This may be the last time IBM reports System i hardware revenues on their own. Seeing as the platform is now officially merged with System p into a new Power Systems, future hardware revenue figures will probably reflect that.

It’s probably a good thing.

System i revenues dropped 21 percent compared to the year-ago period. That compares to increased or flat revenue numbers from the other platforms — System z was up 10 percent, System p up 2 percent, and System x flat. Aside from a small blip at the end of last year, hardware revenues for the System i platform have been dropping steadily for a while now. Let’s take a look at the last three years per quarter:

Compare that to System p revenues in the same period:

Are there anymore questions about why IBM decided to merge the two platforms? Aside from the benefits of having a single hardware platform on the Power processor, the merger will eliminate those ugly-looking, often double-digit revenue decreases that System i was experiencing quarter after quarter after quarter.

In its earnings report last week, IBM announced that revenue for System i was up 2%. It’s the first time System i revenue has been up year-over-year in two years. The chief financial officer at IBM, Mark Loughridge, said the rise was due to the introduction of Power6 System i 570.

Although the 2% increase is compared to a 10% decrease in the fourth quarter of 2006, it’s still a whole lot better than it going down again. And given Loughridge’s reasons for the increase, it’s fair to think that revenues might continue to rise in 2008 when more Power6 boxes become available.

For what has now been eight quarters in a row — that’s two years — IBM System i revenues have dropped in year-over-year comparisons. You would think at some point that the platform’s revenue would have hit the bottom of the valley with nowhere else to go but up, but that simply has not been the case.

At least System i doesn’t have to feel alone this time. Mainframe revenues dropped 31% compared with a year ago, even more than the 21% decline that System i experienced. Overall, IBM system revenues decreased, while software and services increased.

The question, of course, is why? Why does revenue continue to free-fall? There must be reasons other than a marketing problem tied to a couple of name changes. Some think IBM hasn’t been pricing and engineering System i correctly to target it at a different customer base than System p, IBM’s Unix boxes.

It is good to see that IBM has reported System i revenues separately. When IBM decided to split System i into two divisions, it wasn’t clear whether it would be able to avoid this reporting requirement. Whether it’s required or not and despite the poor news, IBM is still doing it.

Then again, do hardware revenues matter? It’s common in many places for vendors to give away hardware so they can sell the software and services. This happens with cell phones, Internet service and cable. You get the cable box for free, then you pay for your monthly service bill. You get your wireless router for free, but then pay for Internet service access. Is that the way it’s going to be for server hardware, or is this just an excuse for IBM’s dismal results?

Once again, every hardware platform that IBM sells gained revenue except for the System i, which dropped double digits.

Big Blue released its second-quarter results today. System i is down 15 percent from the same period last year. Meanwhile, System z is up 4 percent, System p is up 7 percent, and System x is up a whopping 16 percent.

This is not just a blip in the radar — System i year-over-year revenues have gone down seven quarters in a row. That’s almost two years. And even though IBM has recently claimed that it’s focused on System i customers and not System i sales, one still has to admit that this doesn’t look good.

Is there anything good that can come out of this? Let me know what you think.

This is getting to be like a broken record, but System i revenues dropped again, this time 13 percent, in the first quarter of this year. It is the sixth consecutive quarter that year-over-year revenue has gone down. IBM said weak upgrade sales on the platform caused the decline.

Compared to the same quarter two years ago, System revenue is down about 33 percent. That’s a hard slump.
This time, System i’s drop was in the midst of gains on all other platforms: systems z, p and x. It’s not for lack of investment by IBM. In the last year it introduced a VoIP solution with 3Com exclusively on the System i, as well as new entry-level System i boxes.

But analysts say System i suffers from a marketing problem.