IBM sales jump shows mainframe is not dead, with hybrid cloud alive and well

IBM sales jump shows mainframe is not dead, with hybrid cloud alive and well

Big Blue's third quarter financial report reveals a strong showing for mainframes as well as hybrid infrastructure, as total quarterly revenue hits $14 billion.

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At a time when most enterprises are planning cloud deployments and many are reportedly sharpening their mainframe exit strategy, IBM is seeing double-digit growth in its big iron business for the quarter ended September.

The vendor, which recently declared its third quarter results, reported a 98 per cent jump in revenue for its z line of mainframe computer in terms of constant currency (that is, eliminating the effect of currency fluctuations).  

IBM, which buckets mainframes under its infrastructure line of business, released the z16 mainframe in April before beginning to sell it in the second quarter.

At launch, industry observers said they expected that the performance and scalability of the z16 would pave the way for more use of the mainframes in hybrid-cloud environments. And complementing the jump in mainframes sales, IBM revenue for its hybrid infrastructure business was also up last quarter.

For the quarter ended September, IBM’s infrastructure line of business — which includes hybrid infrastructure, distributed infrastructure, support and mainframes — reported a total revenue of $3.4 billion, up 23.1 per cent year-on-year. Specifically, the company’s hybrid and distributed infrastructure business were up by 41 per cent and 21 per cent respectively.

Meanwhile, in another sign that the mainframe is still alive, Google, during its annual conference Cloud Next 2022 last week, claimed that a significant number of enterprises still run on mainframes when it launched a mainframe migration service, dubbed Dual Run.

Growth across all lines of business

IBM, which reported double-digit growth in the last two quarters, reported total revenue of $14.1 billion for the quarter, an increase of 15 per cent year-on-year. Net income was $3.2 billion.

The vendor’s software business, which includes transaction processing services, enterprise Linux subsidiary Red Hat, automation, artificial intelligence (AI) and security products and services, reported revenue of $5.8 billion, up 14.2 per cent year-on-year.

Specifically, transaction processing revenue was up by 33 per cent, followed by Red Hat, which showed an 18 per cent increase in revenue year-on-year. Security products revenue was up by six per cent, followed by AI and automation, which showed a revenue increase of four per cent and three per cent respectively.

In the consulting line of business, which includes business transformation, technology consulting and application operations, IBM reported a total revenue of $4.7 billion, an increase of 14 per cent year-on-year.

While application operations and technology consulting revenue both saw an increase of 17 per cent, business transformation revenue grew by 14 per cent.

So far in 2022, the vendor has completed seven acquisitions.

“In terms of uses of cash in the first three quarters, we invested over $1 billion in acquisitions, which was more than offset by proceeds from divested businesses,” said James Kavanaugh, IBM CFO, in the company's earnings call with analysts, according to a Seeking Alpha transcript.

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