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IBM — The Big Blue That Could, In Mainframes And Beyond

Written by on January 14, 2015

It’s to International Business Machines Corp. (NYSE:IBM)’s credit that it manages to evolve with the times and keep itself relevant in any given technological epoch. IBM has been through many paradigm shifts in the world of technology.

IBM’s z13 Mainframes

IBM’s mainframe business is a prime example of how this company has managed to stay relevant in an increasingly fast-changing world. In a “mobile-first” world dominated by powerful smartphones, IBM’s new mainframe is designed to crunch data.

IBM’s mainframe technology has always found favor among customers such as banks and other organization who have mission-critical operations and want a fail-safe technology. Most of the world’s ATM transactions as well as credit card payment systems use IBM mainframes.

For IBM, mainframes serve as a robust profit center that contribute up to 25% of IBM’s revenue and 35% of its operating profit. The advantage IBM has with its mainframe technology is that it is virtually alone in the market and enjoys the benefits of a near-monopoly status.

IBM sold off its personal computer and then industry standard server businesses to Lenovo as it found those businesses to be too commoditized. Mainframes are the sort of business that is neither commoditized today nor are they likely to become commoditized in the near future.

With its Linux-based mainframes, IBM has found a new lease of life for these million-dollar machines in the age of big data and cloud computing.

The latest z13 mainframe boasts a faster processor and three times more memory than its predecessor. IBM has a solid R&D set up and spent a $1 billion on the development of the z13 while in the process filing 500 new patents.

IBM is hoping to tap into the real-time analytics market with its z13. The ecommerce market is growing as is online shopping made from smartphones. In the U.S. alone, online purchases made from smartphones and tablets was around $114 billion last year and is projected to reach $293 billion by 2018, according to Forrester Research.

While making online purchases easy for customers, mobile ecommerce and mobile online shopping has myriad aspects including authentication, security of data and credit card information, and so on.

It is to IBM’s credit that in an era when companies are eager to trust their data and processing requirements to server farms located in data centers, there are enough big corporates who want to invest in IBM’s mainframe technology.

IBM Joins Up With Apple

It’s IBM’s unique industry relationships and deep industry expertise which led to a formal partnership with Apple whereby the two companies are developing more than 100 industry-specific apps in banking & financial markets, retail, insurance, telecoms and so on.

The IBM-Apple partnership is high profile enough that when it was announced, both the companies’ CEOs — Ms. Virginia Rometty of IBM and Mr. Tim Cook of Apple — made themselves available for an interview with the New York Times. With IBM’s deep expertise and Apple’s user-friendly hardware, professionals in multiple verticals — whether they are sales executives or airline pilots — will benefit.

IBM in Cloud Computing And Data Centers

IBM is inevitably offering cloud computing solutions under the SoftLayer brand and added 12 more cloud data centers recently. IBM has invested heavily — more than $7 billion so far — in making acquisitions in the cloud computing domain since 2007. It is also investing billions in creating a globally distributed data center network.

The benefit in being able to deliver cloud services from as many as 40 data centers worldwide in 15 countries — as IBM is doing — is that it will give IBM a powerful advantage in the post-Snowden era where companies and governments are concerned about data protection and may want their customer and citizen and other confidential data to reside within national boundaries.

IBM Watson

Another major initiative from IBM is its analytics tool Watson which is now being offered to companies in the healthcare arena. With genetic analysis, personalized medicine and brain research all growing areas in the healthcare sector, Watson’s maturing as a research tool will earn IBM billions of dollars in the next few years.

With all these efforts, IBM is not only staying alive but thriving and disproving the old saying that you cannot teach an old company new business acumen.