Sunday 25 April 2010

The recession is over, IBM is in profit!

Well, half right at least! IBM has reported its first quarter results for 2010 saying that profits are up 13 percent to $2.6 billion and sales are up 5 percent at $22.9 billion. As a consequence, IBM has raised its profit guidance for the year by 20 cents to $11.20 per share.

The UK managed an 8 percent increase in revenues. The Americas had 6 percent growth. Europe, as a whole, provided revenue growth of 5 percent. And Asia/Pacific provided 4 percent revenue growth.

In terms of hardware – provided by the Systems and Technology Group – sales were up by 5 percent. However, System z mainframe sales fell by 17 percent. This can be explained by the fact the new z11 mainframes are due later this year and people will be holding of purchasing until those new mainframes become available. Trouble-makers may suggest that hardware sales are down because people are running their mainframe applications on TurboHercules boxes!

Software grew by 10.6 percent to just over $5 billion. Sales of Tivoli management software increased by 23 percent. WebSphere middleware sales climbed by 13 percent. Income from Rational development tools was up by 7 percent. Disappointingly, but perhaps not surprisingly, Lotus software increased by only 1 percent.

Global Services was responsible for $13.7 billion of sales resulting in a 4 percent increase.

But life isn’t all good news for IBM with that antitrust claim from the European Commission brought by TurboHercules. It was only a couple of weeks ago that I was talking about the 10th birthday of Linux on a mainframe – and Linux is open source software. IBM seems unable to make up its mind whether it is the king of open source (Linux) or the arch-enemy of Intellectual Property rights in the open source community (TurboHercules). IBM claims that its battle with TurboHercules in Europe is a result of the hidden hand of Microsoft pulling the strings.

I’m pleased to see IBM making a profit. I earn my living by working with people who work on IBM mainframes. However, recently, I have had a strange nagging doubt. What if you could run mainframe software on a reasonably beefy x86 box with some kind of emulator like TurboHercules? What if the whole mainframe hardware strategy that IBM has been driving for all these years is little more than a house of cards? If that were the case, then no wonder IBM is doing its best to get rid of any company offering low-entry access to mainframe software. I wonder...

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