Dive Transient:
- IBM noticed its software program phase dominate revenues as the corporate ready to ship its subsequent technology z17 mainframe in eight weeks, executives stated throughout a Q1 2025 earnings call Wednesday.
- The corporate reported $14.5 billion in first quarter revenues — up 1% yr over yr — pushed largely by software program, which accounted for practically 45% of IBM’s enterprise, up from 40% a year ago. “Our combine shift in direction of software program is driving development,” SVP and CFO James Kavanaugh stated.
- IBM’s infrastructure revenues declined 6% because the z16 gross sales cycle wound down, however the firm remained bullish on its flagship product line. “Mainframe is an integral a part of our enterprise portfolio general, and it’s an everlasting platform that we’re going to be sure that we prudently however aggressively handle,” stated Kavanaugh.
Dive Perception:
Acquisitions fueled IBM’s shift to software program. The corporate purchased open-source platform supplier Crimson Hat for $34 billion in 2019 and added Apptio and HashiCorp to its software program portfolio within the final two years.
The pivot didn’t gradual the tempo of mainframe growth. The z17, which arrives lower than three years after its Z Techniques predecessor, was designed with AI workloads in mind. Models are powered by the high-capacity Telum II processor and are outfitted for the customized Spyre accelerator chip.
“We begin testing very early with our shoppers … in personal confidential gatherings,” Chairman and CEO Arvind Krishna stated Wednesday. “Given what we confirmed them round safety, round AI and round elevated capability, nearly all of them resonated very positively to the mainframe.”
Regardless of large migrations to cloud and issues a few falloff in mainframe engineering talent, the platform continues to run more than two-thirds of global business transactions by worth, in keeping with IBM analysis.
“We run 45 of the highest 50 banks world wide, 9 of the highest 10 retailers, 4 to five high 10 airways of the world,” Kavanaugh stated. “We’re going to shield these shoppers and what the mainframe brings to the desk.”
The brand new Z Techniques product line arrives at a time of IT funds reassessment by enterprises monitoring the influence of President Donald Trump’s trade policy on the worldwide economic system. Regardless of a surge in PC shipments through the first three months of the yr, Gartner analysts didn’t see a parallel uptick in end-user buying habits.
IBM’s consulting phase, which accounted for roughly 35% of quarterly income, felt the pinch as some shoppers delayed selections on discretionary IT tasks, Krishna stated. “Consulting tends to see headwinds earlier than different elements of the enterprise,” he added.
Firm infrastructure and software program provide chains are largely insulated from tariffs, in keeping with Krishna, who stated imported items symbolize lower than 5% of IBM’s general spend.
Whereas executives are scrutinizing IT budgets for potential price reductions, most are reluctant to impede modernization, analysts instructed CIO Dive earlier this month. The pause on some U.S. tariffs announced April 9 opened a 90-day window for enterprises to rethink buying methods.
“We now have not seen any materials change in client-buying behaviors,” Krishna stated. “Within the near-term, uncertainty could trigger shoppers to pause and take a wait-and-see strategy. Nonetheless, the worth of hybrid cloud automation, information sovereignty and on-premise options turns into much more important in unstable home windows.”
