IBM announced last week that the company delivered $26.3 billion in revenue in 4Q06, up seven percent (four percent at constant currency) over 4Q05 earnings.

"We had the best software revenue growth in over five years, with continued momentum in our strategic middleware, and additional benefit from our recent acquisitions," IBM CFO Mark Loughridge said during IBM's financial report webcast. "Our focus on building up our software capabilities is clearly paying off."

Here's the software breakdown:

• WebSphere software grew 22 percent
• Information Management software grew 28 percent
• Tivoli software grew 25 percent
• Lotus software grew 30 percent
• Rational software grew 12 percent

IBM's Systems and Technology Group, which produces IBM server lines and storage, grew three percent over 4Q05, earning a revenue of $7.1 billion. Here's the breakout:

• System z grew 5 percent
• System i declined 10 percent
• System p grew 4 percent
• System x grew 7 percent (blades essentially flat, though)
• Storage grew 9 percent

"Sales of [System i] upgrades improved sequentially; however, they remain down year-to- year as customers continue to leverage their existing capacity," Loughridge said. "We expect the upgrade activity to ramp during the year."

The System i market is driven by customer upgrade cycles, but the last three quarters for the System i (or iSeries) have been dismal:

• 4Q06: down 10 percent
• 4Q05: down 18 percent
• 4Q04: down 9 percent

For the 2006 year overall, IBM reported revenue of $91.4 billion, up four percent over 2005 excluding the divested PC business to Lenovo, with income from continuous operations up 9 percent when excluding 2005 non-recurring items.

HP, by the way, reported revenue for 2006 at $91.7 billion. The difference is negligible, considering the massive amount of money in question, but in terms of revenue, IBM might not be the largest IT company in the world any longer. When considering influence and global reach, however, particularly across enterprise business systems, IBM remains an influential leader.