IBM announced third-quarter 2010 net income of $3.6 billion, compared with $3.2 billion for the third quarter of 2009, an increase of 12 percent driven by significant increases in systems and technology sales and IBM services as well as a boost in growth markets.
Mark Loughridge, IBM's senior vice president and chief financial officer for finance and transformation, said IBM's Systems and Technology Group (STG) had its best quarter in six years. Revenues from IBM's Systems and Technology segment totaled $4.3 billion for the quarter, up 10 percent from the third quarter of 2009. Systems and Technology pretax income was $327 million, an increase of 46 percent. Systems revenues increased 8 percent. Revenues from System x increased 30 percent. Revenues from System z mainframe server products increased 15 percent compared with the year-ago period. Total delivery of System z computing power, as measured in MIPS (millions of instructions per second), increased 54 percent.
In this interview, Tom Rosamilia, general manager for Power and z System technologies in IBM's Systems and Technology Group sits down with eWEEK senior editor Darryl K. Taft to discuss the role of hardware at IBM and the re-emergence of the mainframe.
eWEEK: In this most recent quarter, the third quarter of fiscal 2010, the mainframe returned to growth. To what do you attribute this?
ROSAMILIA: In the third quarter of 2010, the mainframe grew revenue by 15 percent and MIPS grew 54 percent-the highest growth in 6 years. The key factor leading to this growth was the launch of the new IBM zEnterprise System, which shipped in the third quarter This growth makes it one of the most successful mainframe introductions in recent years. We also saw strong growth of mainframes in emerging markets.
The new zEnterprise System represents more than $1.5 billion in IBM research and development and more than three years of collaboration with some of IBM's top clients. It's the most powerful IBM system ever and represents a radical redesign in its ability to allow workloads on mainframe, Power 7 and System x servers to share resources and be managed as a single, virtualized system. That is critical as customers struggle with integrating their data centers.
eWEEK: How does zEnterprise help clients deal with new business challenges?
ROSAMILIA: Big challenges like energy and sprawl have languished for decades. Data centers are made up of "island communities" that simply coexist rather than work together. Meanwhile, new demands are emerging including the explosion of data and increasing concerns about privacy and security. The provocative new idea represented by zEnterprise was to bridge the divide by extending the unique service capabilities of the mainframe -- always on, secure, bullet-proof, 100 percent utilization and unparalleled efficiency -- to other systems. The new architecture brings the strengths of the IBM mainframe to workloads running on IBM System x and Power Systems enabling the data center to be centrally managed. It also allows workloads to remain on the platform optimized for processing a specific task.
eWEEK: You mentioned the mainframe growth in emerging markets. That seems counter-intuitive. Why are businesses in emerging markets buying mainframes?
ROSAMILIA: This trend started to emerge about a year ago with clients including the First National Bank of Namibia, Comepay in Russia, as well as BC Card and Dongbu Insurance in Korea all moving to the mainframe for the first time. We are already seeing this emerging market momentum carry over to zEnterprise, with customers in Brazil and Mexico already using the new zEnterprise System.
What we're seeing are clients in these markets invest in mainframes to compete more effectively on a global stage. It's all about them using mainframes -- with their world-renowned security, availability, and reliability -- to build out their infrastructure, across a wide range of industries. Additionally, as these hyper growth markets see the need for scale the mainframe delivers. Now with zEnterprise, clients can scale both up and out.
eWEEK: What is driving interest in clients running new workloads on the zEnterprise for first time?
ROSAMILIA: There are two key areas driving new workloads onto zEnterprise. The first is around cloud computing. As cloud computing takes hold, we see a key role for the mainframe in both private and public clouds. The second is around Linux on the mainframe, especially in emerging markets. Many clients in emerging markets built their data centers on a range of different platforms. As their businesses grow they are seeing the mainframe as an attractive option to consolidate multiple Linux systems on a single mainframe server, which affords them scalability for additional room for growth and other features such as security and reliability not found in other platforms.
eWEEK: zEnterprise started shipping last month. What's next for the platform?
ROSAMILIA: Later this quarter we will start to ship the capability to extend mainframe governance to additional platforms integrated into the zEnterprise System architecture. This is made possible by new software called Unified Resource Manager that manages how the additional platforms are integrated and managed by zEnterprise as a single virtualized system.
We will first see the functionality for select IBM Power blades to be connected to the new IBM zEnterprise BladeCenter Extension, or zBX. We will also ship IBM Smart Analytics Optimizer for zBX to accelerate the performance of complex analytic workloads at a lower cost per transaction.
eWEEK: When will the integration workloads on additional platforms be available?
ROSAMILIA: In the first half of next year we plan to announce the availability of additional general purpose blades for the IBM zEnterprise BladeCenter Extension including select IBM System x-based blades running Linux. Additional workload-optimized blades will include IBM DataPower, which improves Website and network performance.
eWEEK: IBM moved away from using water to cool mainframes in the 1990s. What drove the reintroduction of water cooling as an option for zEnterprise customers?
ROSAMILIA: When mainframe servers became more energy efficient in the 1990s, data center air-conditioning was sufficient to cool them. This move away from water--which at the time required cumbersome, independent water cooling systems--actually expanded the market for where mainframes could be used. For example, we started to see mainframes in smaller data centers not previously equipped with independent water cooling systems.
However, emerging realities of today--including rising energy costs, explosive growth rates of data and increased pressure to reduce operating costs--are straining data centers now prone to hot spots that require additional energy and costs to cool.
These factors led to offering water cooling as an option for zEnterprise clients. Water is about 4,000 times more efficient than air cooling and is an ideal option for data centers prone to hot spots or as part of an overall energy efficiency initiative. A key benefit of this option is that the zEnterprise System connects to existing data center chilled water used for air conditioning. Complicated independent water cooling systems of the past are no longer required. Water is piped directly to the hottest part of the server and resulting warmer water can be piped out of the data center to cool and recirculate. This option can reduce energy use by up to 12 percent and removes more than 70 percent of the heat from the zEnterprise System.
Source Citation
"IBM The Mainframe is Back Baby 204924." eWeek (2010). General OneFile. Web. 14 Dec. 2010.
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