It’s The Mainframe That Keeps IBM Going

by Sohini Bagchi    Apr 21, 2015


In recent years, IBM is heavily betting on Cloud as it is undergoing a digital transformation. Despite its huge digital plans, IBM reported first-quarter earnings where its revenues fell short by 12 percent from a year ago to $19.6 billion. Analysts however are optimistic as despite the downfall, as its Mainframe sales more than doubled in the quarter as the Big Blue shipped out a new model. Experts wonder whether IBM’s investment of over $1 dollar into their new IBM z13 model in their z Systems mainframe line will pay off in the long run.

Key growth drivers

With digital transformation becoming a key driver to enterprise technology purchasing decisions, analysts believe that the z13 mainframe is one of the most powerful digital transaction platforms available – and in many ways also supports enterprise cloud efforts.

Mike Gilfix, Director, Enterprise Mobile at IBM told TechCrunch, “The company paid particularly close attention to the growing complexity around mobile transactions and designed the system to handle the intricate interplay between systems, while maintaining security with what they are calling “real-time mobile encryption,” and providing high-end analytics on the move.”

Read more: IBM Targets $40 Bn In Cloud, Other Smart Tech By 2018

Analysts have often suggested that as CEO Virginia Rometty is striving to reshape IBM into a provider of cloud-based software and services delivered via the Web, she also needs to update older offerings. This includes mainframes and other high-end servers, which help the company’s sales people sell software and services to accompany the systems.

Growth despite challenges

While, mainframes continued to be a powerful tool in heavy industries, it often fails to support the influx of new mobile transactions, which the z13 mainframe is focussed on addressing. The z13 comes packed with “the world’s fastest microprocessor, 2X faster than the most common server processors, 300 percent more memory, 100 percent more bandwidth and vector processing analytics to speed mobile transactions.”  z13 can also be used as a private cloud and running OpenStack on it.

From that perspective, Mainframes can be a growth engine for IBM going forward, as the company still has mainframe customers numbering in the thousands.

Experts see the majority of sales is expected to come from existing customers in finance, large retail customers and healthcare, and others who have a large investment in data stored on mainframes already. Moreover, the company is hoping that the mobile nature of this system will attract buyers who might not have considered a mainframe in the past.

“It’s a great time – all companies are faced with digital transformation. The mainframe plays an essential role to current clients and hopefully some new clients as well,” Ross Mauri, General Manager of z Systems for IBM said in a statement.

While some may believe that Mainframes are most likely to decline as the market consolidates, IBM seems to be betting on new mainframe in a digital age that will help keep the market going.