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IBM renews mainframe with 'z9' line

Associated Press

NEW YORK -- Trying to stay atop the market for corporate computer servers, IBM Corp. renewed its lucrative line of mainframe computers Tuesday with a new system aimed at helping banks, government agencies and other big customers keep data secure.

IBM spent $1.2 billion over the past three years developing the new mainframe, the z9, which is twice as powerful as Big Blue's current top model. The price starts around $1 million.

Like previous mainframes -- enormous, centralized computers that date to the early days of the digital era -- the z9 can encrypt data. But IBM contends the new machines make encryption more of a priority by spreading that capability throughout the system instead of just in the central processor.

As a result, IBM executives said, banks and other customers that traffic in sensitive data will find it easier to encode backup tapes and other records that often are transmitted or stored in clear text. That flaw has been at the heart of some of the recent data breaches that have garnered widespread attention.

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"It really does attack the practical issues with an enterprise using encryption as their standard," said George Walsh, an IBM systems vice president who led development of the z9.

The new machine does not have any link –; in production or design –; to IBM Rochester.

Research firm IDC estimates that at least 15,000 mainframe computers are in use around the world, and that IBM sells about 2,500 annually.

While rivals have derided mainframes as dinosaurs that lock customers into expensive service bills, mainframes remain key to IBM's computing-systems business, which accounts for about 25 percent of the company's total revenue.

In the most recent quarter, sales of the z-series servers -- the mainframe line the z9 will now lead -- fell 24 percent. Meanwhile, impressive growth was seen in IBM's sales of less-expensive servers, including industry-standard models with Intel Corp. chips instead of IBM's own microprocessors.

Armonk, N.Y.-based IBM blamed the z-series drop on customers' waiting for the rollout of the z9, which is due to begin in September.

IBM remains the leader of the $12 billion corporate server market, but its lead over Hewlett-Packard Co. has narrowed.

In the first quarter, the most recent period with available statistics, IBM's overall server sales increased only 0.5 percent from the previous year, while HP showed 8.8 percent growth, according to IDC. As a result, IBM's share shrunk to 28.3 percent, while HP had 27.6 percent.

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Analysts said the z9 contains significant improvements, such as updated "virtualization" technology that lets the mainframe be used to configure huge banks of other servers and computers.

"The death of the mainframe," said analyst Clay Ryder of the Sageza Group, "is prematurely exaggerated."

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