IBM is launching a new mainframe that the company expects its clients will need for the expected increase of the usage of smartphones among consumers for daily functions.
The mainframe, named the z13, will feature improvements in speed and security compared to current mainframes to be able to provide better services to consumers that use their smartphones for a long list of activities, from the simplest of sending messages to the most sensitive of banking transactions.
The z13 mainframe is able to encrypt and analyze data in real time, along with processing 30,000 transactions every second or 2.5 billion transactions per day. The system, which will improve the speed and security of the transactions that consumers make on their smartphones, cost an investment worth $1 billion and a period of five years for its development.
UBS Securities analyst Steven Milunovich estimates that the company's System Z mainframe products will lead to revenues of around $2.3 billion 2015, which will be an almost 10 percent increase.
The mainframe is one of the company's signature hardware offerings that will help IBM sell software and other services that can be paired with it. The launch of the z13 comes at a crucial time when IBM CEO Ginni Rometty is focused on looking for new sources of growth for the company in the areas of mobile technology, cloud computing services and data analytics, especially with the demand on IBM's legacy hardware dampening.
According to Donna Dillenberger, a distinguished engineer for IBM that helped in the development of the z13 mainframe, users of mobile devices only wish to wait for a few seconds to complete processes.
"The z13 provides the capability to allow users to connect their mobile devices directly to the mainframe," Dillenberger said.
The z13 also features the ability to carry out data analytics processes within the mainframe itself, allowing the delivery of insights to become cheaper and faster.
IBM, however, refused to reveal the price of the z13 mainframe, with such pieces of hardware usually commanding prices of hundreds of thousands of dollars.
The revenue of IBM has been declining partly due to drop offs in the company's hardware business. In last year's third quarter, sales for hardware decreased by 15 percent, partly due to the 35 percent drop in the revenue of sales for System z mainframes. The most recent model then was over two years old, according to IBM CFO Martin Schroeter.
While IBM has been granted the most number of United States patents for an unprecedented 22nd straight year, the company has been struggling to translate these innovations into revenue.
Rometty is looking to transform IBM into a company that provides cloud-based services and software, while at the same time updating older products such as the company's mainframes and high-end servers.