>Is this really growth, i.e. greater dollars and more boxes, or just >more capability.
What IBM reports to Wall Street is a revenue figure (12% increased revenue for System z servers). That's important information to Wall Street, but a lot of folks might be wondering, "So, what's inside that?" I don't know, but I can guess, and I speak only for myself. Let's look at the four possible ways a company can increase revenue. First, you can grow revenue (temporarily) by increasing prices on stable (or even declining) demand. I think Phil Payne is of this school of thought, although I don't presume to speak for him. But there's no evidence of increasing prices, and there's plenty of evidence of decreasing prices. It's not hard to find public information on this point. It's also not consistent with IBM's demonstrated market behavior. A quick glance at IBM's product announcements, notably in software, shatters this sort of notion. Companies invest in growth businesses, so all this continues to bode well. So if prices are trending lower, how do you get 12% revenue growth? Another possible way is currency effects: a weaker dollar means that mainframes priced in, say, euros generate more revenues in dollar terms. I don't know whether the 12% figure is in "constant currency" or not, but the dollar isn't 12% weaker, and you have some large mainframe markets (like Japan) with weak currencies anyway. Another possible reason: product cycle effects. That might explain one or two quarters, but it doesn't explain what's going on here. That leaves just one option: IBM is actually selling more mainframe capacity. Indeed, that's exactly what's happening, and it also has the virtue of being the simplest explanation. Furthermore, a 12% figure probably means IBM took marketshare in the enterprise server market. IDC and Gartner define that market as all servers priced at $250,000 and up. That dividing line doesn't capture all IBM mainframes, but it captures most. Does the number of boxes matter? Not really, no, because of greater capability. For most customers two is a very good number of mainframes to have (assuming in-house disaster recovery capability). You can get an awful lot of capacity in a single frame. What I suspect is happening is that a lot of customers (and more customers) are buying more MIPS, more memory, more coupling facilities and Parallel Sysplex, and more zAAPs/zIIPs/IFLs, and they're getting all that in fewer footprints per data center because fewer can deliver more capacity. For example, a single System z9 EC has roughly double the transactional throughput of its immediate predecessor, the zSeries z990. The z990 was announced in May, 2003, and the z9-109 (the z9 EC with full capacity engines) was announced in July, 2005. Were there many businesses that grew 100% in 26 months? A few, but not many.(*) 50%? That's more realistic (roughly 23% CAGR). If the performance per frame doubles, but the business grows "only" 50%, inevitably the number of frames might be lower until you reach a natural floor of two. >In the PC world over the past 3 years the average >computer speeds per dollar have probably doubled. Thus if IBM sold >1000 MIPS in 2003, to just stay even they would have had to sell 2,000 >MIPS in 2006. This is the sort of thing that I don't think those who >price mainframe software fully comprehend. Yesterday's high end >capability is today's low-end. I know for sure there's ample recognition of this dynamic within IBM software, and I've related why that's so previously and in great detail. But this is an apples to bananas comparison. If you're looking at mainframe MIPS, roughly speaking 2000 MIPS will allow you to perform twice as much actual business work as 1000 MIPS, including development, test, production, and disaster recovery provisioning (CBU). Mainframe computing capacity is as purely and directly related to business activity as anything in computing. In contrast, if you double the clock speed of an X86 processor that mere fact is almost entirely divorced from the question of whether you can perform twice as much business work as you did before. (Hint: You cannot. Another Hint: Not even close.) The two most important words in that original post are these: "Thank you." This virtuous, sustained trend is wonderful to see -- it really made my day. Although I don't speak for IBM, if I did I'd express our gratitude for your continued and growing patronage. (*) I've been dealing with a situation in which a customer's key real world business metric is +8% per *month*, so there are some extremely high growth cases, especially in Asia. - - - - - Timothy Sipples IBM Consulting Enterprise Software Architect Specializing in Software Architectures Related to System z Based in Tokyo, Serving IBM Japan and IBM Asia-Pacific E-Mail: [EMAIL PROTECTED] ---------------------------------------------------------------------- For IBM-MAIN subscribe / signoff / archive access instructions, send email to [EMAIL PROTECTED] with the message: GET IBM-MAIN INFO Search the archives at http://bama.ua.edu/archives/ibm-main.html
