IBM's 'T-Rex' bites into server market

Big Blue seems to have convinced customers that its top-end mainframe line is far from obsolete. Are Sun and HP seeing mainframe gains, too?

Stephen Shankland Former Principal Writer
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Stephen Shankland
2 min read
IBM has shown some success in its effort to convince customers that its top-end mainframe line isn't destined for obscurity, new market share statistics show.

In the market for servers costing $250,000 and up, IBM's mainframe revenue increased 30 percent to $1.8 billion from the fourth quarter of 2002 to the fourth quarter of 2003, according to Gartner. In contrast, the overall market for servers of that price grew 8 percent to $4.9 billion, the market researcher said.

For this price range, Gartner said mainframes dominated IBM's revenue, accounting for $1.8 billion of the $2.83 billion the company garnered in the quarter. By comparison, HP's sales rose 9 percent to $906 million in the price range and Sun Microsystems' dropped 16 percent to $420 million.

IBM's mainframe products, currently called zSeries, are part of a decades-old line that's highly regarded for flexibility, communications power and the ability to withstand hardware and software faults. But mainframes are expensive, and Unix server makers such as Sun, HP and even IBM are copying mainframe features into their own products.

Mainframes once were a realm unto themselves, but in an effort to keep them relevant, Big Blue is grafting mainstream computing technology onto mainframes, including data and storage networking standards, Sun Microsystems' Java software and the Linux operating system.

In a jab at competitors who declared the mainframe an obsolete dinosaur, IBM dubbed its z990 mainframe "T-Rex." That system was released in May 2003 and upgraded with 24- and 32-processor capability in October.

For the full year, mainframe sales increased 20 percent to $6.8 billion, said Gartner analyst Mike McLaughlin. "Their T-Rex started to ramp. I think they're getting it out the door and they're marketing it well with their 'on-demand' marketing," which makes customers more comfortable that they can get a mainframe's benefits without being locked into overpaying, he said.

Boosting IBM's mainframe revenue for the fourth quarter was the sale of 20 top-end z990 mainframes to Sparkassen Informatik, which provides computer services to the German banking industry. The deal, which also included pSeries Unix servers and IBM's Enterprise Storage System "Shark" products, is worth more than $100 million to IBM over four years.

HP, Sun and storage specialist EMC had bid for the deal, IBM said.

In 2004, Postbank, Germany's largest retail bank, bought four z900 mainframes to run business systems that previously ran on Fujitsu-Siemens mainframes. The bank also bought eight p690 servers, the top-of-the-line Unix server from IBM, and four "Shark" storage systems with a capacity of 40 terabytes.