IBM revealed its third quarter trading results last week and reported that its revenue from the System i had declined by 21% compared to the same period last year.

This is the eight consecutive quarter-on-quarter decrease in revenues from the platform since 2005. While this may set a few alarm bells ringing, it is worth remembering that IBM has been whittling down the price of the System i for some time now and further changes to its user pricing model look set to bring its cost down further for some users. A decrease in revenues down not necessarily mean a sharp decrease in shipments.

It is also worth remembering that IBM, like any other large corporation, is constantly recalibrating the way it collates its trading figures. Given the nature of the System i, this means that for each unit sold not all proceeds of the sale go straight to IBM’s Systems and Technology division as some slices of the cake go to its Software division. Added to that, customers are waiting for the next generation of POWER6 processor-driven System i hardware to arrive next year before they make any new orders.

IBM said that revenues from its Systems and Technology group totalled $4.9 billion for the quarter, down 10%. Revenues from System p increased 6% compared with the 2006 period, as did revenues from System x. Revenues from IBM’s System z mainframe fell 31%.

Overall, IBM’s total revenues for the third quarter of 2007 were $24.1 billion, an increase of 7%. Geographically, the Americas' third-quarter revenues were $10.2 billion, an increase of 4%. Revenues from Europe, the Middle East and Africa were $8.1 billion, up 11%, and Asia-Pacific revenues increased 9% to $4.9 billion. OEM revenues were $890 million, down 12%.

Revenues from IBM’s Software division were $4.7 billion, an increase of 7%. Within those figures, the overarching WebSphere brand increased revenues by 10%. Global Business Services revenues were up 16% and Global Technology Services revenues were up by 13%, leading the typically upbeat IBM chairman Sam Palmisano to say: "Our outstanding services results this quarter enabled us to stay on track toward our objective of accelerated earnings per share growth through 2010, while we work through a transition in our hardware business.

“Our year-to-date performance underscores the strength of major elements of our long-term roadmap, including revenue growth, margin expansion, and continued success in emerging market countries and in the integration of our acquisitions."

Seamus Quinn