Mainframe computers, originally designed for intensive data processing, are proving essential with the rise of artificial intelligence. These days, IBM is the only manufacturer with any sort of scale in the mainframe sector. According to the Wall Street Journal, Financial institutions, insurance firms, and airlines still depend heavily on these machines for their fast data handling abilities. These organizations are increasingly embedding AI within mainframe hardware rather than relying solely on cloud-based solutions.
Financial entities need to process potentially fraudulent transactions almost instantaneously. Steven Dickens, a VP at Futurum Group, notes that delays associated with cloud processing are impractical. Thus, performing AI queries directly on mainframes is crucial for real-time data analysis.
Ross Mauri, GM of IBM's mainframe systems, tells WSJ that positioning AI close to the data source is becoming a preferred approach. IBM has seen a 6% uptick in its mainframe business for Q2 2023.
Mainframes' Capabilities and Market Position
Mainframes excel at processing high volumes of transactions—up to 30,000 per second. The latest IBM zSystem model can accommodate up to 40 terabytes of data, weigh as much as 1,800 pounds, and come with a $1 million price tag. IBM controls a substantial 96% market share, with NEC, Fujitsu, and Hitachi trailing. IBM highlights that nearly all major banks and top airlines utilize mainframes for core operations.
The mainframe market was valued at $3.05 billion in 2023, although IDC forecasts a decline in new sales by 2028. Meanwhile, a Forrester survey indicates over half of enterprise leaders plan to boost mainframe usage in the next couple of years.
Limitations and Challenges
Mainframes have limitations related to their in-built computing capacity, unlike the cloud, which benefits from scalable distributed computing. Also, they often run on outdated code and are difficult to integrate with modern applications, posing high costs for management and new development.
IBM has already adapted its mainframe as an AI platform. Its latest model delivers AI insights rapidly through an on-system processor. This capability aids industries like insurance in predicting optimal products for clients accurately. Future iterations will support broader AI applications, including large language models similar to ChatGPT.
Reliability and Security
Mainframes are prized for their dependability and security. They maintain operations even if part of the system fails, thanks to component redundancy. IBM's latest mainframe includes advanced encryption, making it resistant to quantum computing threats. Ponce Bank in New York uses a mainframe for its loan operations, running overnight batch processes to streamline data uploads. The mainframe seamlessly integrates with cloud-based mobile banking services.
Some businesses prefer to manage their own mainframes. Ponce Bank CEO Carlos Naudon emphasizes the control over infrastructure by not depending on third-party cloud providers like Amazon. Verizon Communications uses a hybrid model, combining cloud services with mainframes and data centers, notes Kamran Ziaee, SVP and CIO for technology strategy.
