New System z mainframe may lift IBM's cloud, mobile fortunes

IBM looks to pivot in a new direction with a revitalized mainframe aimed at mobile and cloud markets along with a rumored major reorganization.

To revive its sagging hardware fortunes, IBM will introduce a new member to its System z series of mainframes with a major technology overhaul. It is intended to lure new users that need more muscle for applications involving cloud, analytics and, in particular, mobile applications.

The new z13, as it's being referred to, is designed from the ground up to more efficiently handle transaction processing, including the billions of transactions conducted by users with a wide assortment of mobile devices, a source close to the company said. Big Blue has reportedly spent five years and $1 billion developing the new system, quietly beta testing it among some 60 global accounts.

The system, to be introduced this week, features a new eight-core processor with a wider instruction pipeline, more memory and support processors than any of its zSeries predecessors, improved multi-threading, larger caches and a "significantly improved intelligent I/O system," that dramatically improves the performance of applications involved with transaction processing, according to sources close to the company.

"The whole thing is tuned for better performance, especially its souped-up intelligent I/O, where you can have dedicated channels for individual types of I/O," said one source who requested anonymity. "Essentially [IBM has] tuned this for environments focused on mobility, analytics and the cloud."

To further improve the system's capabilities for mobile transactions, IBM reportedly focused on improving security for the system, coming up with new cryptography technology, similar to that used by vendors such as Apple and major credit card companies, according to sources.

"They have implemented some new forms -- plural -- of encryption, similar to what is used in Chrome and Firefox, as well as Apple's technology for messaging," one IT industry source who works with IBM said. "[IBM], I think wisely, have adapted the security schemes here to meet users' needs, which increasingly have to do with mobility and credit card transaction processing."

Given the deal IBM signed with Apple last year to distribute the latter's mobile products to corporate users, and the emphasis IBM will put on the new mainframe's mobile transaction capabilities, synching up with Apple's security technology may be more than a coincidence.

Also not so coincidental may be the timing of this week's announcement, given its close proximity to the company's 2014 revenues and earnings report later this month. With sales of the company's proprietary Power series of servers stumbling badly the past five or six quarters, and mainframe sales dipping the past quarter or two as part of its natural sales cycle in addition to fourth quarter hardware numbers figuring to be down again, company officials may be looking for some good hardware news to distract Wall Street's attention away from further bad news. The new system could be the answer.

IBM may also talk about its intent to promote the system's appeal to Millennials. With an increasing number of aging mainframe veterans retiring in ever larger numbers, Big Blue wants to make it clear to 20-somethings that they could have a lucrative career working in mainframe environments, as opposed to lower-end distributed environments. Company officials will reportedly talk about a new jobs board that matches up younger workers to new job opportunities in the mainframe area.

"[IBM] is trying to overcome this fear, the psychological barrier that Millennials have toward mainframes," according to another source familiar with the company's plans.

There have also been reports that IBM may be edging toward a major reorganization, one that would give clearer focus and emphasis on mobility, analytics, security and, of course, cloud. How the newly designed mainframe figures into this corporate realignment will be interesting. The reorganization is being driven by IBM CEO Ginny Rometty, whose performance has been under close scrutiny by Wall Street and the company's corporate accounts over the past year.

It will be ironic -- or perhaps poetically just -- depending on your perspective, if IBM's hardware resurgence is led by a mainframe that makes a big splash in the mobile market.

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