Low-end mainframe may find market in Canada

A move by IBM to create a low-budget mainframe may prompt smaller enterprise businesses to give the computers a second look, according to one analyst.

Armonk, N.Y.-based IBM Corp. announced a new mainframe computer Monday with a price tag significantly lower than its previous products and targeted at customers looking to run a number of applications on one, centralized machine.

While mainframes typically start over US$1 million, IBM has brought out the z800 server for US$375,000 with a new version of its mainframe operating system called z/OS.e, which has been tweaked for workload consolidation.

Alan Freedman, research manager, servers and workstations for IDC Canada in Toronto, said this bit of price chopping makes a mainframe server a more viable option for some.

“It makes the z-series more accessible to a larger number of Canadian businesses and it gives the Canadian market a mainframe rebound like they are seeing in the United States,” he said. “It’s customized for consolidation and e-business applications, which is good, and it only has one processor turned on. If you are looking at more processors, you are looking at additional cost. At least it is giving the customers the opportunity to either expand their mainframe capabilities or enter into the mainframe world, where they wouldn’t have had a chance before.”

IBM says mainframe sales have been the company’s bright spot during a rough 15-month period for hardware vendors. Customers have come looking for a way to run a number of applications such as CRM (customer relationship management), ERP (enterprise resource planning) and databases off of one larger server instead of numerous small systems, said Rich Lechner, vice-president of sales and marketing for the zSeries at IBM. The server will come with a software license, maintenance contract and one of the four processors “turned on” for that price, Lechner said. The z800 will be available at the end of March.

However, according to Freedman, the zSeries hasn’t seen the same successes in Canada in the past and said this move may help IBM get a better foothold.

“In Canada, it’s not doing as well when compared to the U.S. or worldwide because of the customer base in Canada, where we do quite well with the i-series, formerly the AS400, and so we have a disproportionate share of that in comparison to the world,” Freedman added. “Because we have so many small- and medium-sized businesses here in Canada, we don’t typically have the same demand for the high-end mainframes.”

Sun Microsystems Inc. and Compaq Computer Corp. have been particularly aggressive in trying to take some of the mainframe pie by offering powerful Unix servers in Sun’s case and large clusters of Intel Corp.-based servers at Compaq. Sun and Compaq claim their approach gives customers the same kind of performance and hardware uptime as a mainframe but at a lower cost.

“It is positive, however they are running into a lot more competition in this price band from Unix, competition from some proprietary systems, even competition from inside IBM,” Freedman said.

IBM will sell eight different configurations of the z800, which serve as complementary systems to the Linux-only mainframe IBM announced last month. Like the z800, the Linux-only mainframe is designed to run multiple applications such as print serving and file serving on a system that starts under US$400,000.

IBM’s move to revitalize its mainframe campaign did not come as a surprise to another analyst, who said the company appears to have carved out a niche in the market.

“IBM believes that there is a market for putting new types of applications on the mainframe and there seems to be some revenue numbers to back it up,” said Gordon Haff, an analyst at Nashua, N.H.-based Illuminata Inc.

IBM is also including its Parallel Sysplex technology for networking multiple mainframes together with the z800, which could be used to help with data recovery tasks or for extra power.

Even with the significantly cheaper option, Freedman said it would be a while before the average Canadian business goes shopping for a mainframe.

“You have to have a significant operation to justify it, to have a serious return on investment of a significant piece of hardware like this,” he said. “If you look at the Canadian price, it will probably be in the range of $500,000. That’s not something that your average-sized medium business can afford.”

IBM, in Armonk, N.Y., is at http://www.ibm.com/.

– With files from IDG News Service.