Martin Hingley's Blog

IBM zEnterprise Highlights Q310

• Introduces a new high-end server with unprecedented performance
• Is heavily integrating its Power 7 blade servers
• Will launch integrated System x blades in 2011 – but is not supporting Windows
• New levels if automated blade and workload management addressed with the URM
• Is building workload-specific machines, starting with the Smart Analytics Optimizer
• IBM is moving towards a more vertically-integrated approach

IBM announced its new 11^th generation mainframe today . This has been long awaited by its customers, who have been slow to purchase the older hardware in anticipation. Coupled with difficult times in the Finance sector – by far the biggest vertical market for these servers – and the recession IBM must be hoping for a significant upsurge as a result. I thought it was a good time to look at the development of IBM’s mainframe business as well as the new machines and make some comments on the direction the company is taking.

What Is IBM Introducing?

IBM has announced a number of systems, software and other items today. In particular:

• The z196 server – as usual IBM is launching the biggest system first; this mainframe has 96 5.2GHz processors and has a raw performance of over 50 Billion instructions per second (Bips)
• The zEnterprise BladeCenter Extension – it is integrating its blades heavily into the new machines, starting with Power 7 servers (running either its AIX Unix or Linux); it will be integrating its System x blades at the beginning of 2011; Microsoft Windows is conspicuously absent from today’s announcement
• The Unified Resource Manager (URM) – this combination of software and firmware allows automated integration and management of attached blades and their associated workloads; it is also designed to help with network security; IBM claims that it can handle up to a 100k virtual servers on a single system
• The Smart Analytics Optimizer –IBM is updating this workload-specific ‘appliance’, integrating it fully with the BladeCenter Extension and the URM; when coupled with software such as its BD2 10 (currently in beta test), its Cognos Business Intelligence and SPSS predictive analyser it will offer significant performance improvements
• Multiple Software Enhancements – these include Tivoli, Rational Developer, CICS and IMS introductions

ITCandor has attended a number of pre-briefings on these introductions and is impressed with the significant investment and attention to detail. While IBM mainframes are relevant to only a small proportion of actual or potential server users, they remain at the heart of most large Finance industry transaction processing.

By concentrating on specific workloads, automated management and heavily integrating these systems IBM should be able to improve the performance significantly. I can imagine that VISA of instance (a System z reference customer) could make good use of these combined resources to analyse its business at the point of transaction. However it also shows that we have moved a long way from horizontal integration and Open Systems; IBM’s mainframe business proposition involves continued long-term investment in increasing amounts of its own software, hardware and service.

What Does This Mean For IBM’s Server Business?

We’ve included a view of IBM’s server revenues by platform and quarter in Figures 1 (growth) and 2 (the absolute revenues). In both cases we have shown the rolling Q4 totals, which takes out the significant seasonal peaks and troughs of its server sales. Figures to the left hand side of the charts show values derived from IBM’s quarterly financial results, while those to the right include our forecasts for the quarters to the end of 2011.

IBM needs its new servers to be a runaway success because this business has suffered badly for a number of years. IBM’s customers, made up mainly from large companies (those with >1k employees) have been tended to cut capital expenditure strongly during the downturn. We have noted elsewhere that increased System x sales have made up for a period of anticipation for both its new Power 7 and mainframe launches.

Our forecast is positive for IBM – in 2010 we expect it to retain its server market share around the 22.5% level, although it will most probably continue to lose share to HP – a vendor better able to tap the demand from small and medium businesses.

We expect server hardware revenues to grow positively for the first time in a long while by the end of 2010 and the growth rate of mainframes to overtake System x half way through 2011.

Some Conclusions – Back To The Future

We have coined the term ‘matrix integration’ to describe the developing strategies of vendors such as IBM, Oracle, HP and even Apple in its own way. As they acquire numerous smaller specialists and build increasingly integrated solutions, so it feels as if we’re travelling back to the 1980s. The ‘horizontal market’ had advantages in offering real supplier choice at multiple layers of the ITC market and we expect there will be a growing feeling of unease among many users about the resulting lock-in of ‘proprietary’ solutions. If you’ve got time, why not read our earlier analysis.

Coming back to IBM’s mainframes there are clearly ‘Open’ elements such as the integration of Linux and third-party management software, however these have less relevance than in recent years. It’s the integration of automated systems management and concentration on server workloads which will define the success of the new machines. The elements announced today are impressive, but their success will be bracketed by the continued uncertainty of the world economy.

Are you an IBM mainframe user? Have you been waiting for these systems? As always please let me know by commenting on this article.

Filed under: IBM, Server Tagged: | Power 7, System x, System z, Unified Resource Manager, URM, z196, zEnterprise, zEnterprise BladeCenter Extension