IBM mainframe woes continue with big Q4 drop

Big Blue hopes its next generation of mainframes will sell better

IBM's mainframe division finished a disappointing 2009 with a 27% fourth quarter revenue decline, but Big Blue is hoping the next generation of its mainframe computer will boost sales in 2010.

System z mainframe revenue dropped 27% in the fourth quarter compared to the same period in the prior year. The Q4 results followed declines of 26% in the third quarter, 39% in the second quarter and 19% in the first quarter.

IBM doesn't provide revenue dollar amounts for individual server product lines, but the mainframe suffered the biggest decline within the company's systems and technology group, which reported fourth quarter revenue of $US5.2 billion, 4% lower than the previous year. The systems and technology group also includes storage, x86 servers and Power servers.

The System z revenue decline "is consistent with what you would expect at this point in the product cycle," IBM CFO Mark Loughridge said when the company released its fourth quarter earnings this week.

IBM unveiled the System z10 mainframe almost two years ago, leading to a 12.5% increase in revenue in 2008. The initial boost in sales caused by a mainframe upgrade is typically followed by a decline, but the revenue drops in 2009 were quite a bit larger than the amount gained in 2008.

"Later this year we are releasing the next generation System z," Loughridge said.

In the meantime IBM has tried to shore up the mainframe business with special pricing, including on Linux bundles. But overall shipments as measured in MIPS (millions of instructions per second) have still declined for three consecutive quarters, including a 19% drop in the fourth quarter.

Gartner analyst Mike Chuba has said that if sales continue to suffer IBM may be forced to speed up the release of its newest mainframe.

Despite the disappointing mainframe revenue, IBM reported a 10% jump in profit companywide in the fourth quarter.

Join the newsletter!


Sign up to gain exclusive access to email subscriptions, event invitations, competitions, giveaways, and much more.

Membership is free, and your security and privacy remain protected. View our privacy policy before signing up.

Error: Please check your email address.

Tags GartnerIBMmainframe

Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

Jon Brodkin

Network World
Show Comments

Brand Post

Most Popular Reviews

Latest Articles


PCW Evaluation Team

Luke Hill


I need power and lots of it. As a Front End Web developer anything less just won’t cut it which is why the MSI GT75 is an outstanding laptop for me. It’s a sleek and futuristic looking, high quality, beast that has a touch of sci-fi flare about it.

Emily Tyson

MSI GE63 Raider

If you’re looking to invest in your next work horse laptop for work or home use, you can’t go wrong with the MSI GE63.

Laura Johnston

MSI GS65 Stealth Thin

If you can afford the price tag, it is well worth the money. It out performs any other laptop I have tried for gaming, and the transportable design and incredible display also make it ideal for work.

Andrew Teoh

Brother MFC-L9570CDW Multifunction Printer

Touch screen visibility and operation was great and easy to navigate. Each menu and sub-menu was in an understandable order and category

Louise Coady

Brother MFC-L9570CDW Multifunction Printer

The printer was convenient, produced clear and vibrant images and was very easy to use

Edwina Hargreaves

WD My Cloud Home

I would recommend this device for families and small businesses who want one safe place to store all their important digital content and a way to easily share it with friends, family, business partners, or customers.

Featured Content

Product Launch Showcase

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?