Manufacturer in Texas Still Relies on their IBM 402

In the late 1940s, IBM's factory in Endicott, New York, started manufacturing and delivering the IBM 402 Accounting Machine and related accessories. The 402 was not exactly a "computer" in the way we now think of them. For example, the 402 was electromechanical instead of electronic, and programming a 402 involved stringing wires in complex patterns on plugboards. Nonetheless, the IBM 402 helped businesses and governments efficiently and quickly (for the time) solve a wide variety of accounting problems: inventory control, payroll, billing, cashflow, etc.

One of the IBM 402 machines was delivered to Sparkler Filters, a small manufacturing company in Conroe, Texas, which specializes in chemical process filtration. That machine, now over 60 years old, is still running and still handling a wide variety of the company's accounting tasks. That's in no small measure due to the people who keep Sparkler's 402 in top condition, including Lutricia Wood, the company's data processing manager, and Duwayne Leafley, an independent maintenance technician. As far as anyone knows this IBM 402 is the last one operating in the United States and perhaps also in the world.

Sparkler Filters is an extreme example perhaps, but their experience reinforces some important lessons. One lesson is that business processes are extremely important and often durable, and the programs written today often endure a lot longer than anyone expects. Certainly Sparkler could adopt different technology, but doing so would be highly disruptive, especially without careful planning, documentation, training, and customization to fit within existing processes. Obviously they would prefer not to experience that disruption (and cost) unless there's a "damn good reason," and they haven't found one yet. Another lesson is that the choices we make about technologies should recognize durability and longevity requirements to support long running businesses and their often stable core missions. For example, the principles of accounting really haven't changed for centuries, so why rewrite core applications "just because"? That's frequently expensive and disruptive.

There should be a balance. IBM works incredibly hard to make sure that zEnterprise-hosted programs simply don't break even when everything else is evolving: input, output, servers, storage, operating systems, middleware, addressing, etc. While the supported program portfolio doesn't go back as far as IBM 402 programs, the commitment IBM made in the 1960s with the System/360 has been and continues to be honored. zEnterprise customers really do run code which was born in the 1960s alongside 64-bit code written 5 minutes ago on one operating system on one machine. That code interoperates: exchanging data, calling back and forth, etc. Unless there's a "damn good reason," you don't have to replace your programs unless and until your business has a new requirement, and then only to the extent you wish.

Now, just because you could run only decades old code without improvements and innovations doesn't mean you should. If you underinvest in any business infrastructure, including important application enhancements, that's a problem that'll progressively and negatively impact your business. However, being forced to make vendor-driven changes simply for the sake of change (and for the benefit of vendors' quarterly financial statements) is no way to do business either. That sort of change is simply wasteful.

I hope I get the chance to stop by Conroe, Texas, someday soon. What a wonderful story.

by Timothy Sipples April 26, 2013 in History, Media
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Fun Fact: zEnterprise Alone = Triple Oracle

To gain a little more insight into the server market, I was reading through IDC's 2012 year end server market report and compared that to Oracle's latest financial report. Here's the fun fact: IBM's zEnterprise server hardware business alone is triple Oracle's entire hardware business: "Exa," Solaris servers, tape, everything.

Sure, insert standard disclaimers here about quarterly and annual variations, model cycles, etc. But still...wow.

by Timothy Sipples April 19, 2013 in Analysts, Financial
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IBM Announces 1Q2013 Earnings: zEnterprise Shines

IBM announced its first quarter earnings for 2013, reiterating its earnings guidance for the year. Bearing in mind my previous cautions about not reading too much into one quarter or into one segment of the global mainframe ecosystem, IBM's zEnterprise server business performed quite well, growing 7% year over year (8% at constant currency). Any growth in the server business these days is highly likely to be a marketshare gain, and so it was with zEnterprise. Yes, that's correct: IBM mainframes are gaining substantial marketshare in the server market.

IBM's CFO added a few comments to give some color to that performance. One comment was that "MIPS" deliveries galloped ahead faster (27%) than the growth in revenue, so that means customers continue to enjoy progressively lower prices when they buy mainframe capacity. He also pointed out that speciality engines are continuing to perform well, too, reinforcing the fact that mainframe customers continue to place new applications on mainframes at a brisk pace. And he mentioned that several large mainframe sales got pushed into the second quarter, perhaps due to the unusual timing of the Easter holiday, so IBM is expecting a further increase to double digit zEnterprise growth in the second quarter.

Overall, though, IBM's hardware business had a tough quarter. One surprise (to me, anyway) was IBM's Power server business which declined 32 percent. There were several comments about that statistic. One is that IBM is overwhelmingly #1 in the UNIX server market and still probably gained marketshare — that gives you some idea how horribly Oracle/Sun and HP are doing in the same market segment. Also, IBM had a somewhat tepid quarter in their so-called "growth markets," and 20% or more of IBM's business in those markets is hardware, a lot of which is Power-based. There were also some model cycle effects as Power servers are transitioning to POWER7+ processors. IBM said they'll be increasing their efforts to promote Linux on Power in order to try to win a greater share of the Linux server market to add to their dominance in the UNIX market.

IBM's CFO noted that the PureSystems are doing quite well. In fact, IBM's CFO's comments would indicate they're selling in much greater numbers than the Oracle "Exa" systems, probably because they're more open and flexible, providing direct support for a much wider range of industry applications while also delivering the benefits of integration. (The new IBM PureData System for Analytics, featuring Netezza technology, is the PureSystem model most relevant to zEnterprise customers.) However, the growth spots in the quarter (zEnterprise and PureSystems) were not enough to offset the overall decline (14%, excluding IBM's divested Retail hardware segment) in IBM's total hardware business.

In his comments to analysts, IBM's CFO pointed out how storage is changing, with more content and value in the software used to manage storage. (IBM's storage software business was up more than 10%, he pointed out.) To which I would add that trend is true for all types of hardware, and I've mentioned that before. It doesn't mean you can't do without hardware — far from it — but getting the combination right is critically important, and how you do the accounting is much less important. Likewise, I would caution cost-focused IT organizations (which is almost all of them) not to concentrate much on hardware costs. The other parts of IT, notably staffing, continue to increase as a share of spending. Ignore those and your bottom line is in peril.

by Timothy Sipples April 19, 2013 in Financial
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The PC Market is Shrinking Fast

IDC and Gartner reported their separate views of the state of the PC market for the first calendar quarter of 2013. They agree that the PC market is shrinking, quickly.

According to IDC, the PC market suffered its worst year over year decline in the history of its tracking study. It estimates that the global PC market shrank nearly 14% and that the U.S. PC market shrank nearly 13%. (Gartner estimates are -11.2% and -9.6% respectively.) They both agree that HP lost a lot of marketshare, Dell lost some, and Lenovo, Toshiba, and Apple gained some marketshare. Lenovo, in particular, managed to grow within a shrinking market.

If Microsoft's Windows 8 operating system had any impact it wasn't helpful. By definition a shrinking PC market, particularly one with Apple gaining marketshare, means a shrinking Microsoft since so much of its business is dependent on the twin Microsoft Windows and Microsoft Office franchises. Microsoft also has other business units, but those two are essential to its continued success. I can't imagine Microsoft CEO Steve Ballmer being happy with what's happening to the PC market his company dominates.

What's going on? Simple: smartphones and tablets. Google and Apple supply the two most popular mobile platforms. Those devices are killing off much of the PC market. Smartphones and tablets are simply more relevant to more people in more places than PCs, and the mobile client application ecosystems are now stronger. It's astonishing, really. And what's really scary if your business is heavily dependent on PCs is that most of the world's population will never buy a PC but almost everybody on the planet has a mobile phone. Mobile phones are literally more popular than toilets. And smartphones are rapidly eroding the remaining market for feature phones. If it hasn't happened yet, this year (2013) is when the number of active smartphones and tablets will surpass the number of PCs, and it won't take long for tablets and smartphones to outnumber PCs by billions.

Naturally Microsoft isn't happy with this turn of events and has even filed a complaint with the European Commission, which strikes me (and a lot of other people) as absurd. Google and Apple simply built better business models and more compelling platforms than Microsoft, and that's why they're doing well (and should do well).

So what does the continuing rise of smartphones and tablets have to do with mainframes? Plenty. I continue to hear from mainframe users that transaction volumes and associated batch processing are growing faster than they expected, and that's mostly explained by smartphones and tablets. Mobile users are inherently more demanding users in terms of time and place, and consequently they expect continuous or near-continuous service with excellent security. Mobile users often generate wilder swings in application usage patterns — a simple Tweet could easily trigger (twigger?) a sudden spike in demand. Do those requirements sound familiar?

I don't predict the death of the PC, however. I'm just not sure yet where the PC market will stabilize.

UPDATE: ZDNet has posted an incredible chart showing what's happening to the PC market along with some more commentary. Wow.

by Timothy Sipples April 11, 2013 in Analysts, History
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IBM Mainframe Computing at AT&T in 1973

AT&T has posted a wonderful historical film produced by Bell Labs in 1973. The film introduces employees to the services available at the Holmdel, New Jersey, computing center. At that time you could submit batch jobs on punched cards, typically resulting in printed output, or you could interact with the system through TSO (Time Sharing Option) and interactive terminals, some connected via telephone lines.

Note the photograph attached to the IBM System/370 that appears at about the 5:30 mark in the film. Many things have changed in 40 years, and many things have not.

UPDATE: One thing that has changed is that the Bell Labs Holmdel Complex closed in the mid-2000s. The property is available for occupancy if you're interested. Bell Labs has been largely dismantled through a series of corporate reorganizations and cutbacks beginning with the AT&T breakup in 1984. There are a few vestiges of Bell Labs still operating as part of Alcatel-Lucent and (separately) as part of Ericsson.

I'm not the sort of person who looks back on the past as necessarily better. In most respects it wasn't. For example, unleaded gasoline arrived after 1973 in the United States, eliminating a serious public health hazard especially for children. There's some evidence that the reduction in lead exposure has contributed to a large drop in crime rates. As another example, smallpox was still afflicting some of humanity in 1973 but was eradicated a few years later. Also, back in 1973 you couldn't send an e-mail or an SMS to practically anyone, and a one minute "long distance" telephone call from New York to Los Angeles cost about $0.25 (in 1973 dollars, only if you called on nights and weekends), excluding the monthly service charge. Now you can talk and text as much as you want using a mobile phone for as little as $19 per month. So is the loss of Bell Labs worth the benefits to consumers with the explosion in Internet and mobile services at affordable prices? Yes, to the extent it was a trade, that was a trade worth making, and that's what the market decided — with a little help from Judge Harold Greene perhaps. That doesn't mean the loss of Bell Labs wasn't a loss: it certainly was and is. Continuing, long-term investments in research and development are critically important to the success of consumers, a company, a nation, and all of humanity. How best to support those ongoing investments is another question.

by Timothy Sipples April 10, 2013 in History
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Bitcoin Needs a Mainframe

The MTGox exchange and Instawallet, which both deal in Bitcoins, are suffering security-related outages. The whole currency declined in value as a result, and the attacks may be a way to manipulate the value of the currency.

by Timothy Sipples April 5, 2013 in Business Continuity, Security
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Unplanned 3 Hour Global Mainframe Outage Scheduled

IBM is notifying all its mainframe customers that due to a once-in-a-lifetime "rear endian horological issue" of critical importance, all mainframes, worldwide, must be completely shut down and powered off for 3 hours on April 1, 2013. Any 3 hours will do, according to IBM's press release, but the downtime must occur on April 1, 2013, based on Mainframe Standard Time (MST). Moreover, the outage must be Sysplex-wide in order to correct the horological issue properly. All forms of GDPS, SRDF, and other cross-site recovery procedures must not be initiated. Failure to shut down on April 1 will result in random transposition of date fields so that, for example, April 2, 2013, which might be represented as 02/05/2013, could instead be rendered as 3102/50/20. Such improper date rendering could result in catastrophic business losses, such as bank account holders getting paid 0.1% in annual interest on their accounts.

There are only two exceptions listed in IBM's urgent "red alert." The first exception applies to customers that do not use the so-called "Western calendar" and which only process dates using other calendar systems such as the Maya calendar. They can postpone powering off their mainframes until 5 minutes before their IBM hardware service agreement expires. The other exception is Cyprus's Laiki Bank which the red alert describes as a "Permanent Mercy Outage (PMO)."

This worldwide mainframe outage is unprecedented, and it goes without saying it will significantly disrupt global society and our everyday lives. The world's financial systems, public safety including national security, Taco Bell's new SuperMax Burrito, and many other facets of our everyday lives depend on IBM's ordinarily incredibly reliable workhorses. That said, we humans always try to look on the bright side. The BBC interviewed Abigail Smythe, a customer of a large U.K. bank, who says she is looking forward to 21 hours of continuous service. Meanwhile, South Korean broadcaster KBS, which was on the air for 10 minutes today until anonymous hackers compromised their servers again to transmit footage of Kim Jong Un eating sushi and playing with an iMac, mentioned that IBM's red alert will not affect their operations. Visa and MasterCard announced that they've programmed all retail terminals to approve all charges during their 3 hour outages. Credit card industry spokesperson Stuart Umpton notes that "We don't want to do anything that will interrupt our cardholders' spending beyond their means, so we'll just approve everything and clean up any messes starting on April 2."

End-of-the-world

Mainframe users in Venice, California, express horror over the forced worldwide outage, warning the public using this helpful sign. Photo taken by Anthony Citrano (Creative Commons License).

by Timothy Sipples April 1, 2013 in Business Continuity, Events
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