The Enterprise IT Year That Was
Where have all the good times gone?
Ray Davies of The Kinks posed this musical question almost 50 years ago, not long after IBM Corp. introduced its first System 360 mainframe. This year, Davies’ question seemed to resonate with fresh urgency.
To be sure, 2011 saw plenty of positive developments. For one thing, Windows inched ever closer to running on the mainframe -- but a lot of us will probably remember it as a gloomy year, leavened with occasional glints of sunshine. From a stagnant job market to the persistent threat of economic tumult, developments on the economic front offered little in the way of encouragement.
The year also marked the passings of a trio of technology luminaries: Apple Inc. co-founder and CEO Steve Jobs, Unix and C-programming language co-inventor Dennis Ritchie, and artificial intelligence (AI) pioneer John McCarthy.
It’s enough to make one ask: where have all the good times gone?
Instead of dwelling on the negatives, let’s instead focus on 2011’s more positive developments and take time to celebrate the contributions of Messrs. Jobs, Ritchie, and McCarthy even as we mark their passings. After all, the events of 2011 owed much to their genius. And -- barring a sudden and unimaginable paradigm shift -- 2012 should owe them just as much.
Not Quite Windows on the Mainframe, But Still...
Let’s start with the slow -- dare we say inexorable? -- march of Windows to the mainframe. By the time you read this, it will (almost) be possible to manage Windows systems in a mainframe context. Earlier this year, IBM Corp. announced its intent to support Windows running in its zEnterprise BladeCenter Extension (zBX). zBX, as you’ll recall, is the mainframe/open systems sidecar that IBM unveiled with its zEnterprise 196 mainframe back in 2010. As of December 16 of this year, IBM will support Windows Server 2008 R2 Datacenter Edition running in a zBX chassis on its HX5 blades.
Now that Windows-in-a-zBX is here, what does it mean?
First, it doesn’t mean Windows is running on the mainframe, i.e., in zVM or in any other context. In other words, Windows won’t be running in a special processor, a la IBM's Integrated Facility for Linux (IFL).
Nevertheless, customers will be able to manage Windows from their zEnterprise 196 or zEnterprise 114 mainframes, using Big Blue's zEnterprise Unified Resource Manager (URM) to administer their mainframe and BladeCenter platforms as a single, virtualized system. This includes enforcing policy-based workload and resource management on a platform-wide basis, across z/OS, z/VSE, Linux, Windows, and Unix systems, too, because zBX can host any of three versions of IBM's AIX Unix variant (AIX 5.3, AIX 6.1, or AIX 7.1), running on PS701 Power-based blades. This, mainframe boosters say, is a Very Big Thing -- at least on paper.
What will Windows-on-the-zBX prove to be in practice? “Linux server consolidation already is a proven workload. It remains to be seen which Windows applications get moved to zBX Windows blades. Enterprises will likely pick and choose among Windows workloads,” wrote veteran industry watcher Alan Radding on his DancingDinosaur blog, just after IBM announced its official timetable for Windows-on-the-zBX. "The initial workloads will probably be those that will benefit from close proximity to DB2 data residing on the z196 or z114.”
If last year was bleak for Big Iron -- and it was (IBM’s mainframe group posted massive losses in the first and second quarters of 2010) -- this year was something else again. In the first three months of this year, for example, Big Blue sold more than $1 billion worth of Big Iron hardware. True, this was down sequentially from the last three months of 2010, which -- owing to the first-time availability of IBM’s new zEnterprise 196 -- was one of the most wildly successful stretches in Big Iron history, with sales eclipsing $1.7 billion. On a year-over-year basis, then, System z’s performance in the first three months of 2011 was up by almost half (41 percent) from the same period in 2010.
That’s quite a performance, but in Q2, IBM did even better, generating $1.2 billion in mainframe sales according to market watcher International Data Corp. (IDC), which was a 60 percent increase over Big Iron’s Q2 performance in 2010. (True, Q2 of 2010 was one of the worst quarters in mainframe history, but even so, there's no sneezing at more than $1 billion in mainframe-related revenue.) Q2 also marked the fourth consecutive quarter in which Big Blue's mainframe group generated $1 billion or more in revenue. It would also be the last such quarter.
Big Iron didn’t -- and really couldn’t -- sustain this kind of performance through the third quarter of 2011, although this, too, was expected. In fact, zEnterprise’s $970 million performance in Q3 (which saw a 5 percent year-over-year decline in sales) was more or less in-line with IBM’s own guidance.
Although the zEnterprise tank isn’t empty, the pent-up demand that helped fuel four consecutive $1 billion-or-greater quarters probably is spent.
As 2011 draws to a close, zEnterprise is nearing 17 months on the market. This means it’s at least halfway into its life: Big Blue typically revises its mainframe CMOS every 24 to 30 months. If history is any indication, demand for zEnterprise hardware could begin to drop off -- perhaps precipitously -- by the third and fourth quarters of next year.
With this in mind, it’s worth looking at just what IBM has accomplished with zEnterprise since it started shipping in Q3 of last year: namely, almost $5.9 billion in Big Iron sales ($3 billion in 2011), more than 100 new mainframe customers (24 in 2010, more than 80 in 2011), and at least four-score zBX unit shipments. There’s also this: in any given quarter, zEnterprise sales have accounted for almost 9 percent of all server market revenues. Not bad.
Of course, just because zEnterprise is starting to show its age doesn’t mean it can’t be taught a new trick or two. In July, for example, IBM unveiled a new midrange mainframe, the zEnterprise 114, priced to move at $75,000 -- or about $25,000 less than Big Blue’s previous bottom-line offering, the System z10 Business Class (BC). In keeping with one of the most bankable trends in technology history, the new z114 also delivers significantly more performance than its predecessor: almost 20 percent per core. At launch, IBM said that shops could consolidate as many as 300 distributed servers on a single z114.
Not bad at all.
Transition and Turmoil at the Top
This year was a rough or transitional year for several prominent companies. In late August, CEO, co-founder, and nominal miracle-worker Steve Jobs stepped down from the top position at Apple. Just over a month later, Jobs succumbed to the pancreatic cancer that he’d been battling -- with characteristic defiance -- for eight years. Tim Cook, Apple’s long-time chief operating officer, succeeded Jobs as CEO. Cook had been in charge of day-to-day operations at Apple since January of this year, when Jobs first informed Apple employees -- and the world -- that he was taking another medical leave.
There was C-level turmoil at another computing giant -- namely, Hewlett-Packard Co. By any reasonable standard, HP had an especially rough 2010: under the leadership of new chief executive Leo Apotheker -- who was fired by the HP board in September of 2011 after less than a year on the job -- the Palo Alto-based firm hemorrhaged 40 percent of its stock valuation.
Investors seemed mostly to be responding to HP’s miscues, of which there were plenty, starting with the disastrous timing of its acquisition of search and knowledge management specialist Autonomy for $10 billion.
This should have been a big deal for HP: the kind of signature acquisition that a new chief such as Apotheker might use to put his stamp on the company.
At about the same time, however, HP disclosed plans to discontinue all of its WebOS-powered hardware devices and -- maybe, just maybe -- to sell off its PC line, too. Hewlett-Packard (then and now) is the number one PC vendor in the world. Its withdrawal from the PC business would have been a Very Big Deal. As a result, surprisingly few folks wanted to talk about what Autonomy might mean for HP. Instead, investors and customers alike clamored to know more about Hewlett-Packard’s plans vis-à-vis the PC market. Many others -- such as those few who’d purchased HP’s new WebOS-powered Touchpad tablets -- were at least mildly curious about the future of that platform, too.
Apotheker and Hewlett-Packard were forced to abandon both ideas. One month later, Apotheker was out. And one month after that, HP -- now helmed by former eBay chief (and one-time California gubernatorial candidate) Meg Whitman -- announced that it would, in fact, continue selling PCs. Meanwhile, Palo Alto is still mulling its alternatives with WebOS, which was perhaps the most inexplicable of its several 2011 miscues. In February, for example, just six months before officials first floated the idea of killing it, Hewlett-Packard trumpeted an ambitious plan to deploy WebOS across all of its printers, PCs, and notebooks.
By comparison, the impending executive transition at rival IBM seems considerably more orderly. In late October, CEO Sam Palmisano -- who succeeded Big Blue’s acknowledged savior, Lou Gerstner, when Gerstner decided to step down after a nine-year tenure -- announced that he would be stepping aside at the end of this year. That makes nine years on the job for Palmisano, too -- although (unlike Gerstner) he plans to stay on as Chairman.
As of January 1, 2012, Big Blue will have a new president and CEO: Ginni Rometty, its first female chief executive.
Tablets Take the Enterprise
The popularity of the iPad late last year set the stage for an eruption of new tablet offerings in 2011. That’s more or less what happened, with HP, Motorola Inc., Research in Motion (RIM) Inc., Samsung, and others following Apple’s lead.
Although none of these introductions has been an unmitigated failure, none has been an out-and-out slam-dunk, either, and none has come close to approaching the runaway success of the category-defining iPad, which (according to a late-September tally from market-watcher IDC) accounts for almost 70 percent of all tablet sales.
Apple’s rivals aren’t giving up, however. Google Inc., for example, continues to mount a strong iPad challenge with its Android-based tablets, which are available from Samsung, Motorola, and other vendors. Thanks chiefly to pressure from Android, IDC expects Apple’s share of the tablet market to drop down to 50 percent by the end of this year. “Apple's iOS share will continue to lead by more than 40 percentage points over Google's Android for the remainder of the year, but we expect Apple's share to fall closer to 50 percent by the end of the forecast period as manufacturers bring new tablets to market," said Jennifer Song, a research analyst with IDC, in a September market forecast.
In addition to pressure from Android, IDC cited HP’s TouchPad, which enjoyed a surge in sales after HP announced plans to discontinue it and other WebOS-based devices in August of this year. Meanwhile, Amazon recently announced a $199 Android-based version of its popular Kindle reader, the Kindle Fire. And Microsoft Corp. plans to make its big splash into the tablet segment with Windows 8, which will ship with a new UI -- based on Redmond’s Metro design language -- that Microsoft claims is ideally suited for the tablet computing paradigm. (Windows 8, of course, may or may not ship next year.)
The stage is set, then, for someone or something to challenge Apple for tablet computing bragging rights in 2012.
Meanwhile, enterprise IT organizations are proceeding apace with tablet computing adoption: many are already using iPads (or, less frequently, competitive tablet offerings) in production, while most are at least mulling tablet strategies. In Apple’s Q4 2011 earnings conference call, for example, CFO Peter Oppenheimer claimed that the iPad enjoys almost complete penetration across the Fortune 500. “Today, 92 percent of the Fortune 500 are testing or deploying iPad within their enterprises, up from 86 percent last year,” Oppenheimer told investors. “Internationally, 52 percent of the Global 500 are testing or deploying iPad, up from 47 percent last quarter.”
Oppenheimer’s claim seems to stretch credulity. The iPad first shipped in April of 2010; if 86 percent of the Fortune 500 was in fact “testing or deploying” it by the end of the year, you can bet that many more were testing than deploying, and you can likewise question what it means to “test” in this context.
At the same time, few dispute that -- 20 months after the iPad’s debut -- tablet devices have earned a seat at the enterprise table.
The big question is the extent to which tablets will displace PCs. Few IT pros believe that tablets will altogether replace PCs (not yet, anyway), but there’s an expectation that shops will increasingly tap tablets to complement -- and, in many cases, to displace -- the use of desktop or laptop computers.
This year, for example, tablet shipments will increase by as much as 300 percent: from 18 million in 2010 to 62.5 million in 2011, according to projections from IDC. Last year, tablet unit sales came in at about 5 percent of PC unit sales (per IDC’s figures); this year, IDC puts that number at 17.5 percent.
With Amazon’s Kindle Fire expected to make a big splash during this year’s Christmas buying season and with a Windows 8-powered tablet possibly on tap for sometime next year, 2012 could prove to be an especially interesting year for tablet computing.
If, in the popular imagination, Steve Jobs is enshrined as one of computing’s most important contributors, then Dennis Ritchie, who created the C programming language and who helped co-invent Unix, has a Jobs-ian status among the computing cognoscenti. The same can be said about John McCarthy, a pioneering AI researcher to whom mainframers (especially) owe a lasting debt: McCarthy, after all, played a fundamental role in the development of computational time-sharing.
Both Ritchie and McCarthy died in the second half of this year, shortly after Steve Jobs. Neither received anything close to the amount of posthumous recognition accorded Jobs, but -- like Jobs -- both were giants. If human progress is in any sense a ladder-like projection of giant standing upon the shoulders of giant, Messrs. McCarthy, Ritchie, and Jobs have given us some extremely tall -- to say nothing of gigantically broad -- shoulders on which to stand. Their contributions will be as important in 2012 as they were in 2011.
Check back again at this time next year. You’ll see.