While the mainframe business was the only one of its hardware segments to contract in the first quarter, IBM nonetheless has big hopes for that business to contribute to the overall bottom line by the end of the year, industry experts say.
That is because the Armonk, NY-based global computing giant is set to release the mighty "T-Rex," codename for the Generation 8 (G8) mainframe, in a month. T-Rex will be the vendor's most powerful mainframe to date, according to Phil Payne, research director with Isham Research. The product is due to be announced on May 13 and will ship late in Q2, and some believe it's not a moment too soon.
"IBM's mainframe competition today is vastly more dangerous than Amdahl or Hitachi ever were," Payne said. "If the old-style PCMs won a deal, IBM still received the same software revenues and could easily displace the PCM system in its turn...Today, a mainframe customer lost to Sun or Hewlett-Packard today is lost forever."
Even though the latest addition to the zSeries line hasn't been released, it has already impacted the bottom line of IBM's hardware business -- negatively.
In its first quarter announcement, IBM said that revenues from its zSeries line were down a meaty 16 percent from the previous year and cited a "combination of customer deferrals of IT decisions and the anticipated introduction of a new zSeries mainframe" as the reason. This contributed to IBM's 1 percent decline in revenue for its hardware division, which totaled $5.8 billion.
The product comes at a time when mainframe vendors not only compete with other mainframe vendors but also with lower-end models that have "mainframe-like" capabilities. Mid-ranged servers are becoming an attractive alternative because they can perform many of the functions of mainframes at a fraction of the cost, thanks to 64-bit processing capabilities of Unix and now the forthcoming Windows Server 2003 (and, as enthusiasts claim, even some flavors of Linux).
And when T-Rex is formally unveiled in May, it will hit the market around the same time as machines like Unisys' new ES7000/500 series, which are equipped with the more powerful Datacenter edition of Windows Server 2003.
Galileo
T-Rex (also known as "Galileo" or G8) is primed for serving demanding applications for large data centers. It is expected to scale to 450 million instructions each second, or a third more than its major z900 mainframe, according to Payne. It will roll out with 16 processors under a single-system image, which means applications and data sets can be run across multiple processors.
G8 is the first update to IBM's zSeries line since the z800 was introduced in early 2002. It will expand to 32 processors during the next two years and eventually support up to 64 processors. Parallel Sysplex, IBM's architecture for making several mainframe processors act as one unit, is now mature, meaning users can spread resources across many systems.
IBM, which expects to target about half of the 3,000 existing z800 and z900 customers with the G8, is very tight-lipped about any other details regarding the product. The company did not return calls seeking comment on this story.
But that didn't stop Payne from discussing the G8. Payne is about to publish a critical note about the reduced "mission statement" for the initial systems, the analyst told internetnews.com. A lot of "bits" for the initial release of the mainframe are not ready. He also said it remains uncertain that the revenues for the G8 will make up for the shortfall in the first part of the quarter.
Moreover, he anticipates the full functionality of G8 to take longer than planned, estimating that "another large chunk is planned for 3Q (September) 2004."
"IBM's reluctance to publish a credible roadmap for its most important users is thus somewhat perverse -- though doubtlessly welcome in Santa Clara and Palo Alto," Payne wrote in a recent research note.
The analyst added this may have strategic repercussions.
"Although G8 uses a lot of z900 technology, it is sufficiently different to require some investment in positioning -- configuration and infrastructure -- for effective exploitation. Ideally, potential users should have made appropriate provisions in their 2003 IT budgets, but it seems that most IBM non-disclosure briefings have been made at higher management levels and not to the technical staff who would realize the requirement."
As for the present and future, Payne said the G8 will become the current zSeries mainframe for at least three years, but that the company's autonomic computing strategy will do away with its differentiators in time.
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