IBM Debuting New Mainframe to Take On Server Market

NEW YORK — IBM Corp. is unveiling its next-generation mainframe computer Tuesday, touting the z10 as a more powerful and energy-efficient alternative for data centers that use many small servers and face rising power and cooling costs.

The more than 6-foot-tall mainframe was designed to handle growing demands on computer facilities driven by Internet traffic and transactions, IBM said. The z10 can handle about 2 billion transactions each day.

Selling for $1 million and up, the system is intended for big companies, government agencies and financial institutions.

The mainframe is the product of a five-year, $1.5 billion project involving a global Big Blue team of more than 5,000 people, including software developers in Austin, Texas.

"It's the beginning of a new version of the mainframe that's going to become more relevant to today's business problems, particularly for larger corporations," said Carl Greiner, an analyst with the Ovum Inc. consulting firm who was briefed on the announcement.

About 20 percent of data centers use mainframes, while more than 60 percent use servers based on chips from Intel Corp. or Advanced Micro Devices Inc., Greiner said.

While it is unlikely IBM can hinder that dominance, "the mainframe is getting a rebirth on some of the economic benefits it can provide and some of the environmental benefits," he said.

A single z10 has the computing capacity of nearly 1,500 desktop computers but uses 85 percent less energy, said David Gelardi, IBM's vice president of mainframe systems and performance. He said the z10 also occupies far less space.

"To really talk about the momentum of the mainframe you have to look at the taxed data center, the really stressed data centers in terms of power and cooling. These are the major issues," Gelardi said. "We have the capability to consolidate with less energy and less floor space."

Even though the z10 can match the capabilities of 1,500 small servers, it is a very expensive, high-end mainframe and not likely a major threat to the low-end and mid-range servers from companies like Dell Inc., said Roger Kay, president of the Endpoint Technologies Associates research firm.

"How many people need 1,500 of those? Not many, but there are some," Kay said. "In most instances the markets are different."

IBM planned to announce the mainframe's debut Tuesday at events in New York; Tokyo; Munich, Germany; and Mumbai, India.

The company also is announcing a new consulting service to help customers improve their data centers and growth in a program that partners with colleges and universities to teach mainframe technology.

Mainframes are often used to deal with vast numbers of transactions such as those involved with banking, stock exchanges and airline reservations.

The centralized machines date from the dawn of the computer age and have persisted even with the arrival of personal computers and lower-cost servers.

Mainframes have recently been fighting back, with Armonk, N.Y.-based IBM expanding the kinds of programs they can run as way to encourage customers to switch from multiple servers.

IBM shipped more than 2,000 mainframes in 2006 and that business likely remained steady in 2007, said Jean Bozman, a vice president with the IDC research firm.

The z10, which can run a variety of operating systems, uses up to 64 four-core processors custom built for the mainframe. It is 50 percent faster than its predecessor, the z9, which debuted in 2005.

IBM has forecast a strong 2008, largely buoyed by business outside the United States.

IBM said its mainframe revenue in 2007 grew 18 percent in the emerging markets of Brazil, China, India and Russia.

However, in the last three months of last year, IBM's mainframe business saw a 15 percent sales decline. Executives have blamed the drop on customers waiting for the new model.

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