IBM Not Out Of Tricks Just Yet

In a world where many believe that IBM is a company not willing to make concessions to gain market share, the company proves it can compete, and wants to increase market and profits. To do it, the company will make moves to accommodate the needs of the current crop of prospective customers.

The story in ComputerWorld shows that the day of the mainframe is definitely not over, and that they are not the behemoths that most people picture when hearing that word.

IBM has expanded its server lineup with a new mainframe system designed just for Linux that may be aimed, in particular, at higher-end x86 systems.

The new system uses IBM’s specialty Linux processor and runs either Novell SUSE or Red Hat systems. It does not use the mainframe operating system z/OS but includes mainframe management software as well as IBM’s z/Virtual Machine system. Together, they constitute the company’s latest “solutions edition,” or what IBM says are lower-cost, integrated stacks for the mainframe.

There are two servers in the Enterprise Linux Server line, and the starting price on the lower-end model, with two processors, is $212,000; it scales up from there. This system is intended to be competitive with large multicore systems used for virtualization consolidation.

The system may not seem like a deal, but it certainly is one. As IBM has been on the block since the beginning, it knows how to offer complete solutions at competitive prices. There is also that famous IBM support – the kind found nowhere in the PC industry – nowhere.

The Linux-specific line is IBM’s latest effort to reduce the cost of its mainframe. It’s high-end z10 Enterprise Class system can cost millions. But several years ago, IBM started producing a smaller model, the z10 Business Class, which was initially offered at about $100,000, to compete with a broader range of enterprise servers.

Reed Mullen, the System z virtualization lead product planner, said that potential customers include companies that want to virtualize a lot of systems but aren’t necessarily mainframe customers.

Among the arguments that IBM will make for this system is its ability to dynamically add capacity in a running environment, Mullen said.

IBM expects to upgrade its z10 next year, in keeping with its three-year upgrade cycle. IBM’s mainframe sales have been off 26% in the most recent quarter compared with the same quarter last year, and server sales have been flat across the board.

This is another reason that you can bet that bargains are being had by those who sign up with IBM. The company hates losses, and is not going to stand for it for long. The company has survived through all the other recessions, it will find ways to move successfully through this one.

Brad Day, an analyst at Forrester Research Inc., said IBM has been working to reduce the cost of its mainframe software, which can account for half the cost of a mainframe, including personnel, energy and maintenance. With this new hardware, IBM likely wants to compete with x86 systems with 16 processor cores and above, he said.

Anything that lowers the life-cycle cost of the system is critical, and by focusing on Linux, IBM is “putting meat to where most of the workloads are going,” Day said. “About half of the new growth of applications on mainframe is led by Linux.”

IBM and Red Hat sounds like a combination ready to take on all comers. Between the two, they know how to make the customer happy. The only complaint many have is that there is no similar solution for the small business.  IBM knows its customer base, and works to be the best it can be in the space.

Makes me wish for the days when IBM was in the PC business. You only have to look back at some of the things brought about by IBM to know it would be a much better PC market with IBM in it – Lenovo is not the same, and never will be.

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