What drives IBM to chase the mid-market with the Power family?
India being considerably a RISC/Unix market has been on a rise for about 10-15 years. We have seen clients embracing this platform primarily on large mission critical workloads like core banking or ERP. The journey of RISC/Unix began with three players: Sun, IBM and HP. As far as IBM is concerned, especially in India, over the last four to five years we have seen a gradual shift of clients moving toward Power AIX, reasons being manifold. We have undertaken several developments on stability of the operating system, keeping pace with the trend of virtualization.
As per IDC, IBM has been leading the RISC/Unix server space for about last ten quarters. Over this period, we have seen clients slowly and steadily moving their periphery workloads also to RISC/Unix platform, which means that the platform has not been restricted to the elite few—the large enterprises. We have seen a lot of mid-market and SMB clients embracing Power AIX, for example users that are first time SAP users, bidding for 50-150 users and smaller cooperative banks with 15-20 branches. We are not restricting the territory of RISC/Unix to database layer. We are moving it down to applications layer.
We are also incentivizing the ISVs to port all the applications to Power AIX. In view of this, we have had over 3,500 competitive migrations on to IBM Power AIX across the world.
Besides competitive pricing, what do you think will click with the mid-range buyers?
The advantage that we bring to the table is not sheer technology or hardware. Whenever a development happens on hardware, a commensurate change happens on the operating system. On the virtualization layer, unlike in a non- x86 system where the processor could be the best in the world, but there always remains a question whether the operating system will be able to harness the processor’s power. Creating the best processor does not mean you have the best server; you have to have the entire ecosystem supporting it. That is happening beautifully in the Power AIX. If you look at Oracle SPARC, the servers are not directly from the company, they are OEMs from other players. The other reason for clients to migrate is the fact that they have been able to swing the entire footprint that they used to run on a gear, to almost one-third or lesser.
We have the domain knowledge in terms of migration, and we have a team within India called the migration factory and the lab services to help clients migrate. We launched the Power7+ processor in October last year, but the models of the product family that came in were mostly around high-end systems and now we are completing the landscape of the portfolio. We are now working on the next generation of processors within the Power family.
We have also added the functionality of increasing the cache on the processor, which means you have more real estate next to the processor, shooting the throughput up, especially in case of OLTP and database transactions. We have created an L3 cache of about 10 MB per core, which means in a four-core processor you have about 40 MB cache. We have enhanced the encryption levels. Another development we have done on Power 7+ is on the Power VM wherein we have taken the technology to the next level in terms of creating a virtual machine to up to one twentieth of the core, the previous generation could do only one-tenth so technically, in a four-core processor you can actually create 80 servers.
Is only migration happening on Power systems in the mid-market or do you see fresh deployments as well? What is the pattern of adoption?
I think it is both—migration and fresh implementations. If you look at the lower strata of clients, I believe they are still price sensitive, but over a period of time they are also starting to behave like enterprise clients, as they have begun talking of saving over a period of 3-5 years. About 60-70% of businesses in the new clientele are fundamentally in the mid-market space. For the partners, we have come up with a guaranteed margin on Power systems—up to 20% front-end margins. That is a big motivation for the partner to go and convert a proposal which is tabled on x86 to Power system. This is fundamentally what we are doing to target the mid-market.