IBM Expands Mainframe Business With New Models And Costumers
August 28, 2012

IBM Expands Mainframe Business With New Models And Costumers

John Neumann for - Your Universe Online

They may seem like an anachronism in this day of mobile computing and internet-connected everything but IBM is still in the business of mainframe computers. They are operated by powerful self-designed microprocessors and can be bought new for about $1 million.

The company will unveil a new version of its iconic mainframe computer today, adding new security and data analytics features as it struggles to stem declines in the sluggish market for high-end business computers which are increasingly being replaced with racks of servers, reports MyBroadband.

The declining relevance of the mainframe has been predicted many times over the years. But it has not gone away completely because it has been overhauled time and again, writes Steve Lohr for New York Times. In the early 1990s, the personal computer revolution took off and IBM, wedded to its mainframe-style room-sized computers, was in deep trouble.

To make the mainframe more competitive, its insides were retooled, using low-cost microprocessors as the computing engine. The updated computers have cost IBM more than $1 billion and focus on boosting its computing performance, capacity and features.

“It´s going to be harder and harder for IBM to find new customers and new opportunities for the mainframe,” said Charles King, an analyst with technology research firm Pund-IT.

King and other analysts said existing customers are likely to appreciate the new features but caution that it will be tough for IBM to win new clients as most businesses are already enamored of cheaper technology that is widely considered “good enough” for all but the most mission-critical tasks.

“The mainframe is the most flexible technology platform in computing,” rebuts Rodney C. Adkins, IBM´s senior vice president for systems and technology, who argues that the mainframe is a vital asset to the company because of all the business that flows from it, although they only account for about 4 percent of IBM´s revenue these days.

When all the mainframe-related software, services and storage are included, mainframe technology delivers about 25 percent of IBM´s revenue and more than 40 percent of its profits, estimates A. M. Sacconaghi, an analyst at Sanford C. Bernstein.

Gartner analyst Jeffrey Hewitt explained that current mainframe customers, including government agencies, financial services companies and other businesses that require tremendous computing power, extreme speed and very high reliability for certain tasks are going to stick with the technology, reports Darryl K. Taft for eWeek.

Yet he said that demand will grow at a brisk pace for less-expensive servers running on x86 chips from Intel and Advanced Micro Devices. Software makers have developed technology in recent years that enables companies to combine those servers into clusters capable of managing some tasks once handled only by mainframes.

"Gartner forecasts that sales of x86 servers will surge 10 percent this year to $39 billion. In the five years to 2016, annual sales of those machines will climb a total of 33 percent to $47 billion, or more than 10 times the mainframe market according to the firm's forecasts," according to Jim Finkle of Reuters.

“Mainframes are extremely reliable,” said Ruslan Stepanenko, chief information officer of Comepay. “It keeps working even when the transaction load is very high.”

Last year, the Senegal Ministry of Finance bought two IBM mainframes to help monitor all the imports, exports and customs duties at the African country´s 30 border checkpoints.

Performance, security and reliability were the main reasons for selecting the mainframe, said Momar Fall, a manager and mainframe technical specialist in CFAO Technologies, an IBM partner in Senegal.

Another advantage in a developing nation, he said, is that the mainframes are constantly communicating over the internet with a remote IBM support center, “So seven days a week, 24 hours a day, IBM is looking after them,” Mr. Fall said.