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IBM Grows Systems Revenue in 2Q18

Thursday Jul 19th 2018 by Sean Michael Kerner

Demand continues to be strong for both z mainframes and POWER systems.

IBM reported its second quarter fiscal 2018 financial results on July 18, showing growth in its cloud and systems business units.

IBM reported revenue of $20.0 billion for the quarter, a four percent year-over-year gain. Net income was reported at $2.4 billion, for a three percent gain over the second quarter of fiscal 2017.IBM Cloud Revenues

IBM's CFO Jim Kavanaugh highlighted the growth of the company's strategic imperatives during IBM's earnings call with financial analysts.

He noted that over the last 12 months, strategic imperatives revenue has grown to $39 billion, which represents 48 percent of IBM's revenue. Cloud is a core element of IBM's strategic imperatives and generated $18.5 billion over the past 12 months.

"We're continuing to build capabilities, recently announcing an expansion to 18 availability zones for the IBM Cloud across the world," Kavanaugh said. "To expand the global footprint, it is important as clients look to maintain control of their data, as they implement hybrid, especially given the increased data regulations."

Servers

IBM also is growing its systems business, which includes both servers and storage hardware.

"In Systems, we grew revenue again, as we continue to deliver innovative technologies that address today’s most contemporary workloads," Kavanaugh said. "All three brands IBM Z, Power and Storage grew and we gained share overall."

IBM Systems revenue for the quarter was reported at $2.2 billion, for a 25 percent year-over-year improvement. Kavanaugh called out IBM Z mainframe growth as being particularly robust, with a 112 percent year-over-year gain.

"The z14 adoption remains broad-based and after four quarters continues to track ahead of the prior program," Kavanaugh said. "The value prop benefits existing IBM Z clients who are growing and expanding workloads on z14 this quarter, whether it's ecommerce sales, mobile banking volumes, machine learning or emerging blockchain services."

Kavanaugh said IBM is adding new Z mainframe clients from all corners of the globe, including a managed care provider in the U.S., to a University in Canada, to an electronics distributor in Italy, to a bank in Africa.

"We also had good acceptance of our new single-frame z14 designed specifically for cloud environments, which launched earlier in the quarter," he said.

POWER

IBM is also growing its Power systems servers, with revenues up in the second quarter of 2018 by four percent. Kavanaugh said that revenue growth is being driven by the adoption of IBM's new POWER9 entry-level portfolio, as well as continued growth in Linux.

POWER9 is also helping IBM at the high-end as well and now powers the world's most powerful supercomputer.

"As part of our deployment, the U.S. government recently unveiled the POWER9-based Summit, the world’s most powerful supercomputer, which is ranked number one in the TOP500 List of commercially available computers," Kavanaugh said. "This is the first time in over five years that a U.S. company topped the list."

Sean Michael Kerner is a senior editor at ServerWatch and InternetNews.com. Follow him on Twitter @TechJournalist.

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