In spite of appearances to the contrary, the hardware division's still pretty important to IBM. It must be, or the company wouldn't have bothered spending a lot of time over the last month punting the goodness of its big iron product lines. In particular, the company's under a bit of competitive pressure right now, so it's keen on shouting about a resurgence of interest in the good old mainframe.
So what's going on?
For the past ten years or more, IBM has presented itself as a services as much as a hardware company -- even though it's still one of the biggest software companies in the world. The $3.5 billion acquisition of PricewaterhouseCoopers' global business consulting and technology services unit in 2002 cemented Big Blue's image as a further distancing from its hardware roots -- even though, interestingly, the service division still barely figures in the company's official history.
But behind the headline-grabbing events, such as the sale of IBM's PC and notebook division to Chinese company Lenovo, Big Blue still makes a lot of high value hardware.
The figures bear this out. HP is keen to present itself as the biggest maker of servers which, on a per-unit basis it is, according to Gartner's latest figures. They put HP as having shipped 26 per cent of all servers in the third quarter of 2006, while IBM comes third behind Dell with 16.3 per cent.
But look at the revenues, and the picture changes. IBM's leading 33.7 per cent share of the server market by value -- a share worth almost $4.4 billion -- tops HP's 25.3 per cent by a significant margin. Dell by comparison took just 10.8 per cent of the revenues.
What's more, according to Gartner, IBM's doing particularly well right now. "In revenue terms, IBM regained the number one spot from HP, reversing the number one and two positions from the second quarter. IBM’s server revenue increased 12.8 percent year on year," said the research company.
So what's driving this? IBM's VP of its System z mainframes Mark Anzani said that 2006 has seen a resurgence of interest in the mainframe. According to him, more customers than ever are moving in this direction for the first time. "Normally, we'd see two or three new customers per year but now we're into in double digits, and it's increasing quarter to quarter," said Anzani.
Anzani reckoned that the reasons behind this trend are down to what he described as "the fundamental strengths of the mainframe: its security characteristics and its efficiency because of virtualisation, which in turn brings predictable throughput, energy efficiency, and availability."
There's a number of factors behind this, said Anzani, including increasing reliance on computerised business logic, bringing more information online. As a result, businesses are relying on that data to make business process decisions, so availability is key.
He highlighted the importance, from his customers' point of view, of energy efficiency, not just from cost or environmental perspectives, but also because many data centres are at the limit of power they are physically capable of drawing from the grid.
As a result of that and from an environmental point of view, energy efficiency and lowering consumption are now top of buyers' minds, said Anzani. As you'd expect, he sees the mainframe as very efficient from the point of view of a given workload. "The most cost effective way to move parcels is on a container in a truck, not moving parcels individually", he said. And for Anzani, mainframe virtualisation means server images with very high levels of utilisation.
As an example, he cited a mainframe with a single processor that could support 30 to 40 virtual servers running Linux. "It takes much less energy for that workload compared to a distributed environment," he said, 'distributed environment' being IBM mainframe-speak for a bunch of smaller servers. It's easy to set up a bunch of virtual machines in a few minutes, reckoned Anzani.
The L-word is key here: the popularity of Linux in the enterprise is growing and, rather than install a whole bunch of separate machines to serve files and Web pages, it makes huge sense, from management and cost perspectives, to consolidate those functions in virtual machines.
Mainframes are easier to use than before too, said Anzani. "We're putting energy into simplifying the System z environment system especially interaction with the machine. we want to give it the look and feel of other platforms, and make it familiar to those coming out of computer science courses," he said.
"For example, we're developing Web front ends, GUIs, and automation of administrative tasks such as, for example, workload partitioning, or code updates."
Further, he said, "security is more important than ever", an attribute built into the mainframe environment because of its highly centralised architecture, and a key element behind the growth of the IBM mainframe in recent years, according to Anzani.
From a legislative point of view, the mainframe means both that protection of personal data in the form of centralised storage, and techniques such as encryption are easier. "And for regulatory compliance, you need much more protection on that data not just encryption, but also more copies for disaster recovery," he said.
"We also have other developments that make it more efficient to move data. We have new speciality engine that handles personal data, for instance, so that the processing logic happens on the compute-intensive platform but the logic of finding it isn't charged to the mainframe, which means that all the administration can stay in one place."
The final killer in Anzani's advert for the mainframe was the way that such systems needed fewer staff. Typically, he said, for every 10 servers you need one member of staff, and it grows linearly as servers proliferate. But with mainframes, once it's all running, staff numbers don't grow as workloads increase. "The more work you put on it, the more efficient it is, according to Gartner's finding," he said.
What the mainframe isn't so effective at is high performance computing. Workloads for the typical mainframe include core business workloads with very large transaction loads in industries such as brokerage and other financial services that rely, for instance, on databases such as DB2, CICS, and IMS, reckoned Anzani. "Workloads that are very compute-intensive with very high volume processing are more suited to the pSeries," he said.
Despite that, competitive pressure has prompted IBM steadily to reduce the entry price for mainframes over recent years, which has helped the sale chart no end. This move has been seen largely as a response to campaigns being led by HP and others to convince medium and large enterprises to buy their Itanium-based systems rather than an IBM mainframe.
And perhaps the biggest problem for IBM is that, these days, it's a bit isolated. There's precious little competition in the mainframe market, with Big Blue commanding some 90 per cent of it. Fingertip holds on this relatively slow-moving business are retained by Unisys, Hitachi and Fujitsu, along with Groupe Bull. Most adopt industry-standard technology to power their systems, while IBM retains its R&D spend to keep it apart from the competition.
However, there's quite a lot of interest in the segment just below the mainframe. HP is there with its Itanium-based Integrity systems -- originally Tandem. Stratus Technologies also makes highly fault tolerant servers -- the company trumpets the ability of its hardware and software combination to resist failure. And almost every other mainstream hardware maker plays s there too -- including IBM of course. And all those companies are very keen to position their products as mainframe alternatives.
So maybe the time is coming when, from a price perspective at least, the lines between top-end mid-range machines and the mainframe begin to blur. And wouldn't the likes of HP love that?
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