcements on new additions to its iSeries range.

Many of these moves have occurred several months in advance of the original road map targets for these machines and indicate IBM is targeting the UNIX market and is looking to continue the expansion in its market share that has taken place over the last year or so.

Hewlett Packard, the third member of the heavyweight data centre UNIX server club, has also been active in its marketing of its range of UNIX machines, from entry level servers up to the top end Superdome systems.

Also, this week, Compaq has begun to make available 'preview models' of its RISC-based EV7 Alpha Servers that are scheduled for release towards the end of this year. As well as taking a modular approach to system building, the new servers will incorporate 'self-healing technologies' to help simplify system management and ensure maximum availability. This will help to bring Compaq's offerings into line with those of IBM and HP.

The vendors of UNIX systems are becoming very aggressive despite the effects of world's economic gloom. UNIX is clearly here to stay for the foreseeable future.

Bloor Research is a leading independent analyst organisation in Europe. You can find out more at http://www.bloor-research.com or by emailing mail@bloor-research.com.