zSeries revenue rebounds once again

Dogged by nearly a year of sluggish revenues, things are starting to look up for Big Blue's mainframe business--a sign that the company's investment in z9 is about to pay off.

IBM's mainframe fourth quarter sales were up 5%, ending a year of consecutive revenue slumps. Total delivery of zSeries computing power, which is measured in millions of instructions per second (MIPS), increased 28%. The uptick is largely attributable to the company's new z9 mainframes, introduced last summer, which push about 40% more horsepower than the then-current high-end z990.

The mainframe, long left for dead by many in the industry, has managed not only to survive, but thrive over the past few years. Revenues for the zSeries jumped in 2003 and saw gains through 2004 as well. In 2005, mainframe revenues hit the skids due to customers waiting for the z9, but the dip had been attributed to customers waiting for the release of the z9.

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"Customers swimming in a sea of technology choices have and will continue to depend on mainframes as a linchpin while coping with ever-compounding issues such as server sprawl, new workloads, and security worries," said Colette Martin, director of zSeries product marketing. She said the z9 is an important part of IBM's success story in 2005, and release of their new workhorse has been met with praise.

"We're definitely sticking to our guns there -- it's a strong strategy that customers are responding to," Martin said. "It remains a cornerstone in that environment."

Charles King, principal analyst with Hayward, Calif.-based Pund-IT Research said the return to revenue gains as a forecast of general health for IBM's mainframe business.

"The health in the long term really relies on IBM continuing to deliver increased performance and increased capabilities and services related to the mainframe," King said. "[Mainframes] are a real complicated beast, but the technology is enormously flexible and scalable. [IBM] pulls the rabbit out of the hat pretty much every time."

More IBM numbers: revenues from the iSeries product decreased 18% compared with the year-ago period. Revenues from the pSeries Unix servers increased 4%, and xSeries servers were flat. In addition to the eServers, revenues from storage systems increased 24%, and microelectronics increased 48%.

Overall, fourth-quarter revenue decreased 12% (up 3%, adjusting for currency and the divested PC business). Revenues from IBM Global Services, including maintenance, decreased 5%. Revenues from software were flat.

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