Enterprise Unix Roundup: Is AIX a Big Blue Canary?

1 January 1970

It's earnings reporting season. While we at Roundup tend to avoid all things financial beyond the occasional link to more comprehensive coverage, IBM's third-quarter earnings struck a chord with us.

Despite a hefty one-time $320 million charge that flattened net earnings, Big Blue brought in a profit of $1.8 billion. Without the one-time charge, IBM's third-quarter profit from continuing operations would have been about $2 billion.

IBM attributes the strong showing to currency exchanges and continued strong sales in its hardware division. And, indeed, hardware sales were strong for its xSeries (Intel x86) and zSeries (mainframe) server lines. However, they were less stellar in its Unix lines.

By IBM's calculations, the midrange-computing-focused iSeries line declined 26 percent year-to-year. In its quarterly earnings meeting the vendor attributed this to the POWER5 transition "taking longer than previous cycles, as existing customers must transition their operating environment to the new level required ..."

IBM reported big plans for the floundering server family, which in its previous incarnation as the AS/400 was the midrange market leader. Last Friday, Big Blue unveiled the i595, the first 64-way iSeries server. The server delivers more than four times the processing power of the previous generation, and IBM believes this will turn the tide on its iSeries line.

Big Blue also has plans to bolster its pSeries line. Here, too, new, more powerful pSeries servers were announced last Friday. Though IBM's high-end Unix line fared a bit better, it exhibited only marginal growth. IBM noted, "Our pSeries Unix server revenue grew 1 percent year-to-year and 6 percent sequentially, as we continue the transition to POWER5."

IBM is banking on POWER5, and the reception it's gotten has been fairly warm to white hot, especially on its new pSeries offerings. Yet one thing to bear in mind when looking at this from an operating system perspective is that IBM is the only vendor to sell hardware with the POWER processor, and POWER is the only platform that supports IBM's enterprise-grade Unix operating system, AIX.

We don't hear about scads of AIX deployments, and to be fair, we don't hear of many customer wins in the HP UX space either. Much as we hate to admit it, Sun President and COO Jonathan Schwartz may be on to something when he blogs about IBM allowing its only true home-grown enterprise operating system to slip away from it. In today's heterogeneous server room, migrating to an operating system that limits you to a sampling of a single vendor's hardware is so archaic it borders on laughable.

On the flip side, however, despite Solaris' availability on myriad platforms, we haven't seen Solaris migrations pushing down the floodgates.

IBM didn't get to be the market leader it (once again) is by not paying attention. Its early recognition that Linux would be a force to be reckoned with was prescient and has paid off both in sales and "community" building. It is unlikely Big Blue will stop supporting AIX any time soon — it released AIX5L for POWER v5.3.0 in August. The operating system, like POWER5 processors, now supports 64-bit computing.

Maintaining legacy applications is, of course, a viable source of revenue. An enterprise content in its reliance on AIX to drive its mission-critical apps will likely continue with AIX. As its computing needs increase, it will grow its server room with AIX-compatible hardware and may even migrate to future versions of the operating system.

In the bigger picture, however, we are left wondering if AIX is indicative of the enterprise Unix market as a whole. It seems unlikely enterprises will dump AIX, or HP UX, entirely, but legacy apps are limited in how much they can grow and their role in driving the market is small.