IBM has a new plan to boost its ancient but super profitable mainframe business

Ginni Rometty IBMIBMIBM CEO Ginni Rometty

For the past two quarters, IBM has been saved by one of its oldest product lines: the mainframe.

On Monday, IBM revealed a plan that will double down on the mainframe. It’s been shipping mainframe computers that run the free and open-source Linux operating system for 15 years, but its upping its game there, announcing:

  • Two new Linux mainframe servers called LinuxONE, that work with some of the today’s most popular open-source software: Apache Spark, Node.js, MongoDB, MariaDB, PostgreSQL, Chef and Docker.
  • A new “Open Mainframe Project,” formed with the Linux Foundation, where IBM will give away an unprecedented amount of its mainframe software for free. It is particularly giving away software that does “IT predictive analytics” — software that monitors huge IT systems for unusual system behaviour. This can be freely used by other people interested in writing apps for the mainframe.
  • A free app development cloud for people who want to write new apps for the mainframe, called the LinuxONE Developer Cloud.
  • A new partnership with Linux company Ubuntu. IBM now has three flavours of Linux available for its mainframe delivered by Red Hat, SUSE and now Ubuntu.

Altogether, IBM is trying to make the mainframe a more relevant computer for a broader variety of businesses, and put it in the center of trends like big data and mobile computing.

IBM LinuxOne mainframeIBMIBM LinuxOne mainframe

The mainframe is one of those products that’s been declared dead a dozen times over because it’s now possible to build supercomputer performance by stitching together many cheaper computer servers, instead of buying a one big mainframe.

However mainframes have remained the preferred computer of choice for big companies that need to crank out huge numbers of transactions. Think of Visa processing gazillions of credit card charges every second, or UPS tracking the journey of 5 billion packages a year, or ADP processing payroll and benefits info for 630,000 businesses.

While most of IBM’s ageing businesses are shrinking, after IBM introduced a new mainframe in March, sales boomed: up 9% last quarter (15% adjusted for currency) and 118% (130% adjusted) the quarter before, measured versus the previous year’s quarter.

Overall, the Systems Hardware segment, which includes IBM’s mainframe business, made up $US2.1 billion of IBM’s total $US20.8 billion in revenue last quarter.

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