Learning z/OS the Cloud(y) Way

Marist College is accepting new students for its z/OS professional courses. You can learn z/OS from the comfort of your own home — the courses are conducted online. The deadline for enrollment for the spring term is February 6, 2012. If you miss this term you can enroll for the next term, but why wait?

Class Reunion: "What is a Mainframe?"

Here's an animated video depicting a fictional conversation between two former high school classmates at their reunion. One is now a "genius" bank manager, and the other is a mainframe programmer. One is at least a bit smarter than the other. Enjoy.

IBM Announces 4Q2011 Earnings

Let's get right to the point: the mainframe had what's called a "tough compare" in the last quarter of 2011. A year ago, IBM's System z hardware revenues grew an impressive 69 percent year to year as the zEnterprise 196, with the world's fastest microprocessor, won tremendous favor among existing and new customers alike. That was probably the mainframe's best quarterly hardware revenue growth performance in history, at least when excluding the mathematically infinite growth rate in the long ago quarter when IBM shipped its first mainframe.

Every serious analyst forecasted that IBM's mainframe hardware revenues would be lower in 4Q2011 compared to 4Q2010, and that's what happened. However, there's an interesting and exciting twist. IBM had very nearly the same blockbluster quarter in terms of mainframe hardware capacity shipments that it did last year: MIPS shipments were down only marginally (4 percent). Moreover, the mainframe's gross profit margin was up. Profit is the mother's milk of R&D investment decisions for any corporation, especially a publicly traded one. And, with the application of simple mathematics, it's clear mainframe customers yet again enjoyed substantially lower per-MIPS pricing.

As I always point out when IBM announces earnings — and this time is no exception — mainframe hardware revenues are but a tiny part of IBM's, never mind the industry's, total mainframe-related revenues.

IBM's broader financial results are also quite interesting. While several other technology vendors — including Oracle, HP, and Microsoft — are reporting poor (or at least subpar) financial results, IBM didn't. So far IBM has proven to be remarkably resilient during economic downturns. In fact, there have been many times when IBM has turned recessions and depressions into competitive advantages. In one of the most famous historical cases, IBM's CEO Thomas Watson Sr. refused to reduce the size of his company or cut production during the Great Depression in the 1930s. IBM then was uniquely well positioned to win the new U.S. Social Security Administration's business to solve what was then the world's largest accounting problem. That business strategy was a huge, calculated gamble, but it certainly paid off for the company.

Anyway, this sort of earnings report is exactly what I like to see in a technology company. A company with stable, predictable growth in profits is extremely well positioned to make the long-term investments in research and development to assure a steady stream of exciting, useful technology products at competitive prices, including mainframes and mainframe software. Let's hope IBM keeps up its performance, but to date they're doing well.

Sweden's Tieto Needs a Mainframe

Several government departments in Sweden were down hard for days.

Strange Happenings in the PC Market

Welcome to 2012, faithful Mainframe Blog readers. The year 2011 is history, and now the results are starting to trickle in. Late last year IBM made some predictions about the next five years. I'd like to spend a little more time analyzing prediction #4 and its relevance to mainframe computing. There are two additional pieces of information available to me after writing that post. One is Gartner's report on 4th quarter PC sales, and the other is some careful observation of my family, particularly my sister, during the Christmas holiday.

First let's consider Gartner's report: PC unit sales fell 1.4% globally in the fourth quarter, and U.S. sales dropped 5.9%. HP's PC sales fell 16.2%. Note that these figures do not include Apple's iPad. If you also take out sales of Apple's Macintosh desktops and laptops, total U.S. PC sales (of Windows PCs) fell by 8.6%. (Apple's Mac sales grew 20.7%.)

Those are startling figures, but they are in perfect agreement with IBM's prediction. If the PC were the only way (or at least the "best" way) to access our increasingly digital world, we would expect the so-called "digital divide" to persist for a generation or more. Instead what's happening is that smartphones and tablets are rapidly becoming the most prominent access devices, while the importance of (and sales of) the PC are diminishing.

And I also observed my sister. She has an iPad and an iPhone. I'm not sure if she has a PC, and I don't think she cares whether she does. And for most of the Christmas holiday period and no doubt beyond she was glued to that iPad. She had everything she needed and more to support both the business and fun aspects of her life. And clearly she found the iPad nearly effortless to operate and worry-free. It's hard to break an iPad, in either software or hardware terms. She, and millions of other people like her, across all countries and social strata, are finding non-PC mobile devices much more suited to their lifestyles and needs. And this change is occurring very quickly.

Thinking as an architect, I was also struck by how much she was able to do in such a short time. The intensity of her iPad use was quite impressive and not, it seemed, a temporary phenomenon. As I mentioned previously, the infrastructure required to support the information delivery and transactional requirements of all these cloud-managed mobile devices is going to be astonishing. And it'll be mainframes of one stripe or another that'll do most of the heavy lifting.

I'm very bullish on the future of the mainframe as we begin this new year and enter the post-PC world. Be sure to keep stopping by in the coming weeks and months as we continue to explore the growing world of mainframe computing.

Happy New Year!

New WebSphere Application Server Liberty Profile

A large and growing percentage of mainframes run Java^TM code. Even when you license only z/OS, you get Java at no additional charge. CICS Transaction Server, IMS, DB2, WebSphere MQ, Linux on zEnterprise — the list goes on and on — all support Java. If you want to write or run Java on the mainframe, there's nothing stopping you. Go for it!

I'm quite pleased to see that IBM has announced its beta program for WebSphere Application Server Version 8.5. One major new innovation is the WAS Liberty Profile which supports both z/OS and Linux on zEnterprise. The Liberty Profile for z/OS is tiny (by today's and yesterday's standards): the download is only 32 MB. It starts quickly and consumes very little memory. And you can download the beta version now to try yourself. Of course, anything that can run on the Liberty Profile can also run on WebSphere Application Server if/when you're ready. That's because the Liberty Profile is WAS, but with as-needed/where-needed function delivery, depending on your application's requirements. And yes, of course, you can access all the helpful JZOS methods from the Liberty Profile for z/OS.

I expect this new WebSphere Liberty Profile will be extremely attractive to mainframe customers and to mainframe software developers. (Did I mention it's tiny?) Please go give it a try today and let IBM know what you think.

5 Predictions for the Next 5 Years

In keeping with the season of resolutions and predictions, IBM has gazed into its crystal ball to forecast five innovations that will alter the technology landscape within five years. So let's spend some time considering a couple of these predictions and their impact on mainframe computing.

#2: You will never need a password again. Technically that's no problem whatsoever if you have a mainframe and hasn't been for many years. IBM has done a very good job preserving and extending the mainframe's leadership, positioning the mainframe as the definitive Enterprise Security Hub (or ESH if you like). For example, credit and debit card systems are already getting a lot smarter thanks in large part to the mainframe's security innovations. In an ever more interconnected era (see below) when security is becoming ever more important, more businesses and governments are turning to mainframe-based solutions. The only question in my view is whether mainframe professionals will lead or follow this trend. I vote for the former.

#4: The digital divide will cease to exist. Universal mobile access to computing is going to favor the mainframe. First, there's going to be a direct effect on transaction volumes in existing banking systems, to pick an example. I'm hearing lots of reports that's precisely what's happening, even with only a fraction of the world using smartphones at this point. Second, there will be heightened security requirements (see above). Third, the greater the audience depending on mobile access for services, the greater the cost of service interruptions, thus favoring more resilient systems and solutions. Fourth, the greater the demand, the greater the need for massively scalable systems, i.e. mainframes. That's due to the need for bigger central systems of record as well as worsening data center resource problems in procuring enough space, power, and cooling. The world's telcos, for example, are now seriously rethinking their entire infrastructure which is becoming too costly and unsupportable, after a couple decades of largely unrestrained build-out.

#5: Junk mail will become priority mail. I'm not so sure about e-mail, but the central point here is that transactions are becoming more complex, with more and more heavy information analytics associated with core business processes in order to tailor services much more precisely to customers. That's going to drive the need for massively scalable systems with tight integration. Sound familiar? IBM is right at the vanguard of that trend, with the DB2 Analytics Accelerator as a preeminent example. That technology alone is making whole new analysis-heavy applications possible that were simply never possible before.

What's your forecast? My immediate forecast (or at least wish) is for all of our readers to have a safe, healthy, prosperous, and happy new year.

Oracle Had a Rough Quarter

Oracle reported its earnings for its second financial quarter, which ended November 30^th. One of the big headlines: the company's total hardware revenues crashed below $1 billion to $953 million, down 14% year over year. Its software business was essentially flat on a revenue basis.

Oracle started shipping its new SPARC T4-based machines in late September. We would expect to see a substantial increase in revenue when a new model is introduced, but the opposite happened. Oracle's CFO explained that there were product transition problems which accounted for the drop. Perhaps, but Oracle is predicting that next quarter hardware revenues will drop again from 4% to 14% (constant currency). Keep in mind these figures include Exadata and Exalogic servers, which Oracle claims are growing. (CEO Larry Ellison said Oracle sold "over 200" of those servers combined in the quarter. More on that in a moment.) The bleeding continues unabated.

Another thing Oracle's CFO said should be disturbing to potential customers: "...we believe we could be back at pre-Sun operating margins shortly." If your revenues are declining, how do you increase operating margins? That's simple: you cut costs. Research and development are costs, and they should be big costs if you want to compete and win in the server market.

On the software side, Oracle has had some price increases, so a flattish performance there is also a problem.

Richard Sherlund, an analyst from Nomura Securities, asked a great question on Oracle's earnings conference call. In fact, Oracle promptly ended its call after his question. Sherlund asked, "Larry [Ellison, Oracle's CEO], could you reconcile these numbers you gave for Exadata and Exalogic? I think it adds up to 1,000 or 1,100. Didn't you say 3,000 just recently? And I think the company originally guided to 2,000." You can read what Oracle's executives said in reply.

In part of Mark Hurd's reply, he claimed "...we are taking huge amounts of share from IBM at their high end." IDC and Gartner keep close tabs on the server market, and they report exactly the opposite is happening. Maybe Hurd misspoke and will revise and extend his remarks.

European Commission Satisfied with IBM's Practices

As The Mainframe Blog and other outlets reported this past September, the European Commission and IBM reached agreement on a competitors' complaint concerning mainframe hardware maintenance services. IBM proposed changes in how it supplies mainframe spare parts and technical documentation. However, the European Commission wanted to hear comments from interested parties about IBM's proposed solution.

After that comment period, the European Commission is still satisfied.

In separate action, the European Commission is seeking more information on whether Google's proposed acquisition of Motorola Mobility runs afoul of European competition rules.

Japan's NTT Data Is Rock Solid with zEnterprise

NTT Data is the largest system integrator in Japan. In this video a couple of NTT Data's professionals discuss the new banking solution they're building for the Bank of Japan and the exceptional attributes of zEnterprise, z/OS, and WebSphere middleware products on z/OS.

Migrating Off the Mainframe

This topic comes up often. Too often. Those of us familiar with the mainframe get tired of repeating the facts for the resurging neophytes. (Methinks it must be a Microsoft or Oracle conspiracy ... they want to wear us down. Yeah, that's it.)

Over on LinkedIn there is a flame fest roaring through the "Mainframe Experts Network" group. One Frank Trovato innocently (if vaguely) asked ...

"Has anyone successfully migrated off mainframes?"

The responses include marketing and misinformation, mixed in with a hard-to-find smattering of real engineering. For my part, I argued that the S/390 line (or "System z") is more suited to certain workloads than a Pentium. This is no slam of other architectures. (Although one French Canadian continues to equate high dollar hardware with a historic hobbyist system.) Surely nVidia and Radeon are better for graphics than a regular INeL *86. Clearly ARM does better in your phone than a PPC chip. This is nothing more or less than "right tool / right job" pairing. Apply the same rationale to the central processor. Duh.

By coincidence, another noise in the web sphere is the demise of email at a major IT support house. If things were that simple, it might be no big deal. The "solution" seems to be "one size fits all" along with "all or nothing" replacement. People ... [sigh] ... THINK. This is not rocket science. This is not brain surgery. No time to discuss email "to be or not to be" here.

Data Mover

A good way to look at the IBM mainframe is as a "data mover". (Careful ... if you use the phrase "big data", that only implies large addressability and Sir Jeff the Solar ... er, uh ... Sir Jeff the Scholar will tell you things you may already know about other 64-bit systems. That's not the point!) We're talking about input/output. The mainframe has employed channelized I/O since the original S/360. (Even prior, but the S/360 was probably the first to be quite so general ... at least in the IBM universe.) As an example, consider DEC. Once upon a time, they wanted the world to see their VAX line as a "mainframe". These were the days before any negative context. I loved the VAX but was truly offended by their abuse of the label "mainframe". DEC marketeers turned technical terminology into marketing mumbo-jumbo. The VAX hardly had channelized I/O. (Did have nice I/O vector spaces ... but that's a little different.) So the word mainframe in my dictionary means a computer with a robust isolation of input/output from other work. It can move big chunks of data. It can move big data in its sleep. Literally.

Trovato's question "Has anyone successfully migrated off mainframes?" in other industries could be stated as "Has anyone successfully migrated off grid power?" or "Has anyone successfully migrated off semi-trailers?" or "Has anyone successfully migrated off central A/C?". At my house, we still use grid power (sometimes it goes out) and we expect to always use central A/C. We don't directly use semi-trailers. I do have a 3/4 ton Chevy Suburban balanced against a Toyota Prius. More of that "right tool / right job" pairing.

There Can Be Only One

Well ... today, there is only one, sadly.

These days, you can only get "a mainframe" from IBM. Things were not always this way. There was a time when you could get plug-compatible (IBM compatible) computers from other hardware makers. The point is not so much compatibility with Big Blue but the availability of machines supporting that slick ISA for big data operations. (Ooopppsss... I said it again. Sorry Jeff.) The biggest problem with the mainframe is the single source for such hardware. Thankfully, we have Unix and Linux, so while the hardware has vendor lock-in, at least the environment does not.

IBM won the war ... or did they? As a customer, I don't like single source supply. It matters less with workload flexibility (the victory of Unix).

All About Performance

What then is the goal when considering a computing platform? Mainframes offer performance. Okay ... there is more to life than performance, but performance is a Big Deal. I work for a performance company. (Full disclosure: Velocity Software. Some have heard our leader's slogan, "If you can't measure it, I'm just not interested.", tm.) We do performance analysis and reporting for the z/VM system. It's all the more important because VM hosts other environments. (And should host more! but I digress.) Years ago, I didn't care about performance per se. But it has gotten to be a Big Deal for me as I see it becoming a Big Deal for a lot of Big Companies. (If I say "Big Deal" in caps often enough, can I trade mark it?)

Everyone should do this: Look at the facts. Figure out if the machine does what you want. Where it fails, make changes. Avoid ROT. Get real advice. Then measure again! And if you put all your eggs in one basket, be prepared for the bottom to drop out.

No Single Metric

Never let the discussion come down to just one thing. The differentiator may be just one feature. That which tips the scale might be just one attribute. But your consideration should always cover several points before you get to "the one".

Focus only on a single measurement and you'll go out of business. One measurement at a time? Yes. But only one ever? Bad idea. Even the highly respected "customer satisfaction" yard stick will not keep you going if you don't reign in costs. (This is why I work for Velocity: performance is one of those costs too easily ignored.)

Has Anyone?

Frank, it's an excellent question! As others have answered, "has anyone?". Yes. Yes they have. You bet! Have all migrations off the mainframe gone well? Hardly. Some have been catastrophic. Anyone asking today "should we?" deserves an "it depends" along with some sound advice.

A smarter move would be to evaluate individual computing workloads. Don't make it an all-or-nothing shift. Demand flexibility and interoperability from your vendors and support organizations. Move tasks to where they work best. (The wise executive would do the same with staff, rather than RIF them with a broad sword.) (Sorry ... my bad mood is showing.) You may find, as many have, that some workloads should move TO the mainframe. (Linux makes this especially appealing, but there's plenty of work to be shoved over to z/OS.)

There is no "one size fits all" and the bigger your IT needs grow the more you'll want to mix different architectures. It's common sense. You can run a whole organization on a mainframe. Does it make sense? Not in my book. You can run a whole organization on a PC. Does it make sense? Only if you believe the opinions of the inexperienced or the knee-jerks.

-- R; <><

An Update on the Relative Value of IBM v. Microsoft

As I mentioned this past September, IBM passed Microsoft in market capitalization. In other words, the financial markets assigned a greater total enterprise value to IBM than to Microsoft, based on the stock price multiplied by the total number of shares outstanding for each company. Stock prices are quite volatile, but it's interesting to see that the gap has widened. At the close of trading yesterday, Microsoft had a total market capitalization of $215.35 billion, while IBM's market capitalization was $228.71 billion. Translated into percentages, IBM is more than 6% more valuable than Microsoft.

Market capitalization represents the stock market's assessment of a publicly traded company's value, at least for the part of the company that's publicly traded. (Some companies are privately held with only a relatively small amount of stock publicly traded, but that's not the case here.) That value is, in turn, based on the market's assessment of the net present value of the company's earnings. The higher the expected profit (and profit growth), the higher the market capitalization should be, at least over the medium to long term. Therefore, at this moment, the stock market is betting that IBM has a brighter future in terms of profits than Microsoft, on a risk-adjusted basis.

What's particularly interesting to me in this comparison is that IBM's balance sheet, while extremely impressive, is rather different than Microsoft's. Microsoft has a bigger amount of cash (and cash equivalents) on its balance sheet. According to Yahoo! Finance Microsoft has over $42 billion in net cash, while IBM's total debt is actually greater than its cash balance. IBM's debt is a bit misleading because a good part of that is debt from its IT financing division, which is exactly what a financing division is supposed to do and which has no real equivalent at Microsoft. But there's practically zero valuation risk with cash on hand, meaning that the stock market should assign a lot of value to that cash. The stock market does, but it doesn't matter enough: IBM is the more valuable company. Said another way, the stock market doesn't seem to have much confidence that Microsoft knows how to leverage that cash hoard in profitable ways.

I'm compelled to agree, and the news this week reinforces my view. Consider that IBM is using some of its cash to buy Cúram Software. We don't know how much IBM is spending for Cúram, but a couple hundred million is a reasonable guess, perhaps even on the high side. Contrast that acquisition with Microsoft's $8.5 billion acquisition of Skype, which was completed less than two months ago. Is there anyone willing to argue that Microsoft's acquisition of Skype will be more than 42 times more beneficial (in terms of future profits) than IBM's acquisition of Cúram? I'm not willing to make that argument.

Meanwhile, Apple is still the world's most valuable publicly traded technology company with a market capitalization of $361.62 billion at yesterday's closing price. And with that statistic I'll conclude this blog post, written from my new MacBook Air, because my iPhone is ringing.