IBM Unveils Its New Generation of Mainframes : High tech: Analysts said the announcement was the most important one Big Blue has made in a quarter of a century.

By CARLA LAZZARESCHI

Sept. 6, 1990 12 AM PT

TIMES STAFF WRITER

POUGHKEEPSIE, N.Y. —

In what was termed its most important announcement in 25 years, International Business Machines on Wednesday unveiled its new generation of mainframe computers, machines the company said will set its tone in this all-important market for the rest of the century.

In all, the company announced 140 new products, including 18 new computers, that on average will double the computing power of the current models, which are used to handle such complex tasks as automated banking transactions, airline reservations, insurance policy tracking and inventory controls.

Surprising many analysts, the company said 11 of the 18 new computers are immediately available and that all but three will be available within nine months. However, many other remaining products, including a wide range of IBM software that will give the machines their additional power and speed, won’t be available until mid- or late 1991.

Still, IBM’s announcement, coming a day after rival Japanese mainframe maker Fujitsu unveiled a competing model, was generally viewed as among IBM’s most aggressive moves in a year marked by uncharacteristically bold IBM product launches.

“IBM’s objective is to regenerate mainframe demand and I believe they can achieve this,” said Bob Djurdjevic, a Phoenix technology analyst. “I think they are uncorking mainframe demand.”

Although the new generation of mainframes had been dubbed “Summit” by financial analysts and computer industry observers during its seven-year-long development, IBM officials said the new family never had that code name and is known only as system 390 at Big Blue.

“This is it,” laughed George Conrades, IBM’s senior vice president for marketing services when asked about Summit at Wednesday’s press conference here. “This is what we have all been waiting for.”

Despite some early praise for IBM’s moves, analysts remained divided over whether the company can achieve one of its key objectives for its new mainframe family: quickly reversing its sagging performance of the last few years. Several Wall Street analysts had been predicting a rocky transition and possibly sagging profits for the company as it attempts this sweeping product launch, its most ambitious since it introduced its first mainframe 25 years ago.

Unlike its previous product rollouts, this year IBM faces a weak U.S. economy and softening demand even in Europe, which has been a strong source of sales, noted Ulrich Weil, a Washington analyst. Further, competition is intensifying from such Japanese rivals as Fujitsu and Hitachi.

Mainframes are big business for IBM, accounting for more than 50% of its $62.7 billion in sales last year and perhaps as much as 60% of its $3.7 billion in profit. But IBM’s share of the market is slipping, from 95% of U.S. sales in 1987 to 87% this year, according to estimates from Computer Intelligence, a San Jose market research firm.

Further, there are increasing signs that growth of the overall mainframe market is slowing as smaller systems become more powerful and take over tasks once reserved for the giant machines.

IBM has made it clear that it wants to disprove the conventional wisdom that huge mainframe computers--often disparagingly referred to as dinosaurs--are things of the past.

“We believe strongly in the future of large systems,” said Carl J. Conti, general manager of IBM’s Enterprise Systems Unit. “The role of these large systems is continuing to expand.” IBM executives said the new systems contain a variety of new technology and design approaches. Among the more notable advances they cited are:

* New software to connect IBM mainframe to a wider variety of computers from other manufacturers;

* High-speed fiber optic lines that can connect machines up to 5.6 miles away, without any loss of power or speed;

* Increased use of so-called parallel processing designs that will allow customers to string together as many as eight separate mainframe systems, each with six individual information processing units, to create a 48-processor system;

* An attention to security concerns with a new cryptographic system to include sensitive data being sent over networks, a development said already to have aroused the interest of the Central Intelligence Agency.

Company executives said 50 of the new systems will be delivered before the end of the month and by next year the system 390 will account for more than 50% of IBM’s mainframe sales.

Again executives said sales throughout this year and into next will be aided by aggressive incentives to customers, including generous trade-in allowances on their existing IBM mainframes.

Early comparisons to Fujitsu’s new mainframe are difficult, analysts said, because little is known about the Japanese maker’s system. However, Djurdjevic, who has tested the Fujitsu machine, said it appears to have faster processors, capable of handling about 50 million instructions per second, a common measurement of computer speed. IBM’s new models can handle about 41 million instructions per second, he said.

Nevertheless Djurdjevic said that by other measurements, including software, ability to connect a variety of machines and other features, the IBM systems are superior.

HIGH-END MAINFRAME COMPUTER MARKET

Number of systems physically in place in companies within U.S. boundaries, as of January 1990.

IBM: 87%

Amdahl*: 9%

Hitachi: 4%

*Amdahl is 45% owned by Fujitsu

POWER SURGE

Increase In Main Frame Power

Increase in aggregate power of all mainframes installed (in millions of instructions per second-MIPS)

1981: 17,593

1990: 286,068

Increase in number of mainframes installed