IBM mainframe business down 42% in Q2
In a July 14 letter to investors released prior to IBM’s July 22 earnings call, CEO Arvind Krishna warned of the earnings shortfall and laid out current challenges. He related the infrastructure performance shortfall to “wrapping on the launch of z17 in the second quarter” and stated: “Given this was the strongest start to a mainframe program in our history, we expected Infrastructure revenue to decline low-single digits for the year, beginning this quarter. What played out was worse than our expectations, driven by a shortfall in our Z performance and the associated software stack, primarily in Transaction Processing.”
In the last few weeks of June, customers shifted capex spending and started purchasing more AI infrastructure components in the form of servers, storage, and memory “to secure supply-constrained infrastructure ahead of expected price increases,” Krishna stated. “This dynamic impacted client buying patterns. While we anticipated some supply chain related impact in our expectations, we did not anticipate the magnitude of the capex reprioritization.”
Yet despite challenges this last quarter, z17 remains at nearly 130% growth program-to-program, according to IBM. That’s “well ahead of z16, which was our strongest program on record, with clients representing 85% of installed MIPs maintaining or growing capacity,” the July 14 letter stated.
