back to article IBM's mainframe bubble bursts and growth stalls

In its last few quarterly results announcements, IBM has trumpeted unexpectedly strong growth in its mainframe business, and that's helped the technology titan to just-about deliver promised mid-single-digit revenue growth in constant currency. But in its Q3 results announcement on Wednesday, Big Blue revealed mainframe revenue …

  1. Doctor Syntax Silver badge

    IBM's consulting business delivered flat revenue, but 11 percent profit improvement, which Krishna attributed in part to "yield from our productivity actions." IBM-speak for firing people is "resource actions."

    It's amazing thatr revenue is flat. When the effects of their productivity action really start to kick in that's going to fall as well. Consultancy is a people business.

    I'm reminded of the tale of the peasant who was trying to teach his donkey to go without food to save money. He'd almost succeeded but it died.

    1. Roland6 Silver badge

      Seeing similar with Netflix. As expected they are reaching a plateau in the number of new subscribers they are attracting, so are seeing a fall in revenue growth, so their answer is to start increasing prices to better fleece its existing customers.

      Amazon, has done something similar with Prime with the introduction of adverts.

      I wonder what it will take for the investors/markets to wake-up to the simple fact there is no such thing as never ending growth and increasing income…

      1. JacobZ
        FAIL

        Prime

        The most recent price increase for Prime combined with the lack of good, findable content caused me to drop it, and I'm far from alone.

        The fact that they keep larding the bundle with additional features that have no value to me but presumably are factored into the price is not helping.

        If it were possible to buy just the delivery service at a reasonable price I might go for that because I still occasionally order stuff I can't find elsewhere.

  2. Anonymous Coward
    Anonymous Coward

    One year ago the price of the stock was 140$ and has been rallying to 235$. After the result it takes a ~5% hit pre-market to 220$. I consider still a good result.

  3. Roland6 Silver badge

    Time for a re-allocation of revenues in the accounts?

    I expect IBMs mainframe business is just the legacy/traditional Z-Series business.

    Given the massive increase in computing power, I would have thought the larger “mainframe like” x86 servers would be included in the mainframe sales figures….

    1. Peter Gathercole Silver badge

      Re: Time for a re-allocation of revenues in the accounts?

      IBM doesn't sell large x86 servers any more. It sold the entire division to Lenovo.

      The Power figures are broken out separately, so they won't count either.

      In the IBM world, Mainframe and Z-Series are synonymous.

  4. trevorde Silver badge

    What happened next

    Resource Actions

    workforce rebalancing

    workforce reskilling

    workforce right-skilling

    workforce redeployment

    offshoring

    near-shoring

    massive bonuses for C-suite

    1. UnknownUnknown

      Re: What happened next

      Workforce fucking off.

  5. Anonymous Coward
    Anonymous Coward

    Skeptical

    As a former IBM employee I often had the feeling that IBM allocated revenue to things that it wanted to represent as doing well, such as Cloud (in the past), Openshi(f)t, and AI. Watson was a good example of that with all kinds of perfectly ordinary data analysis and data warehousing products being given the Watson branding. In fact, I once told a Distinguished Engineer friend of mine that you'd know Watson was failing in the market precisely if this started to happen.

    Of course, I am not in any way suggesting that anything in IBM's financial reporting is not entirely above board or completely consistent with GAAP and with SEC regulations.

  6. Roland6 Silver badge

    “ IBM's mainframe business is cyclical: buyers spend up big when new machines debut.”

    Too many years back MS operated a cyclical business model, but moved it to a more even revenue subscription model.

    Rolls Royce another business in boutique high technology switched from selling engines to selling a service.

    A few years after Y2K I bought a couple of top end Z-Series for a customer, for the princely sum of £1 per machine, the rest was loaded on to the annual maintenance contract. So I do wonder if IBM have decided not to migrate their mainframe business from product to service.

    1. James Anderson Silver badge

      Re: “ IBM's mainframe business is cyclical: buyers spend up big when new machines debut.”

      The problem is you don't need to buy a new mainframe anymore. About 10 years ago x86 servers could handle the big workloads. But only if you were prepared to rewrite your system.

      However recently there have been several companies offering a "lift and shift" service to transfer systems off the old iron.

      Santander bank is just one example https://www.google.com/url?sa=t&source=web&rct=j&opi=89978449&url=https://www.santander.com/en/stories/7-questions-on-how-gravity-is-transforming-santander&ved=2ahUKEwiAw5a5oauJAxWmWkEAHXBhJ3oQFnoECBoQAQ&usg=AOvVaw1WjPikADgGaOPt4979ofi2

      1. Roland6 Silver badge

        Re: “ IBM's mainframe business is cyclical: buyers spend up big when new machines debut.”

        That article made me laugh, Santander has been trying to get off mainframes since circa 2004 when it took over Abbey National…

        The “lift and shift” has been going on since the mid 1990s, however, back then it was mainframe onto Unix. From my experience from that period the big issue was many mainframe applications dated from the early 1980s when batch and mag tape based databases were the norm. By the mid to late 1990s RDBMS’s, disks etc. meant that you could redesign a 1980s batch system to use an RDBMS etc. with one client that was, on paper, a replacement of a £17m mainframe with a dual processor NT box…

        What is perhaps interesting about the Santander Gravity offering is the mainframe to cloud migration. However, without a complete rework of the application, it will still be mainframe code running in the cloud rather than a cloud native application.

        Obviously, one of the benefits the Z-series has is in server consolidation (this was obvious in circa 2002) having been designed for the ground up to handle VMs et al., something commodity cloud platforms are only really beginning to grapple with. Not saying the Z-Series is perfect, but it still has features that Unix/Linux and Wintel struggle to implement well.

        Given this, it is perhaps educational to understand why mainframes haven’t been particularly successful in cloud datacentres where the ability to add capacity for 1000s of concurrently running VMs would be an appropriate increment in capacity.

        1. James Anderson Silver badge

          Re: “ IBM's mainframe business is cyclical: buyers spend up big when new machines debut.”

          Santander -- the Spanish bank not the old Abby National is just one of the banks migrating of Z-Series. UBS in Switzerland is actively moving its CICS/DB2 workload to Linux, Santander has already moved.

          The major driver is not hardware costs but software licensing -- the whole zOS, tivoli, DB2, etc. etc. just gets too expensive. Plus the realisation that you have to pay for for the privilege of (not) using IEBCPY the worst ever copy utility ( well maybe DECs pip was worse!).

          And if you are really modernising none of the newer core banking systems target Zseries.

  7. Steve Channell
    Pint

    Time for a price cut

    The Telum processor is a CMOS processor like AMD64, the latest AMD and Intel chips are also multi-chip processors. The difference is volume, but that applies to the POWER processor too.

    Given that you can run RedHat Linux on {Telum, POWER, AMD64, ARM} the price ratio should reflect value rather than legacy premium.

    1. Roland6 Silver badge

      Re: Time for a price cut

      Volume..

      That is a big hurdle, as the car manufactures discovered, increasing sales and production from “small production runs” of sub 100,000 to the levels of x86 and Arm is going to be a challenge…

  8. Fruit and Nutcase Silver badge
    Trollface

    defined benefit pension plan obligations

    The bean counters must be counting the days/years until the defined benefit pension plan obligations cease

    1. Roland6 Silver badge

      Re: defined benefit pension plan obligations

      The other big area is life insurance and associated investments.

      Had a laugh in sorting out the estate of a late uncle, discovered several life insurance policies from 1950~1969 that were hand calligraphed…

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