IBM launches the z13 – a server with growth in mind

IBM introduced its new mainframe today and swapped the ‘z’ from back to front to re-brand the family as ‘z Systems’. It’s a good time to look at what was introduced and how the new features and offerings will help IBM’s customers.

Note: This bulletin reflects data as derived by ITCandor based on public IBM financial statements that only quote revenue growth each quarter.

What is the z13?

The new 2964 machine type uses Simultaneous Multi-Threading (SMT) to deliver more throughput for Linux and zIIP workloads. It also uses Single Instruction Multiple Data (SIMD) processing to improve the performance of complex mathematical models. Other features include:

•  5 models – N30, N63, N96, NC9 and NE1
•  A new zBX 004 model (IBM z BladeCenter® Extension (zBX) Model 004), with upgrade paths from the 002 and 003
•  New 22nm 8-core processors
•  Systems with up to 141 configurable cores
•  Up to 3 times the available memory of the zEC12 (up to 10TB) and up to 2 times the cache
•  Up to 320 separate channels of dedicated I/O
•  Upgrade paths from both the z196 and zEC12

New security features include Crypto Express5S, which has enhanced public key support for ‘constrained digital environments’, a new version of VISA format preserving encryption (VFPE), added continuous availability and DR functions for Linux with a new GDPS virtual appliance (SOD) and the extension of IBM zAware to Linux for detecting unusual application or system behaviour.
New I/O features include the introduction of FICON Express16S to reduce DB2 workload latency, the use of a standards based approach to enable Forward Error Correction, zHPF Extended Distance II improves I/O service time which can help GDPS and TPC-R HyperSwap execute faster remote data writing and the extension of z/OS workload management policies into the SAN fabric (SAN Fabric Priority).
For Cloud the new system now supports up to 8k virtual servers per system with more than 50 per core. IBM has also issued a Statement of Direction (SOD) to extend support to OpenStack, PostgreSQL and KVM. It believes not only that its mainframes allow for Enterprise-grade Linux, but also that large deployments by public Cloud companies will be cheaper than those built on x86 processors. It is also positioning its BlueMix PaaS as an efficient way to design next generation Cloud applications.

Updating the mainframe operating systems and software pricing

IBM has also introduced a number of new mainframe operating systems versions. In particular:

• z/OS version 2.1 enables better price performance for zIIP workloads with SMT, supports new analytics workloads with SIMD and larger memory, the ability to sign audit records digitally and more agile operations with z/OSMF
• z/VM Version 6.3 also includes SMT advantages, supports twice as many processors, improves systems management, embraces Open standards and Open Source interoperability and can now support the largest number of virtual servers in a single footprint
• z/VSE Version 5.1 improves security to prevent access by unauthorised users, reduces memory constraints, allows the use of a wide number of applications via Linux and improves system usability with CICS Explorer
• Linux on z Systems offers SMT for ‘per core’ savings, allows more workloads to be hosted and managed at lower prices, adds the automatic identification of unusual messages and integrates the continuous availability and DR solution

On software pricing IBM is making reductions resulting on average in a 5% price performance advantage in addition to the performance gains of the new software itself. It’s introducing IBM Collocated Application Pricing (ICAP), which prices new application workloads on z196, zEC12 and z13 mainframes as if they were being run in a dedicated environment despite actually being technically integrated with other workloads. This scheme also works for the lower-end z114 and zBC12 machines. Effectively this reduces the cost of new applications, as it has been doing for sometime with the mobile transaction processing. It has introduced Country Multiplex pricing, which collects all z Systems in a country and measures them as if they were a single system from a software pricing point of view.

A massive ‘go to market’ effort

The ‘go to market’ approach for the new systems includes 5 global programmes. In particular:

1. New Possibilities for Progress – showcases the new machine through films on YouTube and client stories
2. The z13 launch experience – includes today’s launch events and road shows in more than 60 cities; it also includes a Social media ‘blitz’
3. Inspire developers and architects – creates a friendly environment for developing software on z Systems, including BlueMix and Cloud Patterns
4. Activate IBMers and client advocates – using internal staff and clients to become influencers through the tolls such as its advocacy microsite and ETL calculator
5. Activate Generation z – increases awareness of the mainframe among the young through competitions such as the Master of the Mainframe

Unlike most other new server announcements the majority of the effort here comes from a single vendor. IBM’s advantages are in the substantial reputation and customer acceptance of its mainframe. However recognition of these machines is lower than for x86 servers. For decades IBM has succeeded in reinventing this platform for a new generation.

How is it positioned?

IBM believes we’re entering an important third phase of mainframe adoption historically. It categorises the 3 in order as:

• Traditional drivers from 1964 to 2014 have delivered 16M MIPS at around a 10% CAGR; the associated workloads are batch, general ledger, transaction systems, client databases, accounts payable/receivable, inventory, CRM and ERP
• Linux and Java drivers from 1999 to 2014 have delivered 14M MIPS at a 28% CAGR; the related workloads are server and Oracle database consolidation, private Clouds, email, Java, Web and eCommerce
• CAMSS (Cloud, Analytics, Mobile, Social and Security) will be the new drivers from 2015 onwards; Cloud will include the use of mainframes for on/off premise and hybrid Cloud

IBM is extremely optimistic about MIPS growth from CAMSS workloads and is addressing their requirements through introducing new features, offerings and pricing schema. MIPS growth is different from revenue growth however (see our Figure). Mainframe users have been getting much more for less, especially from Linux and Java machines, which have been heavily discounted in comparison with those running traditional operating systems and transaction software. IBM’s challenge will be to attach positive revenue growth to the systems running the new workloads.
From my perspective, z Systems represent a significant sliver of the server market, accounting for 6.1% of spending in the last year (see the Figure at the top of this bulletin). The falling away of the Unix market – now just 12.6% for all suppliers of which IBM is the leader – means that IBM’s mainframe has less technical competition than ever. It is the clear leader of the ‘scale up’ market. While Intel has made significant progress over the last few years it still lags significantly behind in the transaction processing and large central systems market.

How are product introductions and revenues interrelated?

The mainframe is a peculiar beast – its revenues ride the crest of 2 major waves:

1. a) As a (typically expensive) directly sold product they peak strongly in the fourth quarter and
2. b) As a technology-driven system they are also heavily tied to new product introductions.

As ‘actor-manager’ of the platform IBM continues to invest around $1 billion a year to maintain forward momentum. We’ve extracted the quarterly effect in the Figure by using a rolling 4-quarter analysis to show revenue and revenue growth since the end of 2004. The skyscraper has been heading downward since the middle of 2013, problematic for a company going through major transformation.

Some Conclusions – the only show in town, but what kind of show?

This is an incredibly detailed and impressive launch. The extension of the mainframes functions will certainly help IBM to position the new machines for new workloads. However, significant revenue growth for the platform beyond the inevitable initial lift may prove illusive. Adding Linux and Java workloads to the mainframe have had little effect on its revenue growth, despite being massively popular. For CAMSS, IBM will need to take a middle ground – charging less than for transaction processing, but more than for Linux. For centralised, scale up computing the z System is pretty much the only show in town – IBM is making it a Rock festival, rather than an old-time musical.