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IBM Mainframe Revenue Growing as Overall Systems Revenue Decline

By Sean Michael Kerner (Send Email)
Posted January 20, 2017


IBM reported its fourth quarter and full fiscal 2016 financial results on Jan. 19, showing continued benefit from the company's strategic initiatives.

For the quarter, IBM reported revenue of $21.8 billion, for a one percent year-over-year decline. Full year revenue was reported at $79.9 billion, which is a two percent decline from fiscal 2015.

Looking specifically at IBM's systems group, which includes server hardware and operation systems software, IBM'S fourth quarter revenue was $2.5 billion, for a 12.5 percent year-over-year decline.

"Our Systems revenue reflects growth in z Systems, offset by declines in Power and storage as we continue to address a shifting market," Martin Schroeter, Senior Vice President and Chief Financial Officer, at IBM, said during his company's earnings call.

IBM's z Systems mainframe business is growing, with revenue up by four percent in the fourth quarter. Schroeter commented that the z System is optimized for mobile and security needs and is constantly being redesigned to drive new workloads. Among the new workloads for the mainframe is the emerging-market blockchain technology.

China Poised for Growth While Power Systems in a State of Transition

China is also a growing market for the z System with IBM closing deals in the fourth quarter with two large Chinese banks that have chosen the new z13 mainframe. The z13 was first announced by IBM in 2015. The z13 system can support up to 10 TB of memory and as many as 8,000 virtual servers.

"Overall, the mainframe continues to deliver a high value as a secure and scalable platform that is critical in managing our clients’ complex environments," Schroeter said. "What drives the mainframe -- as it always has -- is our ability to make it relevant to the workloads that our clients need."

In contrast, the Power business is in a state of transition as IBM shifts toward Linux from Unix.

"Linux workloads continued double-digit growth, and faster than the market, while the traditional UNIX base declined," Schroeter said.

Sean Michael Kerner is a senior editor at ServerWatch and InternetNews.com. Follow him on Twitter @TechJournalist.

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