By eweek  |  Posted 2006-06-22 Print this article Print

Customers buy more capacity, typically. They dont buy exactly what they need. So if the amount of processor power [shipped] is going up quarter to quarter, it says that the customers future intention is, "Im going to do additional work on this platform, and Im just building the accommodation." Heres why Im really excited on this thing. Its because what got announced was that our specialty engine MIPS were up substantially in the first quarter. In fact, the mix of MIPS—of our specialty engine vs. what we call our general-purpose MIPS—was up to about 35 percent of the total MIPS. Thats a leading indicator that not only is the customer buying capacity for future use, its buying specialty engines for future use that are running brand-new workloads that have never run on the mainframe, or on their particular mainframe. Theyre saying, "Im not only going to buy capacity for general-purpose workloads. Im going to buy extra capacity at a faster rate for consolidating Linux—eliminating Intel servers, consolidating them onto what we call IFLs [Integrated Facility for Linux], or the specialty engines for Linux." That theyre leaning into taking WebSphere and moving it into the zAAP [zSystems Application Assist Processor] engine, which is the advanced application processor … for Java workloads. Now we announced in January … the zIIP engine that became [generally available] in April. Our early indications are that theres a thirst in the market for that. So these leading indicators on MIPS are vital to say, "OK, the customer over time is going to do work on the platform." So thats a leading indicator that revenues will grow.
Regarding the specialty engines, is that growth within the current mainframe installed base, or do you see that coming from new mainframe customers?
We see it as both. Ill give you clear examples of it. When we made these specialty engines available to our existing mainframe customers, we saw a dramatic increase in growth—revenue growth, MIPS growth, workload growth. Now the great news is that weve taken that strategy and deployed it in the small and midrange machine that we announced back in April. We didnt just announce a "mainframe lite," we announced a low-priced mainframe thats around a $100,000 entry price. Its got the exact same capability with these specialty engines. So think about a small to midsize customer. They can now scale up their open-source workload, they scale up their Java-based workload, they build a database—they dont even have to wait to become an enterprise-class customer to take advantage of these capabilities. They can start out [now] because every one of these accounts I go to, they have mixed workloads. Theres nobody thats running a one-type, one-class workload. So the reason why we say it helps with both is, a new customer to the mainframe thats buying a platform for the first time can exploit the type of capability day one with the first MIP. Which is one of the reasons why … we announced the business-class machine—called the z9 Business Class—in China, in Beijing. We had hundreds of customers—reporters, too—that witnessed it because we realized there were 10 million small businesses in and around that sector that could take advantage of that. So this is how we see the growth, both vertically with our existing customers and horizontally, not only with medium-sized customers in new industries, but also new markets. You mentioned the launch of the midrange mainframe in China. Can you talk about the new markets youre targeting for the mainframe? We see this growth opportunity beyond what has traditionally been our core business. Were very strong in financial services, in banking, in insurance, even in the investment side of financial services, private banking. Weve got a presence there because those customers have always required a high level of availability, but also a high level of trust between the mainframe delivery and their customers. Its a demanding environment, its a capital intensive environment, and theyve got enough capital to do anything they want to do. They can push the envelope. Next Page: Security is a key selling point.


Submit a Comment

Loading Comments...
Manage your Newsletters: Login   Register My Newsletters

Rocket Fuel