IBM is doubling the processing power of its mainframes, the first upgrade of its core product line in two years, in a move analysts say can help spur sales growth across the world’s largest computer company through 2006.
Officials of International Business Machines Corp. told a Manhattan news conference Tuesday that the greater data-crunching power will allow its mainframe computers to secure consumer financial and health records from prying eyes.
The new line, dubbed z9, is the ninth generation of IBM’s modern z-Series mainframes. Prices start around $1 million apiece. Fully configured, the z9 boasts 54 chips and 18 billion transistors stuffed into a black refrigerator-sized box.
Big Blue said the upgrade will help it reignite a growth cycle in mainframes, which in the personal computer era were seen as dinosaurs. Instead, mainframes have staged a comeback as a more manageable way to consolidate smaller computers.
“The new platform will allow us to return to the level of growth we saw in the past few years, maybe not exactly the same percentage,” Bill Zeitler, senior vice president of IBM Systems and Technology Group, said in an interview.
Analyst Bob Djurdjevic of Phoenix-based Annex Research said key selling points of the z9 mainframe are not that it is faster and cheaper -- something it has been becoming for decades -- but rather the mix of hardware and software that give customers control over machines.
“Customers have gotten used to the fact that every two years they get a two-times increase in performance,” Djurdjevic said.
Mainframe customers largely consist of the world’s biggest companies and government agencies.
In a related announcement, IBM said it plans to introduce improved virtualization technology that allows corporate customers to add or partition massive amounts of computing, storage or networking capacity with a few flicks of a switch.
The z9 also holds twice the memory, storage and input-output capacity of the eighth generation of mainframes announced in May 2003 and known as T-Rex, IBM officials said.
The launch of T-Rex was followed within months by six record quarters of mainframe shipments through the end of 2004. A decline set in earlier this year ahead of the July upgrade.
Shutting off data security lapses
Setting out to alleviate the problem of wide-scale data security lapses, IBM executives said the z9’s sheer processing power can enable encryption to be applied at every stage of data transfer.
Underlying growing public concern about recent data security lapses is a basic shift in how businesses are using computers to collaborate and share information with other organizations, rather than mainly managing in-house data like the latest store transactions or a banking machine withdrawal.
Mainframes were nearly written off for dead when server farms composed of lower-cost Intel or Unix machines from rival like Sun Microsystems Inc. were all the rage in the Internet era.
“For IBM, the mainframe is the mother of all product cycles,” said Mark Stahlman, an analyst with broker Caris & Co. ”We are back into the old-school technology business where the product cycle is the most important driver of growth,” he said. The same holds true for IBM rivals such as EMC in storage, Hewlett-Packard in printers and Sun in servers, he added.
But growing demand by big companies and government agencies to consolidate internal business and e-commerce operations have spurred a revival. After a decade-long slide, mainframes began gaining market share in 2002 again against rival server computers from Hewlett-Packard and Sun Micro.
And while the majority of IBM’s roughly $90 billion revenue now comes from computer services and consulting, mainframes operate as the epicenter around which the company offers a range of software, storage and outsourcing services. Mainframes deliver one-third of IBM sales and perhaps more in profit.
“Customers have simply been sitting on their hands waiting to write checks for the new hardware,” Djurdjevic said. “You can expect revenue and share gains in the fourth quarter and 2006 largely as a result of the z9.”
