IBM has been talking recently (in conjunction with a series of mainframe hardware and software announcements) about its investments in the growth markets. (This can cover quite a lot of territory but generally means the BRIC countries (Brazil, Russia, India, and China). We are also seeing Africa starting to feature in this arena, too.
IBM points to both the size of its investments – 166 new branch offices over the last ten years – and the opportunities it sees. Of those 166 offices, 125 are in China, 14 in Brazil and 9 in India. IBM also has a presence in more than 20 African countries.
IBM sees the growth markets as a more than $200 billion opportunity, so it’s no wonder that they’re making these investments. In 2010 STG’s revenue was 27% in the growth markets and of that 53% in China. The growth markets have grown from 16% of IBM’s revenue, by geography, in 2006 to 21% last year; it is expected to approach 30% in 2015. Perhaps we’d better start brushing up our language skills in Chinese and Portuguese?
The real secret sauce here is how often it is IBM’s System z brand – the mainframes – figure in these sales.
For example, the Bank of Russia deployed IBM’s System z to consolidate from 200 distributed servers to 4 mainframes, allowing them to reduce technical staff workload by 85% and payment processing costs by 95%. They are saving $400 million per year.
I sometimes think it is as if as the emerging geographies stretch and grow they feel they have to have “real computers” – mainframes – to become part of the developed world. That’s just my fantasy. What’s really happening is that they are discovering the economies of scale and centralization that have long been hallmarks of government and big business computing in developed countries.
Far from being a dying breed of dinosaurs, mainframes continue to evolve and improve and sales are blooming. In the 2Q11 System z revenue grew 61% and MIPS grew 86% with a share gain of 7 points. IBM gained 14 new customers, 68 since the z196 launch – so forget about that myth that all the mainframes go to existing customers to protect existing software investments.
Watch what happens as the BRIC continues to grow as a computing opportunity – and more emerging countries join the parade.