Big Blue Talks About IBM i And PureSystems

April 7, 2014 Timothy Prickett Morgan

With the $2.3 billion sale of the System x division to Lenovo Group back in late January, IBM is selling off the underlying X86 hardware, chassis, switches, and other components of the PureSystems line to the Chinese PC maker and server wannabe. But don’t get confused. IBM has every intention of selling regular rack and tower Power Systems machines, will be making its own storage and Power nodes for the PureSystems machines, and will be OEMing the remaining hardware from Lenovo to continue selling PureSystems.

PureSystems will still be a significant platform for IBM going forward, but one that is focused more on the software and total solution than on a straight hardware sale. As it turns out, the Flex System Chassis and other components were largely designed by Software Group, not Systems and Technology Group, and sales of PureApplication systems were already being booked in the part of Software Group that handles WebSphere, business process management, and mobile software. This division of Big Blue had, in effect, an OEM relationship with Systems and Technology Group, and after the Lenovo deal is completed, this OEM agreement will simply shift to Lenovo. On the PureData for Analytics front, formerly known as the Netezza data warehouse, sales of this sophisticated machine have been booked in Software Group’s Information Management division (where the databases live), and a literal OEM agreement between IBM STG and Netezza was merely shifted to being between STG and Software Group.

To try to get a handle on what PureSystems in its many forms means to IBM in general and IBM i customers specifically, The Four Hundred had a chat with Jason Gartner, vice president of PureSystems within Software Group. IBM may be exiting the commodity server infrastructure business, but it is by no means abandoning hardware. In fact, what IBM wants to do is turn commodity hardware into something that looks and smells like an AS/400–in a good way–automating many aspects of distributed systems that can run on either X86 or Power iron, or both.

Timothy Prickett Morgan: I am obviously very keen on talking about PureSystems because it is the wave of the future for IBM and on understanding how the System x deal from Lenovo affects the PureSystems line. In my several jobs, I look at the IBM i base, the Linux and AIX base across SMBs and large enterprises, and while I don’t want to focus on the Lenovo deal, we need to talk about how this affects PureSystems as a starting point. So what will change when this deal is done? And I assume at this point that it will meet with regulatory approval and will be done.

Jason Gartner: It will depend on the offering. So all of the components–the chassis, the networking, the x86 compute nodes–are all moving to Lenovo. From a PureSystems perspective, we have got PureFlex for infrastructure and cloud, we’ve got PureApplication for applications, and we’ve got PureData for big data. The X86 PureFlex will be manufactured and delivered by Lenovo.

For racks that are hybrid, mixing Power and Intel nodes, as well as Power-only PureFlex and the PureData systems will all be treated similarly in that we will be OEMing parts from Lenovo and we will build the racks. These will be built in the same places as they are today. The actual physical cabling and racking and stacking will remain within IBM. The center of gravity for software development for PureSystems will remain in Raleigh, North Carolina. We do software development for PureSystems in Austin, Rochester, Boston, Toronto, and Shanghai.

So for PureApplication, for example, we will source our components from different vendors. We will get our hard drives from Hitachi, our compute nodes and chassis from Lenovo, but the overall model won’t really change.

TPM: And the Netezza-based PureData machines, they are not going to change either? Are they going to be moved to PureFlex proper at some point? They are still based on the BladeCenter blade server, and those have not been updated with the latest Intel Xeon E5 or Power7+ processors.

Jason Gartner: You will see a generational update for PureApplication, and I will call it minor–faster compute nodes, more memory, that kind of stuff. We are obviously working on an update for PureData for Analytics, which is the Netezza data warehouse, but we are not ready to discuss what that looks like. It can’t stay BladeCenter forever because BladeCenter is not something that is being invested in any more. But there is still a significant sales lifespan for the current Netezza line, including parts and all of that, and all of the PureApplication and PureData setups have a five year support guarantee beyond this lifespan. They’ve got a long life in front of them, this is not an impending doom scenario to get worried about.

TPM: So what has been the effect of PureSystems on IBM i and AIX customers? I don’t know who is buying PureSystems machines. I suspect there are some IBM i shops that are buying PureFlex, but not many. I suspect that they are mostly sales of X86 nodes running Linux and Windows, with a smattering of AIX and IBM i. And if that is not the case, and there is an even distribution, I am thrilled. So school me on this.

Jason Gartner: It depends upon the offering. IBM looks at these as a layering of value. The Flex system is the next generation of our blade design. Then the PureFlex line is more of a hardened packaging of hardware and software for infrastructure, and in there you have Power with IBM i, AIX, and Linux as well as X86 with Windows and Linux. And then you have the next step up–and it is a significant step up–to PureApplication, which is really looking at an optimized cloud platform on these systems. As you move up the stack, you lose flexibility but you gain value on software deployment and optimization, ease of maintenance, firmware upgrades, and so on. There are some people who have made the PureApplication akin to the next generation of the AS/400.

TPM: Yup, we all saw that. And of course the irony for me is that there is no such thing as a PureApplication system running IBM i. You can only run IBM i a PureFlex setup. Effectively, due to the integration of the database, application tools, and middleware, this is a PureApplication machine.

Jason Gartner: A lot of customers and ISVs picked up on that. There are a lot of customers who are on IBM i, but the question is what is their investment and what are they doing. For the most part, IBM i customers are looking for a consolidation platform for Power and Intel, and the ability to run IBM i, Windows, and possibly Linux and AIX all in the same chassis.

But when you look at the primary use cases of IBM i customers, moving to a whole new paradigm, even though it is the same mindset, the use case is not as strong and there is more attraction on PureApplication on the same use cases as IBM i, but not with IBM i applications if that makes sense.

TPM: So the people with the AS/400 mentality are moving more slowly to the new AS/400, and those who have not experienced the AS/400 before see the value immediately. This sort of makes sense. The IBM i and Windows parts of the businesses where both platforms exist tend to be siloed. I have argued, by the way, that if you are going to engage with IBM i shops, you need a much smaller system. You need to cut the chassis on half and maybe have one Power node, two X86 nodes, and a storage node with switching. The benefits that they can get from Flex System Manager and the application patterns that come with PureApplication machines are exactly what they need, but a full chassis, much less a rack of machinery, is far too much iron for the typical IBM i shop. The technology is there, and the only issue I see for IBM i shops is whether or not it is cheaper to buy a rack-based Power server and rack-based X86 servers and manage them separately. The initial expense could be high at first, but the benefits could return that investment in short order.

Jason Gartner: With all of that, you are getting into infrastructure, and IBM, with the sale to Lenovo, has essentially decided to split ourselves a little bit. We were already working in this fashion anyway, selling low margin, high volume systems as well as high value, low volume systems. That kind of play that you are talking about would definitely be in the low margin, high volume space, and that has never really been our forte. Since we sold the PC business a decade ago, we have been very explicit that we are in the high value business for our clients. And retaining things like PureApplication and PureData and Power Systems in general is really giving us a way to differentiate ourselves as an innovation partner for our clients. Driving volumes and wringing margins out of the system is something that Lenovo has mastered.

TPM: Given the natural affinity between IBM i and PureSystems, what can IBM do to encourage IBM i shops–and I guess AIX shops, too–to adopt PureSystems? With private clouds and service providers, companies tend to build on top of the VMware stack or OpenStack plus KVM. What can you do to get the IBM i and AIX customers to come along with you and get into the PureSystems fold?

Jason Gartner: I would be the first to admit that I am not an expert on the IBM i business. I have spent a lot of time with the IBM i team, and we understand the overall opportunity.

You alluded that there might be a higher mix of X86 compared to Power on the PureFlex line and on the higher volumes, and you are not necessarily incorrect. However, when you look at PureApplication systems, we are driving a fairly even split with Power and Xeons and actually driving a higher ratio of Power customers.

The PureApplication system has been a success for IBM, and I wanted to talk a little bit about that. We had a tremendous year in 2013. A very high double digit percentage of customers that we brought in for PureApplication were brand new to IBM, and we drove a fairly even amount of Power and Xeon sales. IBM has a lot of customers already around the world, and finding new customers is unique.

Clients are looking for innovation in cloud, and what we have noticed is that there is a lot more evaluation above the infrastructure layer than there is for base infrastructure. If you look at the base infrastructure, you will find that we sell a lot of this to our existing clients because it is just base infrastructure, it is just more of what they are already comfortable with. With PureApplication, because we introduced the ability to run software patterns with ISV software, our own middleware and that of others, and this is a unique offering that is unmatched in the marketplace today. These are not just new customers, but in many cases greenfield applications.

As of the end of 2013, we had only been in the market for 17 months and approximately 35 percent of our sales were repeat business. So we are acquiring new clients, we have got a healthy business going, and the clients that are buying it are seeing the value, they are getting it into production, and they are coming back and buying more. We had a couple of customers last year that bought in every single quarter as their workloads grew and as the number of workloads grew. And we see that continuing this year.

It would be a whole different story if we sold a whole bunch and we never sold any again.

TPM: I assume the ramp is similar to what I have seen with the UCS blade machines from Cisco. Customers do a prototype with one or two enclosures, and then maybe they put one or two racks into production on one workload. And then when they are happy, they find three other workloads and come back for more.

Jason Gartner: That’s exactly the scenario that we are in right now. You spend a lot of time on that first little sale at the beginning, and that’s why we introduced our Pure Mini system, with 32 cores and all the bells and whistles, to do prototypes.

We have passed the 10,000 system mark, and that is for the whole family. We don’t break that figure down further.

TPM: I assume when you say system, you mean chassis?

Jason Gartner: That’s correct.

The other important thing is that we have taken the PureApplication system, which manages the topology, the software, the maintenance, and we are now running it as a service on the SoftLayer public cloud. So now customers can, for instance, build a complex, three-tier business intelligence implementation and encapsulate it in what we call patterns, and this pattern can run optimized on Power, it can run optimized on SoftLayer, and you get the same management interface, the same look and feel. Everything is the same except for the iron is no longer in your datacenter. Now customers will be able to do things like dev/test in public but production in private, or offloading of tier two applications to public, or disaster recovery as a service, or cloudbursting for says when you need more capacity on your private systems.

We are in beta testing now in our Dallas datacenter, and we are going to be doing our big launch at Impact2014 at the end of April.

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