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Identifying Key Catalysts for IBM’s Mainframe Business

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Countering the cloud challenge

IBM (IBM), which dominates the enterprise mainframe business, has continued to enhance the space with its IBM z13 and now IBM z14 systems. IBM z14 microprocessors, which deliver clock speeds of 5.2 GHz (gigahertz), are capable of supporting nearly 12 billion encrypted transactions per day on a single system. Therefore, they are quite popular among enterprise customers, particularly banks and financial institutions, where security and quick data access are key priorities.

The launch of blockchain in mainframe environments may intensify its demand, and higher usage of smartphones has increased mobile data transactions. To boost capacity, IBM Z mainframes support Java on Linux. IBM’s z14 microprocessors may help counter competition from large cloud service peers Microsoft (MSFT) Azure and Amazon (AMZN) Web Services.

Performance in detail

The graph above shows IBM’s system revenue over the last five quarters. In the last two quarters, it has grown at a compound annual rate of 1.9%, buoyed by IBM Z mainframe demand. In fiscal Q1 2018, IBM Z revenue rose 54% YoY (year-over-year) as it added several new clients. Hardware revenue rose 10% YoY to $1.1 billion.

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