Watching Big Iron: A Rosier Outlook for 2010

Mainframe and high-end server fortunes took a beating in 2009. An industry veteran says 2010 is shaping up to be an improvement.

Mainframe and high-end server fortunes took a beating in 2009, but 2010 is showing signs of improvement.

With market watchers projecting big spikes in IT spending, along with reports of of pent-up demand, sales of high-end servers could recover nicely this year. This is particularly the case for the Big Iron market.

Prior to joining CA, Scott Fagen, chief architect and distinguished engineer with the company, spent more than 20 years with IBM's mainframe group. He knows Big Iron, knows Big Iron business cycles, knows -- as does any veteran of the pre-Gerstner Big Blue -- what a real Big Iron downturn looks like, and is optimistic about the mainframe's prospects in 2010.

Fagen sees Big Iron's 2009 nosedive as largely a function of a perfect storm: an all-but-unprecedented economic crisis and the natural deceleration of a mature mainframe product line. The economic crisis speaks for itself, of course: all server segments took hits in 2009. In Q1, in fact, mainframe market fortunes took less of a hit than did sales in other server segments. (This also has something to do with the natural ebb and flow of big capital expenditures for mainframes, which -- like sales of big ticket Unix servers -- tend to do very well in the first and fourth quarters of the year and not so well in between.)

"I don't think you can name a business last year that didn't take a nosedive -- other than the legal area of foreclosure," he deadpans. Fagen points out that System z10 turns two next month. Big Blue is prepping z10's successor -- System z11 -- for release later this year. Customers know as much. It's a familiar tale, Fagen concedes, and it's something that happens before every mainframe platform refresh. This time around, the brutal economic climate exacerbated the problem.

"It's all very cyclical, the downturn of the economy sort of corresponded with the latter part of the z10 sales cycle," he continues, adding that for many of System z's largest customers there should be plenty of pent-up demand. "If you look at all of the M&A activity last year, even with fairly large banks buying fairly large banks, [all of these firms have] a lot of work to do … in the areas of software harmonization -- getting these different systems, different platforms, different applications to work. I think that's one of those things that will start to open up over the course of the year."

Fagen -- like other industry veterans -- is intrigued by IBM's announcement of a new Enterprise Linux Server (ELS), which is available in both business-class (BC) and enterprise-class (EC) flavors. Big Blue's new ELS entry is based on a configuration that it had been selling -- by all accounts, successfully -- in the Asia-Pacific region. That said, he stops short of predicting an explosion of System z ELS systems in the coming year.

"I think because the mainframe market here is so much more mature than it is in Asia, it's just a very different kind of situation. Let's face it, not every 'mainframe' in China or India is a [100 percent IBM] system. It's kind of like when the Berlin Wall came down and they discovered all of those mainframes that had been cloned in the 1970s," he points out.

"There probably isn't all that much demand for z/OS [in Asia] because of the way things are, so what you did [with a configuration like ELS] was you're giving them the ability to scale up in a machine that's much more reliable than the typical Intel box. Certainly, it has capacity and I/O capabilities far beyond what you'd get from an Intel box."

More likely, says Fagen, are what might be called "tag team" deployments: conventional System z mainframes -- running traditional Big Iron applications (starting, of course, with the z/OS environment itself) -- connected, via HiperSockets, with Linux-only ELS boxes. It's a topology that makes sense both from a server consolidation perspective -- CA's research indicates that companies with large Big Iron investments are very open to Big Blue's System z-based server consolidation pitch -- and from a security perspective, Fagen indicates.

"I do think that what we'll see is an increased interest in running [ESL] side by side with z/OS, because of the ability to do things like connect them [i.e., both systems] with HiperSockets, so you don't have to do things like encrypting [traffic] inside your internal network. We could also see service deployments that take advantage of the co-location and the physical resources."

Elsewhere, Fagen expects that another established trend -- i.e., that of big Big Iron shops getting bigger, even as smaller shops deemphasize their mainframe investments -- will continue apace. "As much as it's true that the number of MIPS on the platform has grown since 2000, the number of physical customer footprints is down," he acknowledges. In light of the "green IT" push, Fagen stresses that the economics of the 21st century data center are both daunting and unshakeable.

"Although the energy crisis doesn't seem to have maintained the [same] front-page status as the economic crisis has, it's still there. People cannot build more floor space for data centers. London still has its rules about no more floor space for data centers; if you want to build additional [data center] capacity, you have to leave the city. On top of that, the price of oil is spiking back up again -- and data centers are among the highest-price costs of a business," he points out.

"Also, distributed servers have an economic life, and every year some of those come off of an economic life. I think that some number of those will be hosted on to System z -- especially for customers that have large System z practices."