International Business Machines (
has retorted to
claim that the recently-launched SPARC servers (powered by T5 and
M5 chips) are much faster and cheaper (delivers 5 times to 12
times better cost performance) than IBM Power servers.
IBM challenged Oracle's findings and said that the comparisons
were primarily made with older systems (3 to 5 year old systems
according to Business Insider). Hence, the data does not reflect
the current performance of the systems. Oracle had cited data
from Standard Performance Evaluation Corporation ("SPEC") and
Transaction Processing Performance Council ("TPC") to validate
Moreover, IBM also quashed Oracle's claim that its new T5-8
server, priced at $270K, is much faster than IBM's P780, which
costs approximately $1.9 million. IBM said that the systems were
not comparable and for a similar type of setup, its price range
is equivalent to Oracle's recent releases.
IBM and Oracle are traditional rivals. The competition
intensified after Oracle entered the hardware market in 2010. The
relationship took an ugly turn in 2012, when IBM forced Oracle to
pull advertisements that claimed superiority of its Exadata
products over IBM systems.
The recent spat reflects escalating rivalry between the two
global giants as Oracle continues to search for ways to boost its
sagging hardware business. Oracle's recent releases target IBM's
dominant position (more than 50% market share) in the high-end
UNIX server market.
On the other hand, IBM is trying to consolidate its market
share through frequent updates, which will help it to expand its
customer base. In its fourth quarter conference call (Jan 23,
2013), IBM claimed that it gained significant business from
erstwhile Oracle and
customers in 2012 (approximately $1.0 billion).
Despite these aggressive strategies, we note that both IBM and
Oracle continue to lose revenues in the hardware segment. This is
primarily due to lower enterprise spending,- as well as shrinking
market for UNIX-based servers, which face significant competition
from X86 servers. The upcoming launch of
Haswell processor is further expected to hurt their competitive
positions in the near term.
Currently, both IBM and Oracle carry a Zacks Rank #3
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