The State Of The Power Systems Base 2024: The Systems
February 5, 2024 Timothy Prickett Morgan
The foundation of any system is its processor. It is the central processing unit, or CPU, which used to be part of what we called the main frame in a multi-frame system, that ultimately does the calculations that make computing useful. There have always been many things that wrap around this CPU that turn it into a complete system – memory, networking, other kinds of I/O, various levels of storage, all in their own hierarchies. But if you ask someone what kind of system they have, beyond the vendor and the brand, the next bit of data they will tell you is the CPU.
Because the capabilities and price/performance of CPUs across any system line are always changing, usually becoming more capacious on many vectors as well as offering better bang for the buck across those vectors as time passes, you can use the CPU as a kind of a proxy for the health of a server ecosystem. If too many people are hanging back and not investing in new machinery, then the health of the ecosystem cannot help but suffer. It is the current spending on new gear as well as the maintenance for older systems and software that allows for investments in the future.
And so, we have always watched the installed bases of the AS/400 and its System/3X forebears like a hawk, and we did the same with the iSeries, System i, and IBM i on Power platforms that have followed it to market for 55 years now. (The System/3 goes back to 1969. Hard as that might be to believe.)
For the past decade, we have made heavy use of the annual IBM i Marketplace Survey to take a blood sample from the IBM i installed base to see how healthy it is. We use this data as the basis of some models that we think more accurately reflect what is going on in the base of 120,000 distinct IBM i shops in the world. (The IBM i base loses about 2,000 customers a year, and it thankfully gains about 2,000 customers a year thanks in large part to popular application software.)
As we have pointed out many times in the past decade, we think there are about 30,000 active IBM i shops in the world, meaning they keep their hardware and software reasonably up to date, they pay for maintenance on their machines, they use modern programming and database techniques, and they read newsletters and magazines and some of them take part in annual surveys. We think there are 90,000 or so of what we call IBM i laggards, who either chose to or have to hang back on the hardware or software technology and who may or may not even know what machine they have in their datacenter or datacloset. These companies do not tend to read newsletters or take surveys.
For comparison, back when there were 275,000 unique AS/400 sites in the peak year of 1998, we think there were about 100,000 active sites and 175,000 laggard sites, and a lot of the actives ended up in mergers and acquisitions which reduced their count or saw the AS/400 or iSeries platform replaced by a Unix or Windows Server system. It was a very different world back then, in so many ways. The entire IBM midrange ecosystem did a massive contraction in the 2000s, and then bled off customers more slowly, and about a decade ago reached the equilibrium I pointed out above. This is a whole lot better for all of us than bleeding out, which the base could have done three decades ago.
It didn’t, and here we all are, still at it. Imagine that.
One of the first things we look at in the annual Fortra survey is the question: “Which IBM Power servers do you own?” Going forward, as the cloud gets more commonly used for IBM i instances, we are going to have to reword that question. It is an open ended question, and it does not mean what is your primary machine, but is intended to get a count of all of the different Power CPU architecture families installed among those who answer the poll.
Here is what the 2024 report data, which was gathered in October and November 2023, shows compared to the prior four years:
I know that many of you like to take this data at face value, and would that it could be true, but I have never believed that this data was representative of the real AS/400 and IBM i installed base of Power Systems hardware. I have talked to too many customers and business partners – and secondhand equipment dealers – to believe, for instance, that 32 percent of the current IBM i base has at least one Power10 machine.
I do think that this is true among those 30,000 active sites I referenced above, and furthermore, I believe that the 90,000 remaining laggards have hardware that is more reflective of what the actives were using four years ago. And so, each year as a get the Fortra survey, I do some black magic in a spreadsheet to calculate how many servers are in the installed base (which you can do with the server count chart also in the report) and then adjust the actives and the laggards to get their shares of that installed base.
The data I built my model upon goes all the way back to the beginning of the survey, and doesn’t only show five years of trend data. Here is what the raw trend data looks like:
As I have said many times in the IBM i Marketplace Survey webinar, these curves and trends do not violate my sensibilities for the active part of the base, and in fact, if you looked at a distribution of X86 servers running Windows Server or Linux, you would get the same kinds of curves and you would be looking at some pretty ancient systems. Even the hyperscalers and cloud builders are keeping their machines on the books for five years now – and they do so because to have a three year depreciation schedule means the big clouds can never show operating profits. (Imagine that.) Only by having a monopoly somewhere else was Google and Microsoft able to indulge in three year server upgrade cycles.
In any event, when you adjust the base for the laggard and add in the actives, here is what I think the actual Power Systems installed base running the IBM i platform looks like:
There is obviously a lot more rusty iron out there than IBM or any of us would like to see, but the good news is that the Power7, Power7+, and Power8 installed bases look to finally be in real decline. The Power5, Power5+, Power6, and Power6+ bases are most of the way down to zero, and Power4 and Power4+ finally are, as best as I can figure. And, in the vast installed base of machines, which I think numbers around 293,700 boxes across those 120,000 unique customers, the Power10 base is now becoming representative here in year two of its product cycle. The Power10 product ramp looks exactly like the Power8 and Power9 ramp, and if we had been doing the survey for the past 35 years, as all of the other AS/400 and IBM i hardware ramps would have looked like, more or less.
Based on calculations using the survey data, it looks like the number of physical machines has been declining for the past three years, and this makes sense as more and more customers are using logical partitions to create virtual server instances on their machines. The ratio of machines to customers stood at around 2.8 for a long time, dropped to 2.63 in 2023 and is now down to 2.45 here in 2024. Here is a table that gives you the number of machines by architecture and their share in the installed base for the past three years:
All in all, this is still a healthy installed base of hardware, although with Power8 iron going off maintenance this year, we expect for a big upgrade cycle. We think that a lot of customers will be looking to move to Power9 and Power10 iron, and obviously Power9 iron is still on the rise because not everyone can get to Power10 with their application software and even if they could, secondhand Power9 iron can be economically attractive and technically sufficient for a lot of database and application workloads. We think Power8 will see big declines in 2024 and both Power9 and Power19 will show steepening curves up and to the right. Which is a good thing.
One last thing: If you missed the 2024 IBM i Marketplace Survey webinar, you can see the survey results and listen to the commentary from various luminaries here, and if you want to read the written report accompanying the survey results, you can download that there.
You Ought To Be Committed (2023 Survey)
The Power Systems Base Is A Little Less Rusty (2023 Survey)
The IBM i Power10 Upgrade Cycle Forecast Looks Favorable (2023 Survey)
RPG Use “Skyrocketed” Says IBM i Marketplace Report (2023 Survey)
Cutting IT Costs Is Not A Priority, And That’s Good News (2023 Survey)
How Do You Stay In Touch With The IBM i Community? (2023 Survey)
Security Still Top Concern, IBM i Marketplace Study Says (2023 Survey)