IBM is showing signs of life. In the last quarter, the company made progress in its hardware business. The z13 system began shipping in March, helping IBM more than double sales there. IBM shipped 95 per cent more MIPS.
Hardware servers are still an important business for IBM because mainframe is represented by over 80 per cent of the fortune 500 companies. There’s a competitive edge for the System z platform: maintenance is less, and energy usage is low. More importantly, the platform support is wide-ranging, allowing anything from mobile to the cloud to web applications to run. On the data side, the platform supports OLTP.
In February, IBM announced plans for making a hybrid cloud environment available for clients.
Growth in Power
Helped by winning market share in Unix, demand levels for Power improved in the last quarter. Power 8 is also optimized for the cloud and data. To boost its reach, IBM introduced Linux on Power and OpenPOWER. Looking ahead, IBM is well positioned to boost its customer base for entry-level Linux systems. It already has customers like Rackspace, OVH, and Zucchetti who use IBM’s Power-based Linux systems.
IBM is supporting adoption for Power through OpenPower Foundation. By sharing intellectual property, everyone involved will benefit from the accelerated innovation. Members in the Foundation include Google, Mellanox, Samsung, and Nvidia. Smaller firms include SK Hynix from Korea.
Though overall sales remain flat for IBM, the giant is positioning itself for growth ahead. Initiatives like Watson Health (which was just launched a few weeks ago), expansion of SoftLayer, and the Internet of Things initiative (a $3 billion investment over the next four years), are all forward thinking solutions. For example, Watson Health applies cognitive capabilities and partners the functions with researchers and practitioners. When complete, the initiative will be on the cloud and will introduce healthcare analytics to the industry.
Challenges ahead for IBM
IBM still faces some challenges. In North America, Global Business Services is slowing in traditional areas including the U.S. Software sales, which are not growing, but IBM’s SaaS offerings are experiencing improving sales.
The company still needs to invest in itself as it transforms. Investments in Global Technology Services are significant for IBM, but supporting development for the SoftLayer platform is critical to the company’s future. IBM also continued investing in IaaS (infrastructure as a service). As it commits resources in this area, the platform should grow steadily.
Today, the cloud is predominately about storing, accessing, processing, and in effect analyzing data through a web interface. If IBM successfully offers more cost-effective business solutions, it will beat out today’s most formidable competitors. Competitors are growing in market share, but a well thought out solution from IBM may mean winning back the business.
Mobile still holds lots of opportunities for IBM’s growth. Combined with security and analytics, enterprises will have lots of solutions from IBM.