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This blog changed into written through Steve McDowell, storage and HCI observe lead for Moor Insights & approach.
The cloud computing world is one full of unexpected pivots, swift turns, and sharp boomerangs. The early hopes that cloud computing, with its alluring charge/advantage equations and ease of administration, would exchange the business records middle have been brief-lived.
As firms migrated workloads to the numerous cloud providers, lessons had been discovered, and a new fact set in. Workloads require records, and facts has gravity. It’s no longer an easy be counted to flow an utility to the cloud and hope that your present storage architecture gives the right set of capabilities to assist it. You have to installation storage architectures designed to bridge on-premises infrastructure with the cloud. Storage in a multi-cloud ambiance is not a place for the meek.
The complexity of mixing on-premise and cloud has come into sharp focus over the last a couple of months as every participant in the commercial enterprise IT cost chain moves into new territory. The notice "cloud" itself has develop into nebulous, as public cloud providers movement infrastructure and capabilities on-premises, normal OEMs enter the capability-on-demand enterprise, and utility more and more becomes the defining glue tying it all collectively.
Google's Cloud next developer conference changed into held this week in San Francisco, where the company introduced a set of application capabilities called "Anthos" to control purposes and workloads across deepest statistics facilities and Google Cloud capabilities. Anthos even promises to assist workloads on its rivals' clouds, Amazon web functions and Microsoft company's Azure. Anthos is, now not enormously, in line with containers and Kubernetes, with a storage story that relies on companies efficaciously aiding the Container Storage Interface (CSI).
Deploying options corresponding to Google’s Anthos, or even Amazon’s Outpost on-website cloud providing, requires complicated integration with a gradual eye in opposition t balancing compute and storage. These multi-cloud implementations don't seem to be turn-key, as an alternative counting on tight coordination between companions to install an enterprise-capable solution.
whereas the cloud suppliers and server OEMs vacillate on what they each accept as true with is the correct stability of on-premises and cloud applied sciences, every keeping high-margin turf within the process, they should still focus on IBM, who has emerged as an unlikely lighthouse for the statistics-pushed multi-cloud world. IBM , if you are no longer mindful, is the number 4 public cloud company worldwide. The company would not get down in the filth and battle for each bit of company in the same method that Amazon and Google do. IBM instead focuses its cloud efforts where it has at all times concentrated its company: servicing the wants of the enterprise.
alone amongst cloud suppliers and storage expertise vendors, IBM has never vacillated on its imaginative and prescient. IBM has always viewed multi-cloud as an intelligent mix of infrastructure and cloud, managed by way of a comprehensive blend of utility and features. It has made it easy for its purchasers to set up multi-cloud options, no matter if these cloud workloads are containerized or leverage more usual virtual computer know-how. last week in Rome, IBM’s storage group endured its efforts to permit business it's multi-cloud adventure.All concerning the application
The information-pushed multi-cloud world revolves across the application stack, which makes the capabilities precise and manageable. For IBM, that software is its Spectrum Storage suite of items.
essentially the most alluring of IBM’s storage announcements is its enhancements to IBM Spectrum Virtualize, now providing support for Amazon AWS public cloud. IBM Spectrum Virtualize for Public Cloud allows for for hybrid multi-cloud mobility to and from AWS and IBM clouds, with non-disruptive migration to, from, and between clouds. IBM Spectrum Virtualize for Public Cloud is hosted on a pair of AWS EC2 compute circumstances, where it will probably virtualize and control EBS block storage, and picture to and from S3 storage. The application provides information mobility from IBM’s Storwize family, FlashSystem 9100, SVC, and VersaStack. It’s an across-the-board solution play for IBM.
all the way through its Rome adventure, IBM additionally updated its Spectrum Scale facts-administration tool to enhance efficiency for SMB and NFS, whereas also aiding new levels of scalability and resiliency.
one of the crucial more exciting bulletins from IBM is its new application support for blockchain know-how within IBM storage solutions. As blockchain evolves right into a critical skill for managing chains of have faith, i will be able to see many applications leveraging this technology in a multi-cloud world. i am anxious to see this evolve and have in mind how companies leverage the capacity.
one of the crucial satisfactory issues about IBM's storage choices is the blueprints the business provides to aid enterprise IT and IBM's partners promptly deploy solutions with self belief. IBM Spectrum Virtualize for Public Cloud extends the library of blueprints, with new choices defining workload mobility with VMware's NSX, company continuity, and cyber-resiliency with "air-gapped" snapshots.
NVMe far and wide
application is the critical nervous device of the multi-cloud infrastructure, but that application can best ever be as capable as the hardware materials its tasked to manage. performance within the storage world is defined by way of the capabilities provided by means of the blend of flash memory and the NVMe interconnect. IBM changed into a very early adopter of NVMe-based flash storage, deploying its custom FlashCore modules to bring very high-throughput, low-latency, solutions into its performance product.
The component about multi-cloud is that it doesn’t always require the optimum-performing arrays. Deploying multi-cloud options requires the efficiency mandatory for a given workload, with sufficient scalability to survive future evolutions of that workload. To that end, IBM introduced enhancements to its Storwize V5000 family, bringing greater capabilities to the lower-end of its storage choices, and providing conclusion-to-conclusion NVMe to its V5100 collection.
the new IBM Storwize V5100F and v5100 convey NVMe to a previously unimaginable price-element. The arrays convey very nearly 2.5x extra performance than the outdated V5030F, present 9x more cache than old iterations, and have help for server-class reminiscence. The densities are equally compelling, with the arrays capable of deliver up to 2PB of flash in barely 2U. That capability can scale-up to 23PB, and scale-out to 32PB with 2-means clustering enabled. The IBM Storwize V5100F redefines how remember to think about competitively priced performance and density.
IBM also up-to-date its Storwize 5100, bringing new ranges of scalability and density to the decrease-cost latitude of its choices. The up-to-date IBM Storwize V5010E double the IOPS of its predecessor while scaling to 12PB. The up to date IBM Storwize V5030E additionally presents a nice bump, providing 20% better max IOPs, with scalability up to 32PB.
IBM additionally supplied updates to its FlashSystem A9000/A9000R to give greater support for multi-tenant environments. The up-to-date FlashSystem now enables sharing of physical storage elements amongst diverse virtual networks, while also aiding VLAN tagging on its iSCSI ports. These facets may still lead to improved safety and an usual discount of fees in multi-tenant environments. These are critical enhancements for MSPs and others who share components between disparate consumer businesses.
Tying collectively all of IBM’s storage portfolio is its wealthy suite of Spectrum Storage application, designed to combine IBM storage infrastructure with the multi-cloud world. The aggregate of IBM Spectrum Storage application and the up-to-date arrays offers you an end-to-end answer in a position for containerized, AI-pushed workloads. on the identical time, this set of updates offers IBM one of the broadest tiers of NVMe-enabled flash storage within the trade.Concluding concepts
as the average server OEMs and the general public cloud suppliers hone in on a set of architectures for the information-pushed multi-cloud world, it is obvious that the solution was appropriate in front of us the complete time. IBM has blended cloud and infrastructure from the very early days of its cloud offerings. The company supplies the most cohesive set of features and options that scale on-premise and cloud hosted workloads.
IBM's storage group, in specific, has been aggressive in using this imaginative and prescient. Its line of storage arrays are one of the crucial most competitive in the trade, however should you couple these arrays with the power of the IBM Spectrum Storage software suite, it becomes unbeatable. IBM stands practically by myself in offering a finished range of storage solutions that span facts core hardware, inner most cloud, and public cloud. Its contemporary embrace of Amazon AWS and different public cloud opponents is a strong movement that advantages IBM's commercial enterprise client base. choice is at all times first rate.
Steve McDowell is a Moor Insights & approach Senior Analyst overlaying storage technologies.
Disclosure: My firm, Moor Insights & method, like all research and analyst firms, provides or has supplied analysis, evaluation, advising, and/or consulting to many high-tech groups in the trade, including Microsoft, IBM, Google, and VMware, which may well be stated listed here. I do not grasp any equity positions with any groups referred to in this column.
See the entire listing of cloud storage providersbottom line:
within the cloud storage market, IBM is generally idea of running behind leaders like AWS and Azure. still, IBM Storage has a positive reputation as being designed for scale, with a focus on sturdiness and resiliency. So agencies that expect their advanced storage should grow rapidly can also be certain that IBM, with its considerable materials, will have no problem meeting superior demand.
moreover, consumers will benefit from IBM Storage's prosperous network of partnerships. The company has more than 70 partnerships with business ISVs in areas of content distribution, analytics, records administration, archiving, backup and cloud storage gateways. This presents an array of tools that can merits any variety of organizations, with a good array of talents work eventualities.
still, those businesses that may be the greatest healthy for IBM Storage are organizations which are already doing enterprise with IBM. here's due to skills concerns round interoperability: the absolute best software/workload fit could be with IBM-designed products.company Description:
IBM is a U.S.-based mostly leader in IT. It presents hardware, utility, storage and a mess of features from cloud-based mostly to analytics. it's publicly traded. IBM won these cloud storage capabilities from the acquisition of Cleversafe just a few years returned. purchasers include Bitly, Dreamstime, top research, OhioHealth, and ENI.carrier Description:
IBM has two object storage platforms:
Its simple areas are: U.S. (Dallas, Texas; San Jose, California; and Washington D.C.), ecu (Frankfurt, Milan and Amsterdam) and Asia/Pacific (Seoul, Hong Kong and Tokyo). moreover, it has facilities in incredible Britain, Amsterdam, India, Melbourne, Toronto and two U.S. federal centers.Storage class:
File, Object, and block.Differentiator:
IBM presents block and file storage with 48,000 IOPS and designed for the commercial enterprise. COS has native built-in excessive-speed file transfer capabilities, with no can charge on ingress.Implementation:
After growing an IBM Cloud Platform account, you could provision a new provider instance with just just a few steps. obviously, here is a a neatly described technique with an available user interface.https://o1.qnsr.com/log/p.gif?;n=203;c=204660763;s=10655;x=7936;f=201812281303250;u=j;z=TIMESTAMP;a=20400372;e=i
On the block facet this technique will also be a bit more complex. One methods manager stated ease of deployment may be more advantageous.information transfer:
Objects of up to 200 MB may also be transferred the usage of a web-based mostly console. aid for larger object sizes and more advantageous performance (counting on network elements) is supplied by way of Aspera excessive-velocity switch. different transfer equipment or a COS API will also be used for statistics switch. IBM additionally has lots of records migration services.performance:
IBM block and file storage provides as much as forty eight,000 IOPS.Availability/SLA:
Infrastructure availability SLA is as much as 99.95% is available depending on the type of storage.Technical assist:
Gartner shoppers spotlight the exceptional stage of technical guide (self-help, social media, phone, tickets and chat) all through IBM COS implementation and migration periods. IBM provides documentation and 24/7 support in Cantonese, English, French, German, Italian, jap, Korean, Portuguese and Spanish.
“The guide and sales teams have always long gone out their option to not handiest support with their initial adoption, however to make sure the product was meeting their future wants as neatly,” said a programs architect in the functions industry.security:
handiest the bucket and object homeowners have access to the service instance they invent. COS supports person authentication to access records. which you could use access control mechanisms akin to bucket guidelines to selectively grant permissions to clients and applications. which you can securely add/download data to IBM Cloud Object Storage by way of SSL endpoints the usage of the HTTPS protocol.
records at rest is encrypted with computerized server-side advanced Encryption usual (AES) 256-bit encryption and relaxed Hash Algorithm (SHA)-256 hash. statistics in motion is secured through the use of built-in, carrier-grade Transport Layer protection/cozy Sockets Layer (TLS/SSL) encryption.Storage administration:
A dashboard presents entry to: getting begun guidance, buckets, endpoint, carrier credentials, connections, utilization particulars, and their chosen plan. in addition, guidance with managing complex configurations is obtainable from IBM Cloud Managed functions.Markets and Use situations:
IBM’s sweet spot is the business consumer and mid-market looking for enterprise efficiency facets. Use circumstances encompass
backup, archive, catastrophe recovery capabilities, and analytics aid.Pricing for ability.
Block Storage can be purchased with two pricing fashions: per GB when provisioned with patience IOPs tiers, or per GB + per IOP when provisioned with customized efficiency IOPS. patience IOP tier Pricing: IOPS Tier price 0.25 IOPS/GB $0.10/GB 2 IOPS/GB $0.20/GB four IOPS/GB $0.35/GB 10 IOPS/GB $0.58/GBefficiency customized IOPS Pricing:
$0.10/GB + $0.07/IOP
US, Germany, Italy, Netherlands, Hong Kong, South Korea, Japan, high-quality Britain, India, Canada, Australia.
File, block, object
excessive performance block and file storage
ninety nine.ninety five%
Gartner MQ score
area of interest
agencies are more and more unfolded throughout dispensed counsel technology environments. distinctive applications dispersed throughout multicloud computing structures may additionally require storage with assorted personalities to optimize performance and operations … and manipulate charge.
“It’s not the flowery windows; it’s no longer the fancy paint. but when that groundwork isn’t appropriate, what occurs? The entire constructing falls down,” referred to Eric Herzog (pictured), chief marketing officer and vice chairman of worldwide storage channels at IBM storage methods and application-defined infrastructure.
Most businesses are adopting multicloud options. This ability they've distinctive forms of workloads — legacy, monolithic, cloud-native and microservices-based mostly, to name just a few. They may run in on-premises statistics centers, virtualized environments, or in public cloud. One storage class may supply that strong basis in a single ambiance however no longer one other.
A storage misfit may result in terrible software performance and overspending. IBM has refreshed its extensive storage portfolio to fulfill the wants of workloads on-prem, in the cloud, and everywhere in between.
In a two-part video sequence, Herzog spoke with Peter Burris, host of theCUBE, SiliconANGLE Media’s cell livestreaming studio, at theCUBE’s studio in Palo Alto, California. They discussed the storage needs of these days’s distinct workloads and IBM’s latest enhancements to its storage portfolio (watch finished video interviews with transcripts here and here). (* Disclosure below.)
Watch Herzog’s first interview with theCUBE beneath:To cloud or no longer to cloud? a value query
When profiling statistics for a pretty good storage fit, businesses deserve to analyze efficiency wants, cost, security and usage. facts that is going to flow round an awful lot may cost an organization a bundle if they put it within the cloud, according to Herzog.
“Going to a public cloud provider, which charge both for in and out of the facts, that in reality may additionally charge greater than buying an array on-prem,” he observed.
although, many agencies may additionally no longer desire any dataset to be permanently certain on-prem. IBM has made compatibility with all cloud providers a major intention of its storage refresh. Its cloud tiering permits users to tier their on-prem storage arrays to their cloud circumstances.
“we can tier to the cloud. they are able to backup to the cloud. With object storage, they will place [data] within the cloud. We’ve made the cloud, if you will, a seamless tier to the storage infrastructure for their valued clientele,” he noted.
Watch Herzog’s 2d interview with theCUBE beneath:information flies round shuttle to cloud and again
also within the bang-for-your-buck class are IBM’s new non-unstable memory express choices. Its Storwize portfolio now comprises the V7000, V5100, and different fashions with NVMe both interior the array and guide for NVMe over textile.
“These options all convey dramatic performance positive aspects however fantastic expense discounts as smartly,” Herzog referred to. “for example, the 5010E is not simplest twice as quickly because the older 5010, but it happens to be as much as 25% less costly,” he said. The V7000 and V5100 convey NVMe to market at a an awful lot reduce rate than opponents present, he delivered.
Storewize arrays additionally include award-profitable Spectrum Virtualize application that offers enterprise-classification records features. These include snapshot, replication, records-at-leisure encryption, clear tiering to cloud, migration, and so forth.
another recent addition is Spectrum Virtualize for Public Cloud. It sits in a VMware Inc. virtualized instantiation out at the public cloud company, giving commercial enterprise-category functionalities. It permits data emigrate or replicate between heterogeneous on-prem storage systems and IBM Cloud or Amazon internet functions Inc. IBM plans to extend it to greater clouds sooner or later.make sure to try greater of SiliconANGLE’s and theCUBE’s cube Conversations. (* Disclosure: IBM Corp. sponsored this phase of theCUBE. Neither IBM nor other sponsors have editorial control over content material on theCUBE or SiliconANGLE.) photograph: SiliconANGLE for the reason that you’re right here …
… We’d like to inform you about their mission and the way you could aid us fulfill it. SiliconANGLE Media Inc.’s enterprise model is in accordance with the intrinsic price of the content material, not advertising. in contrast to many online publications, they don’t have a paywall or run banner promoting, because they are looking to maintain their journalism open, devoid of impact or the need to chase site visitors.The journalism, reporting and commentary on SiliconANGLE — together with reside, unscripted video from their Silicon Valley studio and globe-trotting video groups at theCUBE — take a lot of difficult work, time and funds. holding the pleasant high requires the aid of sponsors who're aligned with their vision of advert-free journalism content material.
if you just like the reporting, video interviews and different advert-free content right here, please take a second to take a look at a sample of the video content material supported by means of their sponsors, tweet your guide, and hold coming returned to SiliconANGLE.
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May 24, 2010 12:30 ET
Now With NAS, SAN Support for Set-It-and-Forget-It Large-Enterprise Storage
SUNNYVALE, CA--(Marketwire - May 24, 2010) - Mirapoint®, the secure enterprise-messaging experts, today announced the release of its flagship email archiving appliance: the RazorSafe 7000, which provides unshakeable storage to small-to-large enterprises and service providers without the cost and complexity of software solutions or the unreliability and privacy issues of hosted solutions.
RazorSafe 7000 ships with upgraded AOS v5.0 software that offers a unique and proprietary high-performance SmartCache architecture, utilizing scalable NAS or SAN fiber-channel storage while maintaining performance of local disk storage. Other AOS 5.0 features include service provider support and high-performance searching, data aging, and disaster recovery.
"RazorSafe 7000 is a no-brainer decision for enterprises concerned about long-term data security," said Jeff Witous, CEO of Mirapoint. "The addition of SAN capability allows for nearly endless archiving or eDiscovery compliance at the lowest cost. Service providers choose Mirapoint, which is the best reference an email product can have."
Mirapoint has had the lowest TCO in the marketplace for the three years it has built archiving units. Its purchase of Intradyn and the subsequent technology additions makes RazorSafe 7000 twice the product of its competitors, while simultaneously sporting the industry's best storage-to-price-performance ratio.
"RazorSafe is half the price, is done instantly and the amount of staff time is kept to a minimum. This makes it a very easy solution to a difficult problem," said customer Tim Wilson, Associate Director, Informatics for City and Hackney Primary Care Trust.
How it Works Like its Mirapoint predecessors, RazorSafe 7000 uses open standards (IMAP / POP / SMTP) to archive email from all popular email-server products, including: Microsoft Exchange, IBM Domino, Novell GroupWise, Mirapoint Message Server, and open-source MTAs and mailstores.
Working transparently in the background, RazorSafe does not interrupt the SMTP path, and therefore never slows or interferes with incoming mail. Its open, standards-based architecture allows the RazorSafe family of products to interface with any standards-based mail server.
"Our customers typically don't want to spend the IT resources required for server/software/patch-based archiving, and they're leery of the cloud both on an eDiscovery and gut level. In the end, Mirapoint appliances are unique in that they span nearly all customer segments and verticals, and are the only solution that can," said Jenko Hwong, Director of Product Management for Mirapoint.
About MirapointMirapoint Software fulfills the secure-messaging needs of enterprises, service providers, and educational institutions, with more than 120 million mailboxes served and secured worldwide. The market leader in appliance-based solutions, Mirapoint's appliances -- Message Server for email, RazorSafe for archiving, and RazorGate for anti-spam/anti-virus -- provide unparalleled uptime, ease of use, and low total cost of ownership for organizations that serve anywhere from 100 to hundreds of thousands of email users and mailboxes. Founded in 1997, Mirapoint is headquartered in Sunnyvale, California, with offices throughout North America, Europe and Asia. For more information on Mirapoint, visit its Web site at www.mirapoint.com.
On November 12 at the OpenStack Summit in Berlin, Germany, the Linux foundation formally announced the Ceph Foundation. Present at this same summit were key individuals from SUSE and the SUSE Enterprise Storage team. For those less familiar with the SUSE Enterprise Storage product line, it is entirely powered by Ceph technology.
With Ceph, data is treated and stored like objects. This is unlike traditional (and legacy) data storage solutions, where data is written to and read from the storage volumes via sectors and at sector offsets (often referred to as blocks). When dealing with large amounts of large data, treating them as objects is the way to do it. It's also much easier to manage. In fact, this is how the cloud functions—with objects. This object-drive model enables Ceph for simplified scalability to meet consumer demand easily. These objects are replicated across an entire cluster of nodes, giving Ceph its fault-tolerance and further reducing single points of failure. The parent company of the project and its technology was acquired by Red Hat, Inc., in April 2014.
I was fortunate in that I was able to connect with a few key SUSE representatives for a quick Q & A, as it relates to this recent announcement. I spoke with Lars Marowsky-Brée, SUSE Distinguished Engineer and member of the governing board of the Ceph Foundation; Larry Morris, Senior Product Manager for SUSE Enterprise Storage; Sanjeet Singh, Solutions Owner for SUSE Enterprise Storage; and Michael Dilio, Product and Solutions Marketing Manager for SUSE Enterprise Storage.
Petros Koutoupis: How has IBM's recent Red Hat, Inc., acquisition announcement affected the Ceph project, and do you believe this is what led to the creation of the Ceph Foundation?
SUSE: With Ceph being an Open Source community project, there is no anticipated effect on the Ceph project as a result of the pending IBM acquisition of Red Hat. Discussions and planning of the Ceph foundation have been going on for some time and were not a result of the acquisition announcement.
PK: For some time, SUSE has been fully committed to the Ceph project and has even leveraged the same technology in its SUSE Enterprise Storage offering. Will these recent announcements impact both the offering and the customers using it?
SUSE: The Ceph Foundation news is a validation of the vibrancy of the Ceph community. There are 13 premier members, with SUSE being a founding and premier member.
There are more than 30 total members, which include a number of customers. While the development will still be driven by the Ceph technical community (and managed by the Ceph Leadership Team), the foundation will assist in promoting Ceph. Funding via the foundation will help accelerate Ceph awareness in the industry, community infrastructure, events, outreach, and community inclusiveness and diversity by way of scholarships, travel assistance and so on.
This news also serves as proof that Ceph is now a broadly accepted storage solution. The foundation will have a positive impact on the Ceph offerings themselves, for example, SUSE Enterprise Storage in both feature creation and customer adoption.
PK: What role(s) or involvement do you believe that SUSE will play in the Ceph Foundation?
SUSE: SUSE's contributions to the Ceph open-source project have continuously grown. SUSE now has eight of the top 20 contributors to the Ceph project. This trend is anticipated to continue for the next upstream release, Nautilus, and beyond. Their contribution has primarily focused on core functionality, usability, user interfaces, orchestration interfaces and release management. In addition to many of their engineers being appointed to the technical leadership team, SUSE is represented by Lars Marowsky-Brée, Distinguished Engineer, on the Ceph Foundation governing board.
SUSE: What does SUSE have in store for both its users/customers and the Open Source community as it relates to Ceph?
SUSE: They have demonstrated their expertise in bringing innovative features to the market with their previous releases of Ceph. They were the first to market with iSCSI, BlueStore, CephFS and a sophisticated management user interface, and now with SUSE Enterprise Storage v5.5, they have also launched CIFS for Windows connectivity. This will continue as they are planning an innovative set of features with their upcoming releases. SUSE will continue to focus on enhanced Ceph usability and orchestration, heterogeneous interoperability, availability and efficiency, as they focus on making Ceph enterprise consumable for IT customers worldwide. SUSE remains committed to open-source collaboration and has expanded their Ceph engineering investment exponentially and will maintain this momentum going forward.
More than anything else, over its long history in the computing business, IBM has been a platform company and say what you will about the woes it has had through several phases of its history, what seems obvious is that when Big Blue forgets this it runs into trouble.
If you stare at its quarterly financial results long enough, you can still see that platform company looking back at you, even through the artificially dissected product groups the company has used for the past decade and the new ones that IBM is using starting in 2016.
It is important to remember that even after all the divestures of its System x server business to Lenovo and its Microelectronics chip business to Globalfoundries last year, IBM’s systems business is still a much larger platform company than Amazon Web Services and is many times larger than Google Compute Platform and Microsoft Azure (at least the part that is selling raw capacity and services to end users). In 2014, when IBM still sold servers based on Intel Xeon processors, that systems business generated around $33.3 billion, including servers, storage, operating systems, transaction processing software, integration middleware, technical support, and financing of this gear, and in 2015, after divesting itself of that Xeon server business and the associated revenue streams, the overall systems business fell by 14.5 percent to $28.5 billion.
This is still 3.6X as large as AWS, although the two are arguably very different animals indeed, and AWS is growing at 80 percent a year and if IBM’s systems business continues to shrink, they will be roughly the same size at $25 billion a year in 2018.
That will be a remarkable day, should it come to pass.
Not at all ironically, IBM is trying to become more like AWS, with its acquisition of SoftLayer being just part of that, as well as a supplier of on-demand, cloud-based software for marketing, advertising, and analytics. But these nascent businesses are utterly dwarfed by the tradition System z and Power Systems platforms that the company still sells and the DB2 database and WebSphere middleware that dominates on these systems and is often sold on machines made by others to do transaction processing.
The important thing for Big Blue is that these legacy platform businesses continue to generate revenues and profits as the rest of the company undergoes another wrenching transformation. It would be easy to pick on IBM, but its peers among the largest IT suppliers (including Sun Microsystems, Hewlett Packard Enterprise, Dell, and Microsoft) have arguably had no more easy a time of it in the past two decades.
What is concerning is that during the first quarter ended in March, the mainframe and Power Systems cycles seemed to run out of steam and it looks like there will be quite a wait until the next round of System z14 and Power9 machines are out the door – they don’t know when the next mainframe cycle begins, but IBM did not launch Power8+ systems this year as its roadmaps had suggested it would and is just adding NVLink interconnects for GPU accelerators to the existing Power8 chips that have been around since 2014. It is not clear that IBM’s customers need a new chip right now, or its partners in the OpenPower collective, for that matter, but what is important is that an updated Power chip implies a boost in price/performance, which would have gone a long way toward helping Power-based machines compete better against the new “Broadwell” Xeon E5 v4 processors that Intel just launched. In any event, a 24-core Power9 chip aimed at two-socket systems is coming next year, timed roughly to coincide with Intel’s “Skylake” Xeon E5 v5 processors, so this is where the real battle will take place. This should also be when companies like Google and Rackspace Hosting deploy Power-based systems in their infrastructure in reasonable volumes, and perhaps they will see some big design wins for ARM-based servers, too.
We think 2018 is going to be a very interesting year for systems, and they think that IBM is gearing up the Power platform with its partners to get a bigger slice of the pie while at the same time doing everything it can to shore up its mainframe business to help fuel the transformation of its platform business.Drilling Into IBM’s Numbers
In the first quarter ended in March, IBM’s overall revenues continued to trend down as did its core systems business, which depending on the quarter accounts for about a third of its overall revenues. IBM still sells a lot of services, from systems integration to application hosting, that they are not counting in this core systems business, and they are also not adding in its SoftLayer cloud because they don’t actually know how large it is but it is probably around an order of magnitude lower than the sale of systems to large enterprises, governments, and service providers that constitutes most of the IBM systems business.
During the period, revenues fell by 3.7 percent to $18.64 billion, and net income fell by 13.5 percent to just over $2 billion. IBM had a big tax benefit that helped bolster its earnings – it could have been far worse, but then again, IBM is a master at engineering its numbers so the timing on these things works out. The company exited the quarter with $14.35 billion in cash, which is a respectable amount for an IT company of its size, but it also carries $40.5 billion in debt, most of which is related to its financing portfolio.
Starting in 2016, IBM is carving its business into five main groups. Its Global Business Services and Global Financing units are essentially unchanged from their prior characterization in financial reports.
The Systems group that IBM has created, which they detail in the table above, brings together the server and storage hardware it sells with the operating systems that were put into the former Software Group, which has been disbanded. IBM sold $1.68 billion in servers in the first quarter to customers, and another $212 million to other units that use its hardware as the basis for appliances. Within the external customers, $1.24 billion of that was for servers and storage, down 25 percent, and $432 million was for operating systems, down 10.7 percent.
IBM’s operating system sales are dominated by its System z mainframes, which are paid for on a monthly basis and are therefore very stable and almost like an annuity. Sales of its own AIX and IBM i operating systems are perpetual licenses with monthly maintenance fees, and the company also resells Red Hat, SUSE Linux, and Canonical Linux distributions on its System z and Power Systems iron. IBM said that its System z revenues were off 43 percent in the quarter, which is a bigger drop than the tail end of a mainframe cycle typically gets, and added that after four quarters of growth in 2015, the Power Systems business posted a 14 percent decline in Q1 2016. IBM’s tape, disk, and flash storage business had a 7 percent drop, and IBM did not elaborate further.
This System group posted a gross profit of $958 million in the first quarter, with the operating system portion being very profitable, with 88.3 percent gross margins. Hardware has lower gross margins, at 46.4 percent, but this is to be expected. The overall Systems group did have a pre-tax loss of $10 million once corporate overhead costs were allocated to it, which is not good news.
The other new group is called Cognitive Solutions, and this includes a slew of transaction processing software, including databases and transaction monitors, that had been previously part of Software Group as well as data analytics tools such as the Cognos and SPSS statistical modeling tools and the BigInsights Hadoop distribution. In the first quarter, this part of IBM drove just under $4 billion in sales externally and another $668 million to other groups at the company. IBM sold $1.28 billion in transaction processing software externally in the quarter, and $2.7 billion in cognitive software, which includes databases and analytics tools as well as its nascent Watson analytics platform. While this business posted a pre-tax income of over $1 billion, it is down by 33.7 percent compared to the year ago period.
The final part of the “new” IBM is called Technical Services and Cloud Platform group, which has all kinds of infrastructure and technical support services and, for some reason, its WebSphere and other integration software is also put into this category. This is now the largest part of IBM, with $8.4 billion in sales in the first quarter and fell by 1.5 percent. Because of restructuring, this group had a big drop in pre-tax income, off 77.2 percent to $258 million in the quarter.
The SoftLayer public cloud, which is not broken out separately, is part of this final group, and all IBM said about it was that SoftLayer had “double digit” revenue growth in the period. Within the Technology Services and Cloud Platform group, IBM said that it had $1.2 billion in cloud-related revenues, up 50 percent year-on-year, and that the run rate on its “as a Service” products running on its own infrastructure hit $3.7 billion from within the TS&CP group.
Across all of its groups, cloud products drove $2.6 billion in sales (up 36 percent) and those cloud services (infrastructure, platform, and software as a service) had an annualized run rate of $5.4 billion, up 46 percent. IBM is focusing on the growth here, obviously, and they think it is probably being very generous with the definition of “cloud” when it comes to mainframe and Power Systems sales, too. Again across all of its groups, analytics products and services drove $4.2 billion in sales, up 9 percent. These two areas are the main drives for the company’s “strategic imperatives,” which also includes mobile and social application development tools and security software.
As they have pointed out before, IBM’s “real” systems business is considerably larger than its systems hardware and operating system sales suggest. To get a sense of the size of that “real” business, they added up systems hardware, operating systems, transaction processing and database software, plus 90 percent of its integration software sales and 75 percent of its tech support and financing revenues. Add it all up, and as they pointed out already, and this is about a third of the company’s overall revenues in any given quarter.
Here is the raw data from the past two years for this “real” platform business at Big Blue:
And here is the chart that gives you a better sense of how the revenues for each component are trending:
The numbers are all down over the past two years and one quarter. This is not a good thing, obviously.
What they want to know is what the future IBM platform will look like and how it will grow. IBM’s future is not the mainframe business, even though it is lucrative. They think that IBM needs to put a stake in the ground and build a Power-based variant of SoftLayer that makes its case for that platform. It cannot wait until Google comes around. Perhaps this is the plan, and perhaps this is how it will sell a lot of its Power Systems capacity in the future.
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