Lack of hardware growth "is not necessarily an IBM problem exclusively," Foster said. "We don't see huge growth from Dell, H-P or Sun Microsystems ( JAVA)." IBM's software business, which had revenue of $4.8 billion in the period one year ago and grew 14% year over year in the March quarter, will likely have about 12% revenue growth in the second quarter, according to TBR's software analyst Allan Krans. The business will show the first full quarter of results from the acquisition of Cognos, a business-intelligence software developer, which Krans expects to contribute $250 million to $300 million in revenue this quarter. Software had a gross profit margin of 83.9% in the first quarter, the fattest of any of IBM's business lines. "Both gross and operating margins will come down" due to research writedowns and Cognos integration expenses that will phase out over the next three quarters, Krans said. The new z model will also help software sales during the quarter. "A lot of IBM software is still tied to the mainframe platform," Krans said. "You saw some bump up in z-related software revenue in the prior quarter. We will probably see some of that carry forward."