z196 drives IBM financial gains

It has been a hard few quarters for IBM mainframe fans. Mainframe revenues kept declining quarter by quarter, the long anticipated hybrid mainframe—the one IBM had been telegraphing for over a year—seemed like it would never arrive, and the mainframe-is-dead crowd appeared emboldened (I was even hired to write a piece on what IBM could do to save the mainframe from extinction.). Well, the zEnterprise 196 was announced in July, orders have been flowing in, and deliveries started in September. Sorry, the mainframe still isn’t dead.

To the contrary, IBM’s latest quarterly financials clearly reflect what mainframe folks have been expecting, a significant increase in System z revenue. As reported yesterday: Systems revenues increased 8 percent (9 percent, adjusting for currency). 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. Revenues from System Storage increased 7 percent IBM quarterly report. The biggest winner, however, was System x; revenues up 30 percent.

Although revenues from Power Systems decreased 13 percent compared with the 2009 period revenues overall from the Systems and Technology segment totaled $4.3 billion for the quarter, up 10 percent (11 percent, adjusting for currency) from the third quarter of 2009. Systems and Technology pre-tax income was $327 million, an increase of 46 percent.

No doubt that orders for the z196 are flowing in. Speaking with mainframe managers at an IBM System z event in Boston two weeks ago, a number had placed orders for the new machine and more were expecting to place orders in 2011 in keeping with either their budgeting or refresh cycles.

More zEnterprise goodies are expected later this year and in 2011. The x86 blades should begin arriving by mid 2011. Before that the zBX extension cabinet should hit. Later in 2011 the smaller and cheaper business class z196 machines will be announced. IBM also says that discounted Solution Editions for the z196 will appear around then. The Solution Editions are deeply discounted package of z hardware, middleware, and software intended to entice customers, even existing z customers, to try new workloads on the mainframe.

For me, the only disappointment in the results was the decrease in revenues of the Power System group. Power Systems got a new fast POWER7 processor earlier this year. The server lineup also got a refresh earlier this year and again just a few weeks ago.

One thing IBM is not expecting as far as Power Systems go, however, is a major movement to consolidate AIX servers on the z196. For one thing, the necessary blades and the zBX extension cabinet won’t really be here until 2011. More importantly IBM expects the movement of AIX servers to the zBX to come in onesies and twosies as each organization goes through a fit-for-purpose analysis of each individual workload. Good thing because the AIX managers I’ve spoken with certainly aren’t enthusiastic about that prospect.

Although it is heartening to see the mainframe back on track, and with numbers to prove it, don’t expect the mainframe-is-dead story to disappear completely. It will live on forever like a stale Monty Python routine.

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One Response to “z196 drives IBM financial gains”

  1. IBM zEnterprise sparks mainframe growth « DancingDinosaur Says:

    [...] DancingDinosaur Mainframe computing in the 21st century « z196 drives IBM financial gains [...]

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