Annex Bulletin 2007-29 August 2, 2007
An OPEN CLIENT edition
The Greening of Big Blue, Part 2 (IBM to save $250M in mainframe consolidation)
IBM Beats the Street (Analysis of IBM 2Q07 business results)
Updated 8/02/07, 7:30AM PDT
IBM Hoping for Global Warming of Its Customers to Energy Savings
The Greening of Big Blue, Part 2
IBM to Save $250 Million Using 80% Less Energy in World's Largest Mainframe Server Consolidation
ATLANTA, Aug 2, 2007 - Last May, we told you about Big Blue going green on the back of a $1 billion investment in energy saving hardware and software (see "The Greening of Big Blue," May 2007). Dubbed "Project Big Green," the IBM initiative targeted corporate datacenters, including its own, with a hope of achieving a 40% or higher reduction in energy consumption (click on thumbnail image to enlarge).
Well, IBM's latest greening announcement is likely to cause a flurry of veritable clichés... "Big Blue puts its money where its mouth is;" or "IBM practices what it preaches;" or "some cobblers' kids don't go barefoot;" or "IBM likes the taste of its own medicine;" or "Big Blue eats its own dog food" - a comment one analyst offered in the July 26 preannouncement briefing. But our favorite would be - "IBM leads by example."
Pick whichever cliché suits your taste and fancy, the fact is that Big Blue is deadly serious about "going green." And for very good business reasons.
"We expect to save $250 million over five years in energy, software and system support costs," said Florence Hudson, IBM's vice president of System z (mainframe) marketing, in the July 26 teleconference about the world's largest server consolidation project in history.
IBM is planning to consolidate 3,900 servers (OS images) onto 30 mainframe. As a result, the company expects to save on energy usage by 80%, and reduce the data center floor space by 85% for an overall cost savings of 40%, according to Hudson.
As as you can see from the IBM chart on the right, the latest move is a part of ongoing data center consolidations that have been going on for the last 10 years. The result has been phenomenal reductions in resources - human, material (energy, space) and financial.
The process was driven in part by enormous increases in demand for processing power. The 76 System z mainframes that IBM uses internally, for example, experienced a near tripling in installed MIPS capacity (a measure of data processing power on mainframes) in the last three years. And that's before the latest major consolidation phase, announced today.
Charts like the one above are clearly something that many large IBM customers can relate to, based on our discussions with IT executives around the world. And now they can also see that there is a light at the end of the tunnel; that the "mission impossible" their CEOs demand can be done. And that it can be achieved while saving money and resources. Which is why our favorite cliché was, "IBM leads by example."
But some habits die hard, especially if the company gets to be known as Big Blue. The above IBM chart shows how much "greener" its mainframes are compared to the Intel-based servers' usage of energy and space. Yet in the original IBM design, the IBM bars were colored blue and Intel's were shown as green. So we switched them around, to fit in better with "The Greening of Big Blue"... :-)
Happy bargain hunting!
For additional Annex Research reports, check out... Annex Bulletin Index 2007 (including all prior years' indexes)
Or just click on SEARCH and use "company or topic name" keywords.
IBM Beats the Street (Analysis of IBM 2Q07 business results)
Adios, Microsoft Vista! (How I Failed Twice in Trying to Scale Mt. Vista)
The Last of the (PC) Mohicans - Analysis of Dell's strategy changes; Linux, Wal-Mart
The Greening of Big Blue - IBM to spend $1 billion on "going green"
Are We in "Buyback Bubble?" - Analysis of corporate stock buyback trends
To Buy (back shares) or Not to Buy? - Analysis of stock buybacks in corporate America
IBM Stock Still Grossly Undervalued (A preview of IBM first quarter business results]
Accenture Beats Forecasts, Again (Analysis of Accenture's 2QFY07 results)
The Value of pi (π) - Analysis of IBM System p and System i market and product strategies
The (T)ides of March Sink Markets Again - Analysis of global economic & investment trends
Capgemini Caps Great Year, Saves Best for Last (Analysis of Capgemini's fourth quarter business results)
EDS: On Sunny Side of Street (Analysis of EDS' fourth quarter business results)
CSC: Where Less Seems More (Analysis of CSC's third quarter fiscal 2007 business results)
Fujitsu: Sales Up, Profit Down (Analysis of Fujitsu's third quarter fiscal 2007 business results)
IBM Shatters Records (Analysis of IBM's fourth quarter business results)
IBM Stock Passes Century Mark (Analysis of Big Blue's Stock Performance)
Happy Days Are Here Again (Analysis of Top 20 IT leaders' latest stock market and business performances)
Globalization Accelerates (Analysis of United Nation's annual survey of global investments)
IBM: A $125-Stock? (An update to "From Small Acorns Mighty Oaks Grow")
Capgemini: Longest Sustained Stock Price Rise (An update to "By Leaps and Bounds")
HP: New King of the Hill (Analysis of HP's fourth quarter business results)
IBM: From Little Acorns Mighty Oaks Grow (Analysis of IBM's "State of the Union")
Capgemini: By Leaps and Bounds (Analysis of Capgemini's preliminary third quarter business results)
Fujitsu: Good Performance Gets Better, More Global (Analysis of Fujitsu's first half FY2007 business results)
IBM: A Slam Dunk Quarter (Analysis of IBM third quarter business results)
IBM: Services in a Box (Analysis of IBM Global Services' Ground-shifting Announcements)
Strong Comeback by IT Stocks in Third Quarter (Analysis of top 20 IT companies' market and business trends)
Stock Buybacks: A Fading Fad (Dell, erstwhile "King of Fluff," suspends its stock buybacks)
Capgemini: Growth Continues (Revenues, net profit up in double digits, margins also improve)
Power of Manpower (While others move to India, Russia... AMD invests in New York, hailing "phenomenal" quality of its labor force)
Ebb Tide Lowers Most Boats (Analysis of EDS' and CSC's latest quarterly results)
IBM vs. HP: A Tale of Two Blues (Both companies are doing well in business, but only HP is favored by Wall Street; Big Blue trying to change that now with its new "India Opus") [Annex clients click here]