History 2000: IBM Storage Revenue Down

The official line from IBM about its 1Q20 financial results ending March: “Total storage revenues declined, principally due to unanticipated weakness in the company’s HDD drive product line.”

Revenues for the IBM Technology Group, which include more than just HDDs, were $2.7 billion for the quarter, down 11% compared to 1Q99.

The biggest problems have been encountered with 10,000rpm server HDDs, the production of which was transferred from the US to Japan, and for which Big Blue has been incapable of delivering the units it promised.

The winner in all this has mainly been Seagate, EMC’s second source for the drives, and to a lesser extent Fujitsu.

Using IBM’s shortage as a pretext, EMC has taken this opportunity to scale back on its 5-year pledge to purchase $3 billion worth of HDDs from its competitor and at the same time supplier, IBM.

Indeed, the agreement canceling this target is part of a larger out-of-court settlement in a lawsuit dating from 1994 between IBM and Data General over server technology infringements, and another dispute arising from EMC’s acquisition of Data General in 1999. Neither party admitted any wrongdoing, but Big Blue agreed to pay an undisclosed – but apparently minor – sum to EMC as part of the settlement, which also includes an agreement to refrain from further patent infringement lawsuits for 5 years.

Meanwhile, IBM’s Shark RAID subsystem is gradually gaining on EMC’s Symmetrix line, which recently was completely overhauled. Big Blue said that huge pharmaceutical company Bayer moved from Symmetrix to Shark.

This article is an abstract of news published on issue 149 on June 2000 from the former paper version of Computer Data Storage Newsletter.