They’re not dead yet: IBM keeps its mainframe computer business going
In 1991, Stewart Alsop, the editor of InfoWorld and a thoughtful observer of digital trends, predicted that the last mainframe computer would be unplugged by 1996. Last month, IBM introduced the latest version of its mainframe, the aged yet remarkably resilient war horse of computing.
Today, mainframe sales are tiny compared with the personal computer market. But as the mainframe faced extinction, IBM retooled the technology, cut prices and revamped its strategy. One result is that mainframe technology - hardware, software and services - remains a large and lucrative business for the company, and mainframes are still the back-office engines behind the worlds financial markets and much of global commerce.
The mainframe stands as a telling case in the larger story of survivor technologies and markets. The demise of the old technology is confidently predicted, and indeed it may lose ground to the insurgent. But the old technology often finds a sustainable, profitable life.
Television, for example, was supposed to kill radio, and movies, for that matter. Cars, trucks and planes spelled the death of railroads. A current death forecast is that the Web will kill print media.
What are the common traits of survivor technologies? First, it seems, there is a core technology requirement: There must be some enduring advantage in the old technology that is not entirely supplanted by the new. But beyond that, it is the business decisions that matter most: investing to retool the traditional technology, adopting a new business model and nurturing a support network of loyal customers, industry partners and skilled workers.
The unfulfilled predictions of demise, experts say, tend to overestimate the importance of pure technical innovation and underestimate the role of business judgment. “The rise and fall of technologies is mainly about business and not technological determinism,” said Richard Tedlow, a business historian at the Harvard Business School.
To survive, technologies must evolve, much as animal species do in nature. Indeed, John Steele Gordon, a business historian and author, observes that there are striking similarities in the evolutionary process of markets and biological ecosystems.
Dinosaurs, he notes, may be long gone, victims of a change in climate that better suited mammals. But smaller reptiles evolved and survived, and today there are more than 8,000 species of reptiles, mainly lizards and snakes, compared with about 5,400 species of mammals.
As a media technology, radio is a survivor. Its time as the hub of U.S. households in the 1930s and 1940s gave way to television. But radio adopted shorter programming formats and became background music and chat that is listened to while people ride in cars or do other things at home - “audio wallpaper,” as Paul Saffo, a technology forecaster in Silicon Valley, puts it.
While television did pose a threat to movies, it also served as a prod to innovation, including failures like Smell-O-Vision but also widescreen, rich-color technologies like Cinerama and CinemaScope. The idea - and a good one - was to give viewers a more vivid, immersive experience than they could possibly have with television.
Today movies, like other traditional media, face the digital challenge of the Internet. And Saffo is betting that after a period of adjustment and experimentation, they will make another life-prolonging adaptation.
The survivors build on their technical foundations as well as the human legacy of people skilled in the use of a technology, and the business culture and habits that surround it.
The mainframe is the classic survivor technology, and it owes its longevity to sound business decisions. IBM overhauled the insides of the mainframe, using low-cost microprocessors as the computing engine. The company invested and updated the mainframe software, so that banks, corporations and government agencies could still rely on the mainframe as the reliable and secure computer for vital transactions and data, while allowing it to take on new chores like running Web-based programs.
IBMs most recent model, the z10, represents an investment of $1.5 billion and the work of 5,000 technical professionals. To nurture its ecosystem, the company partners with 400 universities worldwide in programs to teach mainframe skills.
“The mainframe survived its near-death experience and continues to thrive because customers didnt care about the underlying technology,” said Irving Wladawsky-Berger, who led the technical transformation of the mainframe in the early 1990s and is now a visiting professor at MIT. “Customers just wanted the mainframe to do its job at a lower cost, and IBM made the investments to make that happen.”
