IBM: The Mainframe Is Back, Baby
As IBM's latest fiscal quarter results indicate, the company's Systems and Technology Group (STG), led by the mainframe, has shown that the company's hardware business can continue to drive profit.IBM says the mainframe is back--if it ever left at all. IBM announced third-quarter 2010 net income of $3.6 billion, compared with $3.2 billion for the third quarter of 2009, an increase of 12 percent driven by significant increases in systems and technology sales and IBM services as well as a boost in growth markets.
Mark Loughridge, IBM's senior vice president and chief financial officer for finance and transformation, said IBM's Systems and Technology Group (STG) had its best quarter in six years. Revenues from IBM's Systems and Technology segment totaled $4.3 billion for the quarter, up 10 percent from the third quarter of 2009. Systems and Technology pretax income was $327 million, an increase of 46 percent. Systems revenues increased 8 percent. Revenues from System x increased 30 percent. Revenues from System z mainframe server products increased 15 percent compared with the year-ago period. Total delivery of System z computing power, as measured in MIPS (millions of instructions per second), increased 54 percent.
The new zEnterprise System represents more than $1.5 billion in IBM research and development and more than three years of collaboration with some of IBM's top clients. It's the most powerful IBM system ever and represents a radical redesign in its ability to allow workloads on mainframe, Power 7 and System x servers to share resources and be managed as a single, virtualized system. That is critical as customers struggle with integrating their data centers.
eWEEK: How does zEnterprise help clients deal with new business challenges? ROSAMILIA: Big challenges like energy and sprawl have languished for decades. Data centers are made up of "island communities" that simply coexist rather than work together. Meanwhile, new demands are emerging including the explosion of data and increasing concerns about privacy and security. The provocative new idea represented by zEnterprise was to bridge the divide by extending the unique service capabilities of the mainframe -- always on, secure, bullet-proof, 100 percent utilization and unparalleled efficiency -- to other systems. The new architecture brings the strengths of the IBM mainframe to workloads running on IBM System x and Power Systems enabling the data center to be centrally managed. It also allows workloads to remain on the platform optimized for processing a specific task.
eWEEK: You mentioned the mainframe growth in emerging markets. That seems counter-intuitive. Why are businesses in emerging markets buying mainframes? ROSAMILIA: This trend started to emerge about a year ago with clients including the First National Bank of Namibia, Comepay in Russia, as well as BC Card and Dongbu Insurance in Korea all moving to the mainframe for the first time. We are already seeing this emerging market momentum carry over to zEnterprise, with customers in Brazil and Mexico already using the new zEnterprise System.
What we're seeing are clients in these markets invest in mainframes to compete more effectively on a global stage. It's all about them using mainframes -- with their world-renowned security, availability, and reliability -- to build out their infrastructure, across a wide range of industries. Additionally, as these hyper growth markets see the need for scale the mainframe delivers. Now with zEnterprise, clients can scale both up and out.