IBM was saved this quarter by one of its oldest product lines: the mainframe
IBM announced the new mainframe in January, but it didn't actually start shipping them until early March.
Thanks to sales of these machines, its hardware business reported 30% year-over-year growth. That is on an constant currency basis (excluding the headwinds from a foreign exchange rate).
It also excludes the revenue from the server business IBM sold to Lenovo. That business unit is now off the books.
Not that IBM will sell that many of them. A state of the art mainframe will run about $1 million. The interesting thing is, is that for decades the IT industry has said the mainframe is dead or dying. It is now possible to build supercomputer performance by stitching together many cheaper computer servers. That's how Google and Facebook run their enormous operations.
But mainframes are good for cranking out transactions. Think of Visa and all the credit card charges it processes every second. Or UPS and the 5 billion packages a year it delivers, and all the checkpoints of each one. That kind of thing is a mainframe's sweet spot and there are enough companies who crunch through loads of transactions to stick with these classic, expensive servers.
IBM expects to finish with 50% growth in its mainframe business in the first quarter of this year, IBM CFO Martin Schroeter said on the its quarterly conference call.
