IBM pushes z9 mainframe for small business

As part of IBM's ongoing effort to gain customers in the burgeoning SMB sector, it has created a more efficient alternative to high-end servers

IBM unveiled a Web site and IT security software application Thursday as part of its effort to compete with Hewlett-Packard and Sun for customers in the fast-growing SMB sector.

New customers can share tips on how to migrate from servers to mainframes on the Web site, which acts as an online community for users, system integrators, software vendors, and academic institutions. Existing customers can use the enhanced z/VM virtualization software to support more virtualized memory or use the new Tivoli zSecure V1.8.1 suite to monitor threats and enforce compliance.

IBM created the new version of zSecure with technology from its first-quarter acquisition of Consul Risk Management. That purchase is part of IBM's strategy to spend $100 million to simplify its mainframe platform by 2011, hoping to persuade businesses to buy its System z9 mainframe computers instead of high-end servers.

IBM sells an enterprise-class version of its z9 for large corporations and a business-class version for SMBs. Compared to servers running on chips from Sun or Intel, customers can save money by using power-efficient mainframes, said Jim Stallings, general manager of System z for IBM's systems and technology group.

"The biggest reason customers are drawn to the mainframe -- a trend we've seen for more than 10 years now -- is power," Stallings said. "Servers running on the faster chips and greater numbers of chips draw an enormous amount of power, and our smaller customers can't get that power. I'm talking about basic electricity."

The streamlined architecture of the mainframe makes it attractive to customers who need to process large amounts of information, such as financial services firms and hedge funds, he said. That group is quickly growing to include midrange banks, including the National Bank of the Republic of Belarus and Nexar, an Internet banking company in Belgium.

"SMB customers are realizing that they cannot afford to change their infrastructure every two years because it's too expensive. The cost comes not so much in the hardware as in training people to administer it," Stallings said. "Our customers came to us and said, 'We want to migrate more work to the mainframe because of the economics. We're way over the religious debates about which processor is faster -- we don't care -- we need better economics.'"

IBM is making a big bet on its mainframe business with the $100 million investment, but the gambit may pay off. In the first quarter of 2007, the company credited strong growth in its software and system z sectors for an 8 percent increase in net income to $1.8 billion and a 6.6 percent increase in revenue to $22 billion, compared to the same period in 2006.

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