IBM can milk the mainframe for years to come, because the cloud doesn't compete against its legacy enterprise customers. Large enterprises have chosen to retain many of their legacy mainframe applications. Previous attempts at re-writes have too frequently failed due to cost overruns or have been complete failures. So, the safe choice for a CIO is to avoid rewriting legacy systems (many have been around since the 60s or 70s). So, IBM customers will continue paying their premium to run on a mainframe, and in some cases will leverage their existing skills/systems to deploy more onto their IBM systems.
This mainframe strategy for IBM will keep many of their legacy customers, but as Cringley and others point out, it fails to capture new growth.
Here's another view point: I recruited for Mainframe Developers a year ago. It's an increasingly rare skillset to find because developers:
- move on to cloud technology or other newer technologies to stay relavent
- don't want to move back to mainframe since they see less jobs for them
- there are almost no junior level candidates for mainframe roles. Most candidates will have 10-20+ years of experience. It's extremely rare to find anyone less than 5.
It is true that legacy systems aren't going anywhere anytime soon. But as time goes on there's a high cost in finding people that can maintain those systems.
This is true, but they've been milking it for 40 years, and it's in permanent decline. Mainframe sales are not worth anything like what they were in the 1980s.
I remember back in the Sam Palmisano days (mid to late 2000s) watching him present in an internal all hands meeting (I'm a past Software Group IBM employee). He spoke briefly about mainframe margins, he didn't state numbers, but boy he made it clear that the margins were significant and they were seeing growth.
So, I don't know about the last few years, but I think IBM can ride the mainframe money train for years to come. My point was simply that it's not going to drive any growth.
Agreed, but the numbers have been going down for decades, and are still going down. In 1985, mainframes brought in $14bn of IBM's $50bn turnover. Today it's less than $5bn of IBM's $100bn turnover. Factor in inflation and the decline is even more dramatic.
IBM used to be able to charge $1 million just to install its top-level mainframe OS (before rental charges) and C cost $1,500 a day. I expect those days have gone ;-)
This mainframe strategy for IBM will keep many of their legacy customers, but as Cringley and others point out, it fails to capture new growth.