More Insight into IBM's New z114

Rob Enderle's reaction to IBM's introduction of the new z114 mainframe is quite interesting and thought-provoking. In short, he notices that major IT vendors have flipped roles, with Oracle (and Microsoft, I would argue) now emulating IBM's worst behaviors from the 1980s, undermining trust among formerly loyal customers and partners. Enderle also observes something I reported in my reaction to the z114's introduction, that IBM is passing along its cost savings (and perhaps more than that) to its customers — clear evidence that IBM is focused like a laser on growing the mainframe ecosystem. Said another way, Sun customers are to be milked, and IBM customers (current and prospective) are to be delighted.

Another way IBM is delighting current and prospective mainframe customers is on the software side. As most people in IT purchasing know, software licensing and maintenance fees are increasing quickly, in general. I point to these key drivers:

  1. Commercial software is a close substitute for labor. (You can either buy software or build it.) Given long-run global trends in labor and in business sophistication, we would expect commercial software to take a progressively bigger role in IT projects with correspondingly bigger shares of the project budgets.
  2. There has been quite a bit of consolidation in the software industry generally. Less competition tends to result in higher prices. Interestingly, there has been increasing mainframe software diversity in recent years.
  3. Virtualization tends to drive down the number of CPU cores required to perform the same work. Software vendors have been racing to claw back their licensing and maintenance fees as customers have virtualized their software products, most of which are licensed per core.
  4. In some industries there's unexpected growth that's driving additional infrastructure expense (including software). For example, I'm hearing from a lot of banks that smartphones (such as Apple's iPhone) are driving up transaction volumes and infrastructure requirements.
  5. As software becomes more sophisticated, new entrants face tougher challenges getting established. If there's less competitive threat from potential new entrants, then prices will tend to be higher.

That said, IBM is consistently driving down mainframe software unit costs, something that's quite rare or even unique in the industry. The z114 continues that evolution, with even more attractive software licensing terms. IBM dropped prices for z/OS and other mainframe-unique software products. You'll probably see a reduction in z/OS-related software charges ranging from 5% to 18% just by moving from a z10 BC to a z114. Interestingly, IBM's most aggressive z/OS pricing is for single z114 customers. Coincidentally my favorite mainframe configuration is the "single machine virtual cluster" Sysplex approach, and IBM's new pricing is especially friendly to that mainframe-unique, parsimonious way of delivering exceptional reliability and availability.

At the same time, IBM dropped its prices for its Linux-based software products. Pricing per core fell from 120 "value units" to 100, a decrease of almost 17% compared to the z10 BC. Core performance is up substantially, so that means IBM reduced unit prices roughly 29% (by my quick calculation) compared to the z10 BC.

There's no question this IBM behavior is customer-friendly, and it goes a long way toward explaining why IBM is enjoying such phenomenal mainframe growth. I hope more IT shops understand this stuff, and soon.

by Timothy Sipples July 22, 2011 in Blogs, Economics
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IBM Announces 2Q2011 Earnings: Mainframe Up Big Again

The IBM mainframe keeps roaring ahead and gaining marketshare, with IBM reporting that System z hardware revenues increased 61 percent in the second quarter (versus the year ago quarter). MIPS, that classic measurement of mainframe capacity, increased 86 percent. (See this post for more insight.) IBM's CFO Mark Loughridge noted that IBM has added 68 new mainframe customers in the past year. About a third of those are in IBM's "growth markets" (i.e. outside North America, Western Europe, and Japan) — "planting the flag," he said. Loughridge also remarked that System z had its best four quarter period in five years.

IBM does not report other System z-related revenues separately, such as mainframe software and services, but in the aggregate those parts of IBM's business also performed strongly.

A year ago (last September) the zEnterprise 196 started shipping, so the next quarter's performance will be judged against that strong quarter. However, the new zEnterprise 114 starts shipping this quarter.

by Timothy Sipples July 18, 2011 in Current Affairs, Economics
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Introducing the zEnterprise 114 (Updated)

It's new mainframe day! IBM has announced the zEnterprise 114, a particularly clever mainframe package which replaces the System z10 BC. The z114 is the little brother to last year's z196 super-mainframe, but keep in mind the z114 is in every way a real mainframe. A single z114 can handle more processing than IBM's fully configured top-of-the-line mainframe from just a few years ago. In no particular order, here's a list of the z114's improvements that I particularly like:

  • For the first time that I can remember, and certainly for the first time since 64-bit z/Architecture debuted, all of IBM's mainframe models feature flexible, modular processor configurations. That is, you can order a z114 with either one or two processor "drawers" installed. I love that flexibility, particularly because it means that IBM has found a very smart way to lower the costs of entry into the mainframe world, so more businesses and governments can buy their first mainframe and enjoy its benefits. You can order an M05 hardware model and then, when/if you need more than 5 configurable cores, you can upgrade to an M10. (And you can still continue upgrading to z196 machines when/if needed.)
  • Processor power and capacity are, of course, improved. That wasn't at all a problem with the System z10 BC, but it's always nice to see more performance in the smaller mainframe package. Uniprocessor performance is up 18%, for example. Clock speed is up to 3.8 GHz, which is a rather high-end number. Maximum z/OS capacity per z114 machine is up well past 3,000 MIPS, not including specialty engines.
  • Coupling facility capacity is up a lot, too. If you need a dedicated coupling facility machine, the z114 is more likely to meet or exceed requirements.
  • The z114 supports more memory than the z10 BC, but most of that increase is allocated to memory protection in the form of RAIM (Redundant Array of Independent Memory). Yes, the "little" mainframe gets exactly the same mainframe-unique memory protection that its big brother got last year — and which no other server has.
  • Likewise, the z114 M10 provides a mandatory minimum of two spare cores, just like its big brother. The M10 also offers processor drawer redundancy. In the incredibly unlikely event a drawer or a core fails, the system stays up and running. If that capability is valuable, you can order the M10. For the rest of us (which is most of us), the M05 is perfectly fine and still better than its predecessors. Adding or replacing a processor drawer requires a planned outage, at least for now. Considering that everyone did perfectly well without that feature for decades, until the System z9 EC in late 2005, I think IBM can be forgiven for not getting that bit of work done just yet. (I think it's a moot issue anyway if you have a physical Sysplex.)
  • You can run the z114 on high-voltage DC power or on AC, with or without a raised floor, and with top or bottom cable exit. In other words, you can put a z114 pretty much anywhere, including inside a mobile data center.
  • Yes, you can add the zEnterprise BladeCenter Extension (zBX) to your z114. You can run the IBM Smart Analytics Optimizer, DataPower blades, all the other blade features — all centrally managed by the z114.
  • You can order z114 machines now, and you can take delivery in September. Model upgrades from System z9 BC and z10 BC machines are available at the same time.
  • IBM introduced "Advanced Entry Workload License Charges" (AEWLC) to go with the new z114, aimed specifically at smaller mainframe customers running single, standalone machines (with or without internal Sysplex clusters). Otherwise, AWLC is available for physical z114 Sysplexes, so that's good, too. AEWLC, AWLC, and IWP represent the technology dividends: you can enjoy the same performance and throughput for a substantially lower software license charge, or you can enjoy substantially more performance and throughput for the same software license charge compared to the System z10 BC. All I hear about is that everybody else everywhere else is increasing software license charges and maintenance charges. For well over a decade IBM has been slashing software prices on its mainframes, so you get way more bang for the buck (or euro or yen). I really hope people understand this stuff by now.

All goodness. Nice job, IBM.

UPDATE: IBM has issued a press release highlighting the new z114 mainframe. Indeed, IBM says that the z114 has a U.S. "starting price of under $75,000." That's the lowest price ever for an IBM mainframe and a big 25% reduction from the previous entry price. Also, according to Timothy Prickett Morgan at The Register, on an equal performance comparison IFLs (Linux processors) on the z114 are priced 37.5% lower. There are big price reductions across the board, though, for both hardware and software. It's clear IBM is determined to convince many new customers to buy their first mainframes.

by Timothy Sipples July 12, 2011 in Economics, Innovation, Systems Technology
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