IBM Begins System z9 Mainframe Shipments

by Timothy Prickett Morgan

As promised, IBM began shipping the first phase of its new "Danu" System z9 mainframes on September 16. By beginning shipments last week, Big Blue will be able to book those sales in the third quarter, which should help boost its zSeries sales for the quarter. In the second quarter, as companies were anticipating the Danu announcements, mainframe MIPS shipped were down 19 percent compared to a year earlier and revenues were off 24 percent.

It is hard to imagine that a few weeks of System z9 announcements in September will be able to offset what must have been pretty tepid shipments in the first eleven weeks of the third quarter, particularly those weeks prior to the July 26 announcement of the new mainframes. But, as I have suggested many times in the past, when you own what is probably the largest buyer of mainframes--that would be IBM Global Services--you can probably afford to stay one generation back on mainframe technologies provided you can get Systems Group to cut you some slack on the pricing. In fact, IBM HQ probably encourages such foresight and planning. To be fair, customers wanting smaller mainframes than the Danu boxes--the z800 and z890 boxes--would continue buying at their normal pace, of course. So mainframe sales would not just stop cold. The question now is this: Will the Danu boxes cause mainframe sales to heat up in the next year?

IBM seems to think so. "There's a groundswell of interest from businesses and governments around what the new class of mainframes can do," said Erich Clementi, general manager of IBM's System z9 Division, in a statement. "Companies are looking to the new mainframe more than ever to help manage some of the most complex corporate issues, such as protecting the security of customer information and complying with federal regulations. From a technical perspective, the mainframe's deep commitment to Java, Linux, virtualization and SOA are driving adoption." IBM has been bragging about how the legendary security of its mainframes has been improved with the System z9 boxes, through the cryptographic accelerator built for the machine (which can handle 6,000 SSL handshakes per second with four 1.7 GHz z9 processor cores and two Crypto Express2 cards) and a facility that encrypts data on tapes and allows keys to unlock that data to be shared only with partners.

Pumping Iron: Rich Nelson (left) and Tom Sylvester (right) of IBM's mainframe factory in Pokie pack up some mainframes for shipments to customers last week. If IBM has its way, they will be plenty tired moving a lot more iron around in the coming quarters.

Exactly who is buying the first Danu mainframe rolling out of the IBM factories is unclear, and according to IBM sources, the fact that they are just laden with security features and such is one of the reasons that none of Big Blue's big iron customers are willing to step forward to say they are among the first organizations to use the machine. Such customers don't want to tip their IT hands, says those IBM sources, and thereby give anyone on the outside a clue as to what goes on in the systems behind the firewalls. This is particularly true of the largest mainframe shops, who are generally the biggest public companies and governments in the world. The fact that IBM is the dominant seller of the largest mainframes means it can keep the identities of the buyers under wraps for a while, but sooner or later, people will start talking and those few remaining resellers out there will figure out where at least some of the boxes are going. This will be particularly true where Danu machines are used to consolidate the workloads on many smaller zSeries mainframes, machines that might have been sold by one of the few resellers IBM still has left peddling mini mainframes. The software vendors who sell systems, database, and applications software for big IBM mainframes surely know where they are going, since they want to jack up the software fees for customers using these bigger boxes.

What IBM will confirm is that Danu systems are shipping out of two factories, the main North American factory in Poughkeepsie, New York, and the other in Montpellier, France, which is the main factory for big mainframes in Europe. Sources at Big Blue say that machines of varying configurations have shipped--with 1, 2, 3, and 4 processor books installed. That means some relatively skinny machines have gone out the door as well as some of the biggest mainframes IBM has ever created. Those machines can have, in theory, 10, 18, 28, and 38 z9 processor cores activated, and span up to around 13,700 MIPS in the largest configuration with a street price, as estimated by mainframe analyst Hesh Wiener, of around $18.2 million. If you sell ten of these puppies, you have around $200 million, or about a quarter to a fifth of a normal third quarter in the IBM mainframe business. My IBM source says that the Danu machines are going out to the usual suspects--governments and financial services firms--and that they are shipping to customers in North America, South America, Asia, and Europe.

The cryptographic support for z/OS 1.6 and z/OS 1.7 will not be available until October 28, however, which may put a damper on sales. IBM is still, as far as I know, on track to deliver its 54-way, 17,800 MIPS System z9 S54 box on November 18. This machine should be a boon for the fourth quarter and the first quarter of 2006 for customers with growing mainframe workloads and/or the desire to do big server consolidations.