MainframeMarket-A Global Perspective

8/4/2019 MainframeMarket-A Global Perspective

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Mainframes Market A Global

Perspective

6/1/2011

Unisys Global Services IndiaPrasath Srinivasan

USN: P2 MBA 10055


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Mainframes Market A Global Perspective 2011

Executive summary

This research aims at understanding the market scenario of mainframes in a global perspective

and analyzing the trend and openness of the customers worldwide towards investing further more

in the mainframes in the coming years. The study covers overall mainframes market worldwide

and is not restricted only with Unisyss ClearPath mainframes.

The research work tries to bring forward the fact that the future of mainframes lies with two set

of customers:

a. Big customers who have already invested in mainframes in the past and are willing to

expand their capacity owing to increased transaction volumes and business requirements

to scale up.

b. Businesses in the growing market of Asia Pacific. Japan, Korea, China and Africa

The report also puts forth a set of recommendations based on the understandings and

interpretations of the study which is believed to help Unisys ClearPath mainframes strategy in

the future.


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Acknowledgement

Praise the bridge that carried you over. ~George Colman

Every journey in life begins with a hand that holds us until the path is clear. This report is not so

much a result of my efforts, as it is of the cumulative efforts of those who helped me scale this

journey of intense learning. They gave me the strength and support to pursue this project with

relentless perseverance.

I feel greatly indebted to my mentors in Unisys Mr. PremKrishnan Venkatasubramanian and

Mr. Sumeet Panda, for guiding me through the entire course of my research work. It was their

constant support and encouragement which helped me believe in myself and scale up the project

scope to the level it is today.

I would also like to thankMr. Uma Shankar for his infinite support throughout my journey in

Unisys, making me feel better all the time, instilling confidence in me and providing me with the

opportunity not only to present my work to the team in UGSI, but even to the Vice-President of

ClearPath systems of Unisys Mr. Bill Maclean. That was really a great opportunity for which I

extend my whole hearted gratitude to Mr. Uma.

I would like to take this opportunity to also thank my college professor Mr. Rajagopalan for

proving useful inputs and recommendations on how better I can improve my analysis, without

whom I am sure to have missed a few dimensions of this research work.

Last, but never the least, I would like to thank my friends, who kept me up and active with their

timely review and feedbacks, assisting me to think out of the box and encouraging me all

throughout my tenure in Unisys.


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Key Findings

The Problem

Anobsolete device still used by thousands of obsolete companies serving billions of obsolete

customers and making huge obsoleteprofits for their obsolete shareholders.

Are mainframes getting obsolete? That is exactly the major question asked by innumerable companies

across the world. With lot many alternatives emerging in todays world, there have been quite a few

instances of questions triggered pertaining to the future of mainframes, its effectiveness and the efficiency

that a mainframes promise to deliver to its customers. Though companies are not fully confident on the

emerging technologies, there has been a reluctance spread in the minds of most of the companies across

the globe with respect to their relevance in investing in mainframes. This is high time to reinforce those

customers on the Mainframe Advantage, and the above quote, quite ironically, gives a befitting reply to

the raised eyebrows.

Sectors that eye themselves in growth phase in the next five yearsThe following table gives a hint of those sectors that see themselves in growth and transformational phase

in the coming five years time.

Industry Run (in %) Grow (in %) Transform (in %)

Banking & financial Services 61 22 17

Telecommunication 61 23 16

Insurance 62 22 16

Transportation 64 21 15

Pharma, Life Science & Medical Products 65 20 15

Table1. List of industries with high growth potential in the near future

The extract of the full table given in the report helps the mainframe vendors to reinforce their belief in

their customers because for long, these were the industries that stayed by and believed in the mainframe

capabilities. Now, Gartner predicts that these industries are set to grow and transform their business

model at a higher pace, which proves to be a potential market for mainframe believers to watch out.

The Devils IT Dictionary


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The first table gives a clear indication of which geographical location focuses on what sector in the near

future. This is highly useful to target those sectors in the corresponding location for selling Unisys

ClearPath.

The second table gives the preference of each sector with respect to the ClearPath variants offered by

Unisys.

By combining both the tables, one can easily target the right group of customers at desired location and

offer them the key benefits of the respective machine of choice for that particular industry.

Largest inhibitors for mainframe growth

The future of mainframes was always questioned by industrialists, ever since the early 90 s. Stewart

Alsop wrote,

I predict that the last mainframe will be unplugged on 15 March 1996.

But with much more improved features, the mainframe still rules the world. But it is highly absurd to

remain complacent of this fact, because the current generation doesnt question its capabilities, but

there is another bigger threat this time for the mainframe vendors.

Cost of 3rd party software and IBM software costs are the two major factors inhibiting the future

of mainframes. As many as 50% of the respondents of a Gartner survey quoted these two are theprimary factors that restrict them from investing more in mainframe in the future.

Perception of the management that mainframes is getting obsolete and the skill set going grey

prove to be the second biggest factor that proves to be another barrier for companies to invest in

mainframes.


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Key Recommendations for Unisys

Smaller Mainframe: Every customer is very important for any vendor, and Unisys is no

exception. Hence, it will be highly appreciated if Unisys can come up with a smaller mainframe,

similar to the Business Class (BC) variant of IBM mainframes to cater to the needs of the smaller

customers.

ClearPath in Cloud: ClearPath in Cloud is a fantastic initiative by Unisys. This can also prove to

be an attractive market for its smaller customers who wish to migrate off their mainframes owing

to higher costs. A smaller customer, planning to migrate off its ClearPath can be given this

ClearPath cloud option, thereby reducing the customers Capital Expenditure on a newer

alternative, and also help the customer work on a familiar environment, which might eliminate

costs to be invested in training the employees, higher capital investment and thus longer time to

break even.

Flexi-Pricing: Variable pricing strategy can be employed for Unisys ClearPath, based on the

customer whom it serves. Unisys ClearPath caters to various Government organizations across

the world, which generally doesnt care about the operating expenses, but would be cautious of

the initial investment, while the same is the reverse for non-Governmental customers. Hence,

Unisys can work out a strategy to vary its ClearPath pricing strategy to cater the needs of both

these segment of customers.

Linux on mainframes: With IBM venturing into Linux on its mainframes almost a decade ago, it

proves to be a greater benefit for its customers now. More and more organizations look up at

Linux in mainframes as the next big transformation in mainframe market. It would be wise on

Unisys to understand the advantage created by IBM and reap from the market by supporting

Linux in ClearPath as well.

Year Book: Unisys can look into the possibility of publishing a year book similar to Arcati,

(which concentrates more on IBM System Z customers and its upgrades), to educate its

customers on the year-on-year upgrades and new features added to its ClearPath. This will

reinforce their customers of their wise choice of choosing ClearPath, thereby improving itsbusiness.

Educational initiative: With Anna University, Coimbatore, being the only educational institute

to have an IBM mainframe in India, there is a great opportunity for Unisys to provide its

ClearPath to big technical institutes across India and Asia at a subsidized price, which will also

help in addressing the graying population of mainframes to a greater extent.


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ContentsKey Findings ............................................................................................................................................ 4

The Problem ........................................................................................................................................ 4

Sectors that eye themselves in growth phase in the next five years ..................................................... 4

Largest inhibitors for mainframe growth.............................................................................................. 5

Key Recommendations for Unisys ........................................................................................................ 6

Objective, Methodology and Limitations ............................................................................................... 13

Objective ........................................................................................................................................... 13

The Management Decision Problem .............................................................................................. 13

The Market Research Problem ....................................................................................................... 13

Methodology ..................................................................................................................................... 13

Limitation .......................................................................................................................................... 14

Introduction .......................................................................................................................................... 16

Features of mainframes ..................................................................................................................... 17

Who is mad enough to use this obsolete machine? ........................................................................... 17

Facts in a glance ................................................................................................................................ 18

The Mainframe Advantage ................................................................................................................ 18

Acquisition/Maintenance Costs of Servers - A Comparison ................................................................ 19

Mainframe Cost across Industries .......................................................................................................... 22

Cross Industry IT Spending ................................................................................................................. 22

Mainframe cost as a percentage of IT cost ......................................................................................... 23

Distribution of Mainframe Costs ........................................................................................................ 24

Salary and Benefit Cost per Mainframe Support ................................................................................ 26

Takeaway .......................................................................................................................................... 27

Drivers and Barriers of Mainframes Growth........................................................................................... 29

How is Mainframes Capacity Measured ............................................................................................. 29

Growth of MIPS ................................................................................................................................. 30

The Future of Mainframes ................................................................................................................. 31

Major Drivers of Mainframes MIPS Growth ....................................................................................... 32


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Mainframe Revenue of Asia Pacific and Japan ................................................................................... 33

Largest Inhibitors of Mainframes Growth .......................................................................................... 34

Takeaway .......................................................................................................................................... 36

Sector-Wise Growth Analysis ................................................................................................................. 38

Run Vs Grow/Transform .................................................................................................................... 38

Telecom ............................................................................................................................................ 42

Reason for such a high growth ....................................................................................................... 43

Major Drivers ................................................................................................................................. 43

History of Mainframes Telecom Deal........................................................................................... 44

Inference ....................................................................................................................................... 44

Banking and Financial Services ........................................................................................................... 45

Banking.......................................................................................................................................... 45

Insurance ....................................................................................................................................... 47

Recent Deals won by IBM in the Banking and Financial Sector ....................................................... 48

Airways ............................................................................................................................................. 49

Healthcare ......................................................................................................................................... 51

Malaysia ........................................................................................................................................ 51

Europe ........................................................................................................................................... 51

Takeaways ..................................................................................................................................... 53

The Growth Opportunities for Unisys ClearPath .................................................................................... 55

BMC Software ................................................................................................................................... 55

CA Technologies ................................................................................................................................ 55

IBMs approach in Economic Downturn ............................................................................................. 56

Strategy Asia .................................................................................................................................. 56

IBM goes GREEN ............................................................................................................................ 56

Unisys in the mainframe industry ...................................................................................................... 57

Cloud Facility ................................................................................................................................. 57

Mainframe Strengths ......................................................................................................................... 58

Modernization Vs Replacement of Mainframes.............................................................................. 58

Disaster Recovery Mainframe Vs Windows ................................................................................. 59

Opportunities .................................................................................................................................... 60


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Top IT priorities.............................................................................................................................. 60

IBMs date of Service Discontinuance............................................................................................. 60

The Road ahead for Cloud .............................................................................................................. 61

Linux on Mainframe ....................................................................................................................... 64

MIPS or RMF? .................................................................................................................................... 65

ClearPath in the View of an Analyst ................................................................................................... 65

Insights and Recommendations ............................................................................................................. 66

Insight 1 ............................................................................................................................................ 66

Insight 2 ............................................................................................................................................ 66

Insight 3 ............................................................................................................................................ 66

Recommendation 1 ........................................................................................................................... 66

Recommendation 2 ........................................................................................................................... 66

Recommendation 3 ........................................................................................................................... 66

Recommendation 4 ........................................................................................................................... 66

Recommendation 5 ........................................................................................................................... 66

Recommendation 6 ........................................................................................................................... 66

Appendix ............................................................................................................................................... 68

Appendix-I ......................................................................................................................................... 68

Appendix - II ...................................................................................................................................... 69


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Acronyms

LUW Linux, UNIX and Windows servers

MIPS - Millions of Instructions per Second

TBR - Technology Bureau Research

APAJ - Asia Pacific and Japan

EMEA -Europe, Middle East and Africa

ITKM - IT Key Metrics report by Gartner

LCC - Low Cost Carrier

EFHS - European Federal Healthcare System

MSM - Mainframe Service Management

BC - IBM mainframe, Business Class

EC - IBM mainframe, Enterprise Class

z/OS - Operating system of System Z -IBM mainframe

LPARS - Logical Partitions

RMF - Resource Management Facility


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List of figures & Tables

Fig1. The mainframe Myth

Fig2. Geographical distribution of the survey respondents

Fig3. Acquisition/Maintenance Costs growth rate of LUW servers in comparison with Mainframes

Fig4. Average IT spending as a Percentage of Revenue by Industry (2010)

Fig5. Cross Industry IT Spending as a Percentage of Revenue

Fig6. Mainframe Cost as a % of IT Cost

Fig7. Distribution of mainframe costs into sub segments (2009)

Fig8A. Distribution of mainframe costs

Fig8B. Distribution of UNIX costs

Fig8C. Distribution of Wintel Costs

Fig9. Percentage of Respondents Vs Number of MIPS installed

Fig10. Future of Mainframes

Fig11.Growth Drivers for Mainframes

Fig12. Mainframe Market revenue in APAJ (2008-2009)

Fig13. Business Value category Decision Tree

Fig14. Projected growth of Telecom Data Traffic

Fig15. Smart Phones as a percent of mobile shipment projection

Fig16. Projection of broadband growth

Fig17. IT spending of Banking & Financial Services by industry and Region

Fig18. Projections of IT spending in banking sector

Fig19. Prospects of insurance sector growth in Asia Pacific

Fig20. Low Cost Carrier Capacity by Region (mar 2011)

Fig21. SWOT analysis of a Mainframe Vs Windows DR

Fig22. IBM System Z OS Service Discontinuance

Fig23. Road ahead for Cloud


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Fig24. Who should ClearPath Cloud Target?

Tables

Table1. List of industries with high growth potential in the near future

Table2. Salary per Support for Mainframes, UNIX and Wintel server admin

Table3. Largest inhibitors of Mainframe Growth

Table4. List of industries with high growth potential

Table5. Global traffic comparison of internet and mobile data

Table6. List of Banking / Financial customers of IBM

Table7. Regions to focus for Mainframes Growth

Table8. Type of ClearPath to offer to various sectors

Table9. Mainframe Modernization Vs Replacement


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Objective, Methodology and Limitations

Objective

The major objective of the project is to understand the current scenario of the mainframe market

and to recommend potential areas of its growth.

The Management Decision Problem

Should Unisys continue investing in its ClearPath mainframes?

What are the sectors, both geographically and industrially, that Unisys could focus for selling its

ClearPath mainframes?

In order to answer these two questions, the project revolves on the following research problems.

The Market Research Problem

Understand the amount of spending that each industry is willing to invest in mainframes.

Understand the growth drivers that keep the mainframes market alive and the potential

barriers that might inhibit the market to grow in the future.

Research and recommend potential target markets for mainframes in the near future

Methodology

This research was done with the data available in the secondary sources which include

Research documents from Gartner, IDC, EBSCO, TBR (Technology Bureau Research),

BMC, CA Technologies, Celent, NortonRose.

IBM Press rooms, and a few videos available on the internet

Tech-forums like The Register, itjungle, openmainframes

And a few mainframe related information available in the internet, for which Google

was widely used.


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Based on the findings from the above sources, the research can be structured into the following

logical modules:

The first module introduces the reader to the mainframes environment: A short

introduction followed by the current statistics pertaining to global mainframe market

The second module focuses on addressing the importance that customers give to

mainframes in todays world: A cross industry mainframes cost as a percentage of IT

cost across industries, a granular level categorization of mainframe cost so as to

understand it better.

The third module introduces the reader to the growth drivers and the potential barriers

that the mainframe market might face in the near future.

Continuing on the same line, the fourth module gives a picture of sector-wise growth

analysis for the upcoming few years.

The penultimate module identifies various opportunities for a mainframe vendor in the

areas of modernization, disaster recovery and also a possibility of integrating mainframes

with cloud technology.

Finally, the report concludes with a few recommendations based on the study, which

when implemented could be benefitting for the organization.

LimitationAlthough there were enough and more data available on the internet, the report suffered from a

few limitations listed below:

High precision data and reports were available only in paid sites

Segment-wise and sector-wise market sizes were not available openly.

Technical specifications pertaining to ClearPath mainframes of Unisys were not

accessible owing to confidentiality thereby making this research a generic mainframes

market research rather than the one focusing on the features of ClearPath alone .

All the details furnished in this report were accumulated, compiled and interpreted only from the

internet and no information is taken from the Unisys intranet for supporting the research.

Whenever needed, project guides in the office pitched in and provided useful Gartner reports to

help the research.


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AN INTRODUCTION TO MAINFRAMES


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Introduction

Is the market of mainframes doomed to disappear soon? Or have they already become obsolete?

Recently, many eyebrows were raised over the future of mainframes. The situation is quite

paradoxical. Mainframes are viewed as old, creepy and huge, but the fact is, they are the most

technologically advanced, high speed machines with impeccable accuracy and the most compact

machine given their complexities.

Mainframe computers are often seen as old, huge machines that occupy a greater floor area, but

if only they were living in the 60s or 70s, they might possibly be right because unfortunately

todays mainframes no more occupy huge floor spaces, nor are they outdated.

Fig1. The Mainframe Myth

Right from the very first mainframe to the latest ones, there has only been an increase in

reliability, availability and serviceability (RAS as IBM calls them).

There are still companies running on mainframes for years together, with minimal down time

and little processing capabilities. Although mainframe technologies are referred as legacy

platform which is no longer strategic for companies, they play an essential and central role in all

usual operations people do every day. Whenever people deal with data, they are bound to pass

through a mainframe in its backend for sure. Such is the penetration of mainframes in the current

world. Be it banking and financial sector to insurance to healthcare to air reservation to telecom

industry, wherever there is a huge data transaction, mainframe is most probably found

functioning in the backend with high speed processing capability, greater accuracy and stronger

efficiency.

Fail, crash or slow processing speed has never been an option


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Features of mainframes

Mainframes were designed to achieve all its customers workloads with maximum accuracy, not

compromising on speed. The three basic features around which a mainframe still revolves are

Reliability, Availability and Serviceability.

For more than decades, mainframes were able

to achieve this requirement quite easily until

competition from the distributed servers

entered the market. It was then when the

mainframe providers started revamping the

capabilities of a mainframe.

Along with its incomparable accuracy with such high speed and little down time, a whole new

bunch of features were added to the mainframe server. Mainframes were always designed to be

upward compatible so that upgrading the mainframes was always an easier process. Thereby

reducing the complexity of replacing every old machine with a higher end one and do a data

transfer. This saved a great deal of costs for the customers.

Nowadays, more emphasis is being laid upon Disaster Recovery, mainframe modernization and

running Linux on mainframes.

Who is mad enough to use this obsolete machine?

Even if Mainframes dominate the landscape of large-scale business, they remain obsolete to

many people around the world, and are considered as dinosaurs since emerging technologies

leap into the public eye such as cool 3D effects, newer and improved look and feel and a lots

more features that makes them attractive.

Then who is probably still using mainframes?

The answer is quite simple. Almost everyone has used and is using mainframes in their day to

day activities. For instance, lets consider these situations:

a. Got an American Express card?

b. Have you ever withdrawn/deposited cash in an ATM machine?

c. Have you ever made air travel reservation?


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Well, if yes, then you have been using a mainframe in the back end to process your request.

Yes!!! It is quite staggering to find out in how many ways mainframes make our life easier,

faster, reliable and most importantly, secure to the extent that it is next to impossible to

imagine scrapping off these mainframes from our lives completely.

Facts in a glancea. Gartner Says 2010 Worldwide Server Market Returned to Growth with Shipments Up 17 % and Revenue

13 %

From a geographic perspective, all regions, with the exception of Japan, grew in revenue

with the three highest growth rates shown by North America (24.5 percent), Asia/Pacific

(22.4 percent) and Latin America (12.3 percent). Europe, Middle East and Africa (EMEA)

grew by 10.4 percent and Japan declined by 4.4 percent.

b. IDC figures that sales of mainframes shot up by 69.1% in the fourth quarter, to reach $1.7bn.That was the highest growth spike that IDC has ever recorded for a mainframes.

c. Linux on System z grew from 16% of the installed MIPS at YE09 to 19% by YE10.Thirty of the 61 new accounts that IBM added to its installed base in 2010 are reported to

be running Linux - some in conjunction with z/OS, and others as stand-alone systems (10

are Linux-Only mainframes).

d. IBM mainframes are the dominant in the market with close to 90% of market shareThe first mainframe vendors were GE, Control Data, IBM, NCR, RCA, Burroughs,Honeywell and Univac: Collectively known as IBM and the Seven Dwarfs. These

vendors led by IBM now include Fujitsu and Unisys among others.

e. Unisys grew its ClearPath systems sales by 7%, following a full-year ClearPath growth in 2010.The Mainframe Advantage

The primary advantage of a mainframe is its immunity to virus attacks and high security

measures. It is quite staggering to know that there has been little, (if not any), instances of

downtime of mainframes because of viruses threats. The Vulnerability report published in

NIST reveals the true story of the mainframes reliability.

High speedis yet another clear distinction of mainframes when it comes to high volumetransactions. In case of banking/insurance industry, where the amount of transactions per

minute across the world is really high, mainframes can process every single one of them


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with utmost precision and extraordinary speed. A single mainframe can handle as many

instructions per day as many transactions in the New York stock exchange in a day.

Cost advantage: With so many advantages, a distributed environment is bound to cost

high, both in terms of capital expenditure and operational expenditure. Whereas, with

mainframes, its value for the money initially invested. Mainframe save millions of dollars

of operating costs and ensures high efficiency.

On an average, fewer administrators are enough for a mainframe than that for UNIX or

Wintel servers. Also, it is less expensive to employ a mainframe administrator than a

UNIX/Wintel person.

Acquisition/Maintenance Costs of Servers - A Comparison

A 2011 Mainframe Users Survey of System Z users community was conducted on 100

individuals. The survey respondents were either contacted directly by e-mail or other web based

means and invited to complete the mainframe user survey on the Arcati Website.

Fig2. Geographical distribution of the survey respondents

Fig1 represents the geographic distribution of the survey respondents. It can be seen that the

survey mostly covers North America and Europe just because of the fact that the number of

mainframe users in those areas are high compared to the other regions. This gives a clear picture

of the authenticity of the outcome, thereby ensuring little bias in the survey results.


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Fig3. Acquisition/Maintenance Costs growth rate of LUW servers in comparison with Mainframes

As it can be seen, the region marked in green color represents similar if not equal rate of growthof the acquisition/maintenance cost in comparison with an IBM mainframe and any region in the

bar below the green, i.e. red and blue, means the cost is growing at a reduced pace, and any

region above the green depicts high acquisition/maintenance cost growth rate of the server when

compared with that of IBMs.

A substantial number of respondents felt that their UNIX, Linux, and Windows user-support

costs were increasing faster than the mainframe for an equivalent amount of capacity or support.

With growing concerns of companies migrating off mainframes to other alternatives, this figure

justifies the cost advantage that a company will eventually reap of any mainframes being

deployed in its premises.


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THE COST FACTOR OF MAINFRAMES


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Mainframe Cost across Industries

In this section we will be seeing the cost that is allotted for the software, hardware, personnel and

other components of mainframe across industries. A comparison of the mainframes cost with

UNIX and Wintel servers will educate us in understanding the benefits of one server over other.

Cross Industry IT Spending

A survey from Gartner reveals the average IT spending across each major industry as a

percentage of its revenue in the year 2010. The figure below gives a clear picture of the same.

Fig4. Average IT spending as a Percentage of Revenue by Industry (2010)

From the figure above, it is quite clear that the Banking and Financial sector spend around 6% of

their revenue in IT related activities. This is because of the growing number of transactions in

this industry across the globe and the ever increasing data security needed for such high volume

transactions.

Though there has been a fluctuation across industries over their IT spending with respect to the

revenue, it can be generalized into one figure as depicted below.


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Fig5 Cross Industry IT Spending as a Percentage of Revenue

From the chart, we can understand that owing to the economic downturn, there was a fall in IT

spending during the 2008-2009 period. The trend has not continued, but contrarily, it has revived

back to the same figures as before, which is a great sign for all the IT software/Hardware

providers.

Mainframe cost as a percentage of IT cost

Now, having known about the average IT spending percentage, we can further break them down

to know how much of the IT spending cost is actually consumed by mainframes alone.

According to a research by Gartner in the year 2011, on an average every industry spends 7% of

its IT cost in mainframes alone, with a mid quartile ranging from 3.75% to 10%.

Fig6. Mainframe Cost as a % of IT Cost


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Also, the report claims that major customers are eyeing growth of their subscribed mainframe

MIPS capacity for the next three years time.

On relating the above with the overall revenue, it is possible to arrive at the exact figure of the

mainframe cost that each industry encounter with respect to their revenue, thereby facilitating us

to arrive at the market size of mainframes globally.

Distribution of Mainframe Costs

With close to 7% being the cost of mainframes across industries, it will be more interesting to

know the various components of this 7% cost. The mainframe hardware cost of acquisition alone

will not contribute to the total cost. There are other related costs associated with owning a

mainframe for a customer. The pie chart below segregates the mainframe cost into sub segments

which include software costs, personnel costs, hardware costs and other relevant costs.

Fig7. Distribution of mainframe costs into sub segments (2009)

Below is the bar chart that gives a clear indication of the split up of these costs over a period

from 2002 to 2008, that helps us to compare and interpret the cost associated with mainframes,

than its UNIX and Wintel counterpart.


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Fig8A. Distribution of mainframe costs

Software

It can be seen that in all eight years, software represents the biggest proportion of mainframe

spending. Users should be aware that software spending has been more closely linked to

hardware spending for mainframe systems than for most other hardware platforms until 2009.

Software spending in 2008 was 31% of the overall budget. The ITKM data chart for 2009 shows

that this proportion raised to 44%. The manner in which the figures are measured changed in

2009; however, accounting for the changes in measurement methodology, on a like-for-like basis,

the software figure for 2009 is approximately 40%.

Hardware

The proportion of spending going into hardware has changed little between 2002 and 2008,

remaining at approximately 25%. In case of 2009, again, taking account of the changes in the

measurement methodology, a like-for-like comparison would have this at approximately 21%.

People Cost

The proportion of overall mainframe costs that go toward people has remained steady at 25% to

30% between 2002 and 2008. In 2009, taking account of the changes in the measurement

methodology, a like-for-like comparison would have this at approximately 30%. This indicates

that organizations are not cutting back on mainframe skills.

Other Cost Elements

The other cost elements have remained fairly static during the past few years


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Fig8B. Distribution of UNIX costs Fig8C. Distribution of Wintel Costs

On comparing Fig8A with 8B & 8C, we can infer that

The hardware cost of Wintel is way higher than the other two counterparts.

The personnel required to administer a UNIX server is close to 50 of the total cost, which

again is really high than that of mainframes.

Inference

This means that companies investing in mainframes have a low portion of their costs allocated

for administrating the machine than those investing in UNIX and Wintel.

Salary and Benefit Cost per Mainframe SupportA same survey conducted by Gartner also brings in another point to prove that investing in

mainframes is wiser and cheaper rather than to invest in UNIX or Wintel servers. The following

chart gives the salary cost associated with a company per support employee for mainframes.

Parameter Mainframe UNIX Wintel

Cost (in $) 107,124 121,584 112,093

Table2. Salary per Support for Mainframes, UNIX and Wintel server admin

Per support, per year the table gives the cost difference between the support costs for a

mainframe in comparison with UNIX and Wintel server administrators. Thus, taking all the

support staffs in an organization pertaining to the servers they employ, over a 5 year period can

prove to be of a greater cost saving in the case of mainframe.


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Takeaway

Combining the above two results we can infer that it is not only less expensive to employee a

mainframe support, but also only less number of support are required for administering a

mainframe when compared to UNIX and Wintel servers. So in all aspects, mainframe wins the

battle with a clear margin.


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DRIVERSAND BARRIERS FOR MAINFRAMES

GROWTH


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Drivers and Barriers of Mainframes Growth

In this section, we will understand first how the capacity of mainframes is measured. Once

knowing this, we can analyze which cluster of mainframe customers see themselves in the

growth phase and are willing to expand their MIPS capacity. The section concludes with

analyzing the potential barriers that the lower end customers apprehend towards their investing

less in mainframe MIPS.

How is Mainframes Capacity Measured

Before jumping into the growth drivers, one has to first understand how the capacity of each

mainframe machine is measured.

A customer quotes the order for a particular capacity machine based on the amount ofinstructions the company would normally expect a mainframe to perform. And following this

argument, the capacity of mainframes is measured in units of MIPS (Millions Instructions per

Second).

The capacity of the mainframes can be increased any time based on the customers requirements.

Mainframe vendors charge the customers based on the MIPS usage. There are various pricing

methodologies available for a company to choose from.

The customer can opt for a prepaid subscription as like mobile service, being able to use

as much as it has subscribed.

The customer can opt to flexible pricing options like pay-as-you-use as in the case of

Unisys ClearPath, which allows the customers to pay only for its usage or as in the case

of IBM mainframe, the customer can request for higher MIPS capacity license whenever

necessary while subscribing to a minimum level on normal days.

Each of the two pricing strategy has enabled both Unisys and IBM to pioneer in the services they

offer, thereby enabling their customers to get the maximum benefit for the cost of subscription .


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Growth of MIPS

There can be three categories of customers.

Smaller customers (less than 500 MIPS)

Mid-Range customers (Between 500 MIPS to 5000 MIPS) Larger Customers (More than 5000 MIPS)

According to a survey conducted in 2010 by Gartner, the customers showed varying interest

towards the future of mainframes. On closer observation of the chart below, one can easily

understand where the mainframes market is heading towards, who will be the prime customers in

the future and who will be migrating off the mainframes sooner or later.

Fig9. Percentage of Respondents Vs Number of MIPS installed

The chart above depicts a few interesting scenarios:

The number of customers with less than 500 MIPS is reducing

The trend is not that very different with mid-range customers as well, though they are

sticking to their mainframes, only because of the cost they have invested in this

technology, hoping that mainframes market will revive soon.

The actual growth of mainframes is in the larger customer sector with more and more

customers investing in increasing MIPS to cater to their growing business needs. This is

where the future of mainframe relies on .


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The Future of Mainframes

As explained above, the future of mainframes lies with those large customers who are expecting

their business to grow and are ready to make full use of the potential that each mainframe is

designed for.

To understand what the customers feel about the future of mainframes, Gartner research firm

conducted a survey asking the respondents their outlook of the mainframes environment in each

of their work place. The chart below shoes the response statistics from the respondents of the

survey. Gartner asked the question

Which of the following closely describes the outlook of your mainframe environment?

The respondents were given six options to choose from, from which it was easier to categorize

the results in to either declining or stable or growth phase for the mainframes market.

Fig10. Future of Mainframes

As it can be seen from the graph above, more than half of the respondents of the survey see

themselves in growth phase with higher emphasis on growing their MPS through the growth of

both legacy and new applications.


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Major Drivers of Mainframes MIPS Growth

Why are the large customers eyeing to invest more in these mainframes in the near future? What

makes them believe that their business is growing?

Fig11.Growth Drivers for Mainframes

A study by BMC software reveals the major factors that drive this growth of business to the

mainframe customers. A study with 926 mainframe customers in the year 2010 reveals the major

growth drivers as shown above.

Thus the major growth drivers reinforce the survey respondents belief that their business is

witnessing higher transactions per day than ever before and consequently, it attracts the business

to scale up to meet the business requirements with higher performance and reliable transaction

security.

With Reliability, Availability and Security being the key features of mainframes, these prime

factors in turn invite companies to invest more in their existing mainframes so as to cater to their

business needs.


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Mainframe Revenue of Asia Pacific and Japan

The growth drivers played a significant role in the revenue reaped from mainframes investment

for various industries in the year 2008 and 2009. In spite of the global economic recession, the

mainframes market seemed to perform exceptionally well in the Asia Pacific location.

Fig12. Mainframe Market revenue in APAJ (2008-2009)

The mainframe hardware market alone grew from 1.37 billion USD in 2008 to 1.45 billion USD

2009.

From the 2008-2009 statistics, we can find that most of the mainframe business was in peak in

Asia Pacific and Japan, the reasons for which can be attributed to many factors:

When the whole world was facing downturn, countries in Asia like China, India were the

least affected and thus the business investments didnt get affected to a greater extent

Also, since the mainframes market so far were concentrated in the West only, there were

too little customer base in Asia Pacific. The slowdown provided opportunity for the

vendors to move out of their conventional operating zone and look out for alternatives.

Owing to many such factors, mainframe giant IBM started to attract customers from Asia Pacific

region. And since IBM mainframe accounts for close to 90% of world wide mainframe market,

the growth in Asia Pacific mainframes market also grew by a huge percentage when compared to

the global mainframes market.

Asia Pacificmainframe marketshare grew by 5% inthe year 2008 to2009

Global mainframe

market shrunk by9% in the year 2008to 2009


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Largest Inhibitors of Mainframes Growth

It is easier for anyone to get carried away with the assumption that mainframes are here to stay

for long and decide to invest in it. Though it is true, no venture is worth pursuing without

knowing the potential threats looming large in opposition to it.

Well, if mainframes are having the best reliability, highest security measure, and minimum (if

not zero) downtime, it must be the option for many businesses. Then what can be the factors that

are arguably slowing the growth of mainframes?

It is definitely not the features that the customers of today are worried about. There are a few

more factors, which the customers feel, are preventing them from investing more in mainframes

in the future. Let us take a look at what those factors are and how much importance does thecustomer give to each of those factors.

Inhibitors 2009 (in %) 2008 (in %) 2007 (in %)

Hardware Costs 4 4 3

IBM Software Costs 18 20 11

3rd Party Software Costs 32 34 31

Portfolio of 3

rd

party apps 8 18 7

Greying of skill set/ Availability of trained 16 8 14

Sole-source concern 2 2 0

Perceived Complexity or mainframe 0 6 3

Mgmt perception that mainframe is outdated 20 8 31

Table3. Largest inhibitors of Mainframe Growth

One can draw two major inferences from this table shown above:

COST

The IBM Software Costs and the third party costs alone prove to be two major factors

that limit the customers to invest more in mainframes in the future. These set of people,

close to 50% of the respondents of this Gartner survey, feel that it is the cost and not the

performance that stops them from growing their MIPS usage.


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PERCEPTION

The second staggering outcome of this survey is that there exist a group of respondents

who feel that it is neither the cost not the performance, but what stops them from

investing in mainframes is the perception of the company management team. Most of the

companies top management feels that the mainframes are going to get obsolete and it is

of no use for the company to invest in them anymore.

With close to 90% of the global market share, many customers feel that IBM dictates pricing of

mainframes to a greater extent. Most people also feel that they are now in a situation where

migrating is too expensive, but mainframe support costs are also high. Given the cost-benefit of

migrating off mainframes, comparatively they stay put with mainframes, not with trust in

mainframes capabilities, but because of the additional costs they might have to encounter if theymigrate off mainframes.

Apart from this, some customers now feel that they can outsource mainframes thereby freeing up

their data centre space, as well as reducing their cost of maintenance, license subscription and

also eventually reducing their necessity to employ a mainframe expert.

For a longer period of time, IBM used this situation to price their mainframes higher, but with

questions raised on the future of mainframes, there have been innovative pricing methodologies

from IBM. But the impact (of reviving mainframes), it was expected to create is not yet fully

achieved.

The third biggest factor that proves to be an inhibitor for mainframes growth is the graying skill

set of mainframes, i.e. aging trained personnel in mainframes. Most of the customers worldwide

feel that the baby boomers are set to retire in other decade and if the current generation

youngsters dont get themselves equipped with the necessary skill set required to be a

professional in the mainframes environment, there will be minimum trust shared between

vendors and customers. IBM has tried to address this problem for the past six years, but

unfortunately, even though close to 600 institutes worldwide have joined hands with IBM for

this academic initiative, most of the customers were not aware of them. This was clearly the

reason for this factor being ranked high in the list shown above.


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Takeaway

Though the cost factor would require significant brainstorming, the other factors like

management perception of the mainframes getting obsolete or the graying mainframe expert

population can be addressed easily by the mainframe vendors, if communicated properly. It just

requires the mainframe vendors to go that extra mile and communicate with its customers,

reassuring them of their investment in innovating cool features and also of the academic

initiatives, which can potentially clear any doubts in the minds of its customers.


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SECTOR-WISE GROWTHANALYSIS


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Sector-Wise Growth Analysis

This module of the research focuses two major aspects:

Industrial sector wise growth analysis for the next few years Geographical sector identification where the industry can grow

We start the section with an analysis across industries to understand which cluster of industries

are open for growth in the coming few years. From the list of industries we will concentrate on

five key sectors which eyes good growth and proves to be a great market for mainframes vendors

to focus in the following years. The five sectors we are going to focus are:

a. Telecom

b. Banking

c. Insurance

d. Airways

e. Healthcare

Before analyzing each of these sectors, let us also understand that most of these sectors in the

West have long been mainframe customers, relying on its capabilities, its functionalities and its

operating cost advantage over the mainframe counterparts.

If these sectors are already minting on mainframes advantage, then why is this report further

focusing on them again?

To answer this question, let us review the above statement once again. Yes! These industry

sectors are mostly from the West, investing huge amount of their revenue in mainframes. Let us

take a look at the scenario of these sectors in APAJ and EMEA because globally analysts predict

that the future of mainframes lies in these markets for various reasons stated in the report earlier.

Run Vs Grow/Transform

The IT spending study conducted by Gartner in 2011 identified the best way to categorize the

business models of various industries so as to enable analysts to identify potential market for

implementing newer technologies into the customers premise. According to this study, any

business can focus on any of the three options in the next few years:


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Run the Business

This is an indicator of how much of the IT resource is consumed and focused on the

continuing operation of the business. It includes all nondiscretionary expenses as part of

the run-the-business cost.In most run-the-business cases, the basic function is essential to staying in business, and

the need for the function is not at issue. The value statements need to justify:

o The investment in terms of price/performance

o Changing over to electronic pay checks to increase accuracy and eliminate rework

o Outsourcing expense management to lower monthly support costs

o Server upgrades to eliminate unplanned downtime

Grow the Business

Think through the whole value chain. For example, a capability that enables a reduction

in the product development cycle time equates to more new products to market faster,

which can lead to more revenue and/or market share. As in this example, construct the

value argument from measurable operational improvements and a plausible set of value

chain connections, instead of directly forecasting financial benefit. Stakeholders must see

how the business value is generated to properly understand the opportunity .

Transform the Business

These opportunities make the world in which the organization operates a different place.

To discuss value, a picture must be painted of how the world will be different. At the

industry level, describe who will win or lose, how and why. At the market level, describe

what makes the market new or different, and what new rules will separate winners from

losers. At the enterprise level, describe what the bet is: What is at risk for the client

(starting with the entire investment and possibly including the entire company e.g.,Motorola bet and lost $26 billion on the Iridium project) and what can be gained? Apple,

on the other hand, invested in iTunes (a Web-based service), and, thus, created not only a

new revenue model with an online storefront, but also a new platform to catapult and

transform its product set (as well as the market) in terms of the disruptive technologies

behind its iPod, iPhone and iPad.


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Based on this knowledge, it is possible to construct a business value decision tree to take the

right decision at the right time. Let us see at what situation a business should think about each fo

the three alternatives described above.

Fig13. Business Value category Decision Tree

Gaps in business alignment can be found by examining IT spending as it relates to the day-to-day

operations of a business (run), the organic growth of the business or productivity improvement

(grow) and its support of major business transformation, new products, services or business

models (transform).

A common misconception with this measure is that an IT initiative that may transform the IT

organization, such as data center modernization or virtualization, should be classified as a

"transform the business" investment. While these IT initiatives do transform the IT organization,

they should primarily be classified as "run the business" investments because they support pre-

existing IT services. IT transformation often leads to new business process improvements that

enable the business to grow or build new revenue streams; therefore, these costs would need to

be evaluated and distributed based on IT service and business performance. The run, grow andtransform the business framework should always be viewed in business terms with respect to

how IT will enable the business to grow or transform revenue, operating income and/or profit

margins


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The table below gives a sector wise report on the openness to grow and transform their business

model in the near future. The entire table is available in theGartner report.

The following table concentrates only on those sectors that are ready to grow or transform in the

near future. This is because, these are the markets that mainframe vendors can target for selling

their mainframe hardware / software services.

Industry Run (in %) Grow (in %) Transform (in %)

Banking & financial Services 61 22 17

Telecommunication 61 23 16

Insurance 62 22 16

Transportation 64 21 15

Utilities 65 19 16

Pharma & Medical Products 65 20 15

Retail & Wholesale 65 21 14

Professional Services 66 20 14

Table4. List of industries with high growth potential

From the above table, we find industries that are very familiar to mainframe vendors such as

Banking &Financial Services, Insurance, Transportation and Pharmaceuticals. These are the

industries with high volume transactions which relied on mainframes over the years for its

reliability, security and uninterrupted service round the clock. Now, with a growth potential inthese industries being high, it would be wise of the mainframe vendors not to lose focus on them,

understand their customers business needs and bridge the gap that might assist these customers

to grow and expand their business, which again would attract investing in mainframes.
http://my.gartner.com/portal/server.pt?open=512&objID=260&mode=2&PageID=3460702&resId=1528717&ref=QuickSearch&sthkw=210146http://my.gartner.com/portal/server.pt?open=512&objID=260&mode=2&PageID=3460702&resId=1528717&ref=QuickSearch&sthkw=210146http://my.gartner.com/portal/server.pt?open=512&objID=260&mode=2&PageID=3460702&resId=1528717&ref=QuickSearch&sthkw=210146http://my.gartner.com/portal/server.pt?open=512&objID=260&mode=2&PageID=3460702&resId=1528717&ref=QuickSearch&sthkw=210146


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Telecom

The growth rate in telecom sector is quite staggering. Most of the analysts across the globe

perceive this robust change in the telecom as the next big revolution after the internet revolution

of the late 1990s. With more players entering into the smart phone business worldwide, it calls

for higher security and speed, heavy data transmission in the form of real-time voice, data and

video and increased simplicity.

Global Internet Traffic Growth Global Mobile Data Traffic Growth

1997 178% 2008 156%

1998 124% 2009 140%

1999 128% 2010 159%

2000 195% 2011(Estimate) 131%

Table5. Global traffic comparison of internet and mobile data

According to the Telecom Industry Association, Asia Pacific overtook Europe to become the

worlds largest telecom market in 2010. The volume of data traffic rose more than 60% in 2010

and is expected to continue its growth for at least next five years. The global data traffic grew 2.6

fold in 2010, nearly tripling for the third consecutive year.

Fig14. Projected growth of Telecom Data Traffic

Western Europe and Asia Pacific will account for over half of global mobile traffic by

2015, as shown above.

Middle East and Africa will experience the highest CAGR of 129 percent, increasing 63-

fold over the forecast period.

The emerging market regions (Central and Eastern Europe, Latin America, and Middle

East and Africa) will have the highest growth and will represent an increasing share of

total mobile data traffic, from 12 percent at the end of 2010 to 20 percent by 2015.


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Reason for such a high growth

Many experts believe that one of the major reasons for the growth of mobile data traffic is the

astonishing increase of smart phone shipments.

Fig15. Smart Phones as a percent of mobile shipment projection

As it can be seen from the projections the shipments of smart phones are expected to capture and

mobile market by leaps and bounds. This is really inviting heavy data traffic in the telecom

community. The 20% smart phones alone account close to 78% of global handset traffic and is

expected to grow by 131% as shown in Table4.

Major Drivers

The major drivers for such a phenomenal growth of smart phones in the telecom market are the

wireless and broadband services.

Broadband subscribers in Asia Pacific grew at 26% in 2010 to

reach 257 million, and are expected to outnumber pay-TV

subscribers by 2015, reaching 538 million and thereafter climbingto 681 million by 2020. Regional per capita penetration will climb

from 7% in 2010 to 15% by 2015, and 18% by 2020. Fixed

networks had an 83% share of the market in 2010, though this

will decline to 52% by 2020 due to the growth of mobile.

Smart

Phone

20%

Others

80%

Mobile

Shipments, 2009

Smart

Phone

50%Others

50%

Mobile

Shipments, 2015

2010 -

257mn

2015 -538mn

2020 -681mn

Fig16. Projection of broadband growth


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History of Mainframes Telecom Deal

Mainframes are no stranger to the telecom industry. There are various incidents in history where

major telecom giants have invested in mainframes for their growth.

The table below just gives a glimpse of a few deals between telecom giants and mainframevendors.

Company Vendor

European Telecom IBMLinux Mainframe

British Telecom IBM-S/390

Bharati Airtel IBM-System Z

British Telecom Unisys

Apple Unisys

Inference

The world economy is currently going through a recovery phase. The momentum is expected to

remain strong in 2011. The Telecommunications Industry is identified as a major driver of the

global economic recovery.

Furthermore, as the global economy continues to recover, demand for real-time voice, data and

video increased by leaps and bounds. All these developments are enabling the telecom carriers to

undertake large network extension and upgrade plans.


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Banking and Financial Services

The banking and financial services primarily include three major sub sectors:

Banking

Insurance

Security Services

The figure below gives a geographical split of the IT spending of each of these sub sectors.

Fig17. IT spending of Banking & Financial Services by industry and Region

Let us see in detail about the banking and insurance industries to understand the growth prospects

across regions in the coming few years time.

Banking

The sum of the bank IT spending across North America, Europe and Asia Pacific will grow to

169.6 billion USD, which is approximately 4% higher than 163 billion USD in 2010.

The majority of the growth is expected in Asia Pacific; the spending by the banks in this region

will grow by 5.9% in 2011 to 56 billion USD. This growth will continue in 2012 at the rate of 6%

to reach 59.4 billion USD.


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Fig18. Projections of IT spending in banking sector

North American bank spending will grow by a solid 4% in 2011 to $53.4 billion. This figure will

accelerate to 4.6% in 2012 to $55.9 billion. European banks will grow 2.5% in 2011 to $60.2

billion and this growth will remain constant in 2012 as spending increases by 2.4% to $61.6

billion.

Major Drivers

There are five key growth drivers that will help the banking industry to sustain its growth for the

next four to five years time:

Need for customer centric core banking system

Construction of new data centers

New business requirements like mobile and internet banking

Capacity expansion

International expansion.

Banking industry will look closely into these growth drivers and may require the best of the

breeds to meet their business requirements in the near future. With mainframes being a well

established solution provider for most of the banks across the globe, it stands a good chance to

increase its foot prints in Asia Pacific in the banking sector.


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Insurance

China and India are rated as the two countries with the greatest prospects for growth in the Asia

Pacific region. A survey done by NortonRose reveals that 97% of the respondents predict China

to have Very significant prospects for growth, with India (90%) in the second place. Indonesia

registers in third place (80%0, with Vietnam and Malaysia in joint fourth place with 77%.

These countries have the largest populations in the region and their increasing middle classes

seeking insurance protection for their lives, property and possessions, and their desire to save for

the future, together with extensive natural resources and infrastructure projects are driving the

market. However, insurance penetration rates in Asia Pacific still remain low compared to the

mature markets of Europe and North America, giving rise to immense opportunities.

Fig19. Prospects of insurance sector growth in Asia Pacific

56% of the insurance CEOs in our survey believe that emerging markets will be more important

than developed markets to their companys future. China tops the list of countries targeted for

growth (cited by 28% of insurance CEOs), followed by the US, Brazil and India (all 19%). The

potential within emerging markets is evident.


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Recent Deals won by IBM in the Banking and Financial Sector

The table below gives a glimpse of the recent deals won by IBM in the Banking and Financial

sector globally. This will reemphasize the fact that mainframes reliability have long be sorted out

by companies of this sector and that investment in mainframes by the business giants of the fiels

have always reaped greater benefits.

Company Sector Location Year E/N

Kookmin Bank Bank Seoul, Korea 09 N

BC Card Credit Card Korea 09 N

Dongbu Insurance Insurance Korea 10 N

Vietnam Joint Stock Bank for

Industry and Trade

Bank Vietnam 10 N

Guangdong Rural Credit

Cooperatives

Bank China 11 N

Perimerica Financial Services America 11 E

PSP Payment Solution

provider for banking

Canada 11 N

Senegal Ministry of finance Govt Africa 11 N

E - Existing Customer

N - New Customer

Table6. List of Banking / Financial customers of IBM

One can infer from the table that IBM targets Korea, China and Africa for acquiring new

customers. Since IBM is the trend setter in the mainframe market in general, it would be wise of

its competitors to also shift their focus to the emerging market and tap the available opportunity.


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Airways

Asia Pacific

The number of scheduled seats within and to/from the Asia Pacific region will grow to more than

107 million in Mar-2011, according to OAG. Within the Asia Pacific region, capacity has

expanded 8% to 92.5 million in Mar-2011. Seats to/from the region grew 11% to a total of 15.2

million, making the Asia Pacific the largest region in the world in terms of passenger seat

capacity. Frequency increased 13% to/from Asia Pacific.

LCCs grew the number of services within Asia by 20% for 1Q2011. Services by LCCs to/from

the region grew by only 6%, indicating the more limited range that LCCs can operate to outside

of Asia. Interestingly, LCCs grew their capacity to India by only 1%, whereas LCC frequencies

on domestic services are planned to expand by 10% in 1Q2011.

Dubai

Number of Airlines Passengers Using Dubai International Airport Grew by 15.6 % in the first 11

months of the year (till Jan 2011) compared with the previous year.

Paul Griffiths, the chief executive of Dubai Airports, said the airport was crossing a traffic

threshold after passenger numbers surpassed 4 million in October and last month, with a

monthly count of 4 million travelers forecast to become the norm next year.

Fig20. Low Cost Carrier Capacity by Region (mar 2011)


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Low-cost scheduled capacity increased 10% year-on-year, following growth of 9% in Feb-2011,

with the most notable regional growth in terms of frequency being within Africa (35%) and

to/from the Middle East (21%).

Global Air Cargo

Air cargo traffic is also recovering after two years of contraction. Led by strong recovery in

Asian exports, monthly world air cargo traffic growth turned positive after 18 straight months of

decline. Air cargo traffic is now forecast to return to its 2007 peak by the end of 2011.

Half of the worlds new cargo traffic added during the next 20 years will be to , from, or within

the Asia Pacific region.

Since Air reservation and cargo have long been relying on mainframes and the global scenario

seems reviving back to growth phase, especially in Asia Pacific and Africa in the Low Cost

Carrier segment of airways, it proves a good opportunity for mainframe vendors to cash into in

the near future, one - to improve its capacity with existing customers by providing proactive

solutions and twoto improve its presence in this region of the globe.


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Healthcare

The growing concern of investment in healthcare across the globe is something which cannot be

overlooked as a part of any research today. More and more countries are trying to understand the

public needs for a safe and secure healthcare system in the country. While there always seems to

be an unending debate about privatization of healthcare, regions like Europe have a different say.

The research focuses on such two geographical regions which promise a lot to deliver in the

coming years for the healthcare sector in their respective localities.

Malaysia

Malaysia ranks fifth in the Asian pharmaceutical market and first in Philippines. The government

of Malaysia expects robust growth in its healthcare sector within the next few years.

Malaysian government is introducing various policies like Economic Transformation Program

and Entry Point Projects (EEP) and expects the healthcare sector to grow at the rate of 6%

year-on-year in the near future.

Director of KNEA, Dr. Chua expects the Malaysian healthcare sector to grow to the size of RM

35.1 billion by 2020 and continue to increase and reach RM 40 billion in the following years

very soon.

Europe

One more area to focus for healthcare growth is Europe. There have been extensive discussions

and research activities going on in Europe on the future of their healthcare sector. With public

demanding a centralized healthcare facility and free treatment for those who cannot afford the

treatment, the government has set up commissions to review the current healthcare domain and

its performance over the past few years.

Based on the research by the Economic Intelligent Unit, Europe finds five possible scenarios of

the healthcare growth by 2030. Let us look at all those five scenarios, which intern will help us

identify the growth drivers of the healthcare sector in Europe.


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1. Technology triumphs and cures chronic disease, while e-health takes a prominent role in

the management of healthcare

2. European nations join forces to create a single pan-European healthcare system

3. Preventive medicine takes precedence over treating the sick

4. European healthcare systems focus on vulnerable members of society Integrate

healthcare with smart phones

5. European nations privatize all of healthcare, including its funding.

Drivers

1. The new system will ensure consistent quality across the region. As part of this system,

EU countries will be required to supply statistical data on all national healthcare activities,

as well as personal medical data. The number-crunching carried out by the European

Federal Healthcare System (EFHS) allows it to decide with accuracy which drugs,

medical devices and types of medical care should be made available to all EU citizens.

2. The above scenarios call for e-health business model by 2030. This scenario illustrates an

innovative healthcare-delivery model, known as participatory medicine, in which

networked patients shift from being passive recipients to being active drivers of their own

healthcare and full partners to their healthcare providers. Tools such as Google Health,

which is available in the USA, will become universally used and seamlessly integrated

with national electronic health records. Such a change would make this patient-driven

model possible, according to Mr. Michel of Greater than One.

3. The growing telecom sector will find itself integrated with the healthcare with smart

phones being the tool bridging the health conditions of the public to the healthcare

systems of the medical centers.


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Takeaways

1. Regions to Focus

Regions Sectors

Asia Pacific and EMEA Airways

Malaysia & Europe Healthcare

China, Korea & Africa Insurance & Banking

Table7. Regions to focus for Mainframes Growth

2. Which model of Unisys ClearPath mainframe would each of the sectors prefer?

Unisys offers two variants of ClearPath namely

a. ClearPath Libra and

b. ClearPath Dorado

Each of the two has different operating systems which has been continuing fromBurroughs and Sperry (which joined together to for Unisys)

Sector ClearPath Model

Telecom ClearPath Libra

Banking ClearPath Libra

Air reservation & Cargo ClearPath Dorado

Table8. Type of ClearPath to offer to various sectors


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OPPORTUNITIES


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The Growth Opportunities for Unisys ClearPath

This section describes on the major players in the mainframe market, their projections about the growth of

mainframes in the near future, their business model and takes the reader through what Unisys offers in its

ClearPath as well as in the cloud environment. With this knowledge, the research focuses on the potential

opportunities for Unisys to cash in its mainframe business in the near future.

BMC SoftwareAlthough the mainframe business is typically a slower growing market for systems management

vendors, BMC Software grew its Mainframe Service Management (MSM) business 8% year-to-

year, as the company continued to focus on expanding its customer base in emerging markets

and increasing its footprint within existing customer accounts.

TBR (technology Business Research) believes BMC is well-positioned to sustain its growth pace in

mainframes; the company reported a 37% year-to-year increase in mainframe license bookings

($131.8 million).

BMC Software is investing in strategic partnerships, as well as research and development. BMC

is growing its cloud market share through a partnership with Salesforce.com

CA Technologies

CA Technologies is also partnered with IBM to provide management services around zEnterprise.

CA Technologies believes mainframe revenue will pick up in the second half of its fiscal 2011.

TBR believes mainframe 2.0 initiatives will continue to drive some revenue growth in CAs

mainframe business.

CA acquired 4Base to enhance services in cloud and virtualization, which will support the

customers adopting these management solutions from CA.


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IBMs approach in Economic Downturn

Strategy Asia

While the entire world was bleeding in the economic recession, countries in Asia were alone

little affected. Many attribute them to the life style of the people in this region, claiming them to

be more conservative, not being extravagant in their business investment plans and so forth. But

be it whatever, IBM understood that there are little customers of mainframes in this geographical

sector when compared to the proportion of mainframe customers in the West. Also given the

lesser impact of the slowdown in this area, IBM cashed in on this opportunity to increase on its

customers base in this part of the world.

This is one of the reasons for the Asia pacific mainframes growth from 2008 to 2009 of 5%

reaching the market size of 1.45 billion USD from 1.37 billion USD in 2008.

IBM goes GREEN

IBM will begin shipping a computer with something that customers have not seen in a new

mainframe from the company since 1995 -- water cooling. The new mainframe, dubbed the

zEnterprise 196, can operate with up to 96 processors versus 64 in the System z10 mainframe

using about the same amount of power. IBM credits the improved efficiency to an assortment of

updates affecting how the new system uses its resources. Nonetheless, IBM saw fit to offer water

cooling to help reduce overall data centre cooling needs.

This is the revival of the older technology after as long as 15 years, owing to the greener concern

from IBM. IBM claims that this methodology will make the environment more greener by

consuming lesser power and also recycling the coolant can save lot of cost to its customers.

Now it remains a challenge to its competitors to either follow suite and re-use the same water

cooling technology for their mainframes or implement their own advance Greener cooling

mechanism.


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Unisys in the mainframe industry

Recently, Unisys has ported the Java runtime environment to all of its machines--Clearpath Libra

and Dorado as well as ES7000s--and has partnered with Jboss to deliver a single Java application

server layer that spans these platforms as they run MCP, OS2200, Windows, and Linux. Unisys

also allows ClearPath customers to plug X86 server boards into their mainframe machines, and

they can run Windows or Linux on these boards.

Unisys has also been pushing utility pricing as a differentiator for the ClearPath lines with its

pay per use pricing options; the company is working on a new thing called pay per service

pricing.

Cloud Facility

Customers can upload their applications and data over the Internet or send Unisys the files ontape of DVD media to get them on the cloud. The ClearPath Cloud slices sell in three-month

blocks. The base cloud slice is rated at 25 MIPS and has 8MB of main memory (all you need to

write and compile code) and 75GB of disk capacity; it costs $13,000 over the three months - said

Mr. Bill Maclean, vice presid

Documents

MainframeMarket-A Global Perspective