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New IBM Mainframe Enhances Encryption

Posted on: Wednesday, 27 July 2005, 12:00 CDT

International Business Machines on Tuesday introduced a new type of mainframe computer that is not only twice as powerful as its predecessor but also is intended to make it easier for corporations to encrypt vast amounts of customer information and to bundle the workloads of many smaller computers onto an IBM mainframe.

The new line, the z9, is the result of a three-year, $1.2 billion development effort involving 5,000 IBM engineers. Maintaining the health of the mainframe business, which accounts for a small percentage of revenue these days, is still important to IBM. The big machines, which typically cost several million dollars, pull in a lot of other business for IBM, including sales of software, services, financing and other hardware, like storage systems, analysts say.

With all the related sales included, the mainframe franchise represents about a quarter of IBM's revenue and nearly half its operating profits, A.M. Sacconaghi, an analyst at Sanford C. Bernstein, estimated. So sustaining and, if possible, expanding the mainframe business is a vital part of IBM's strategy. Over the years, IBM has done a remarkable job of renewing the mainframe despite predictions of its demise by industry analysts and rivals after the arrival of the low-cost computing technology of the personal computer industry.

The threat from server computers, powered by inexpensive PC- style microprocessors, is increasing, and companies like Hewlett- Packard and Sun Microsystems have sizable teams focused on getting corporate customers to abandon their mainframes.

Yet IBM has consistently made its mainframes more cost- competitive by updating the technology and by expanding their uses beyond the traditional role of processing huge volumes of transactions for financial institutions and other corporations, 24 hours a day, year in and year out. Analysts say the new z9 line, and new mainframe software also announced on Tuesday, represent another step to reinvigorate the big machines that still occupy the heart of many corporate data centers.

"IBM is doing what it needs to do, which is to continue to invest in the mainframe to take on new workloads, so it's clear it is not an old technology and that the mainframe is not dead," said Clay Ryder, president of the Sageza Group, a research firm.

In recent years, IBM has opened up its mainframe technology to different operating systems and modern software technology like the Java programming language and Web services for handling data on any computer system. Analysts say the z9 goes further in that direction.

A new version of IBM's virtualization engine, for example, will make it easier to run and manage hundreds or thousands of server systems off the mainframe. The technology creates virtual machines software that mimics the performance of a stand-alone computer. For example, hundreds of instances of the Linux operating system, each running applications like e-mail or e-commerce Web sites, could be pooled on a single mainframe, which would then juggle them all.

"Instead of buying a bunch of servers, corporate technology managers can create ones almost on demand by punching keystrokes on a desktop console in the data center," said Bob Djurdjevic, president of Annex Research, a consulting firm. "That kind of thing is a big deal for corporate customers." The new IBM mainframe is also designed to make it easier for companies to increase the security of customer information stored in their computers and to manage data security. Encrypting each personal record can take huge amounts of computer processing for companies that have millions of customers like banks, credit card companies, health insurers and publishers.

IBM executives say the z9 can overcome that challenge with its extra processing power and new security technology for encrypting personal data not only on the mainframe but wherever the information is stored, including computer tapes and disks. The loss of unencrypted customer information on tapes and disks has raised identity theft concerns in high-profile cases recently, including such losses at a Citibank division and Time Warner.

Source: International Herald Tribune

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