How IBM Is Finally Getting Serious About the Mobile Economy

Updated from 4:30 p.m. to include additional comments from Bank of America regarding earnings estimates in the fifth paragraph.

NEW YORK (TheStreet) –– Though IBM (IBM) has largely gotten out of the hardware business in recent years, the company is still innovating on that front, as the mobile economy pushes more data to retailers and consumers. To that end, IBM has announced the z13 Mainframe, the first computer system built for today's mobile economy.

After spending five years in development and working with more than 60 customers, IBM has unveiled the z13, which can handle more than 2.5 billion transactions a day and which allows real-time encryption of mobile transactions to provide safety to consumers and sellers. The product includes 500 new patented technologies to make sure the data are safer than they were before.

With the widespread use of smartphones and other mobile devices, the concern is that there are simply too much data to properly analyze, an issue IBM expects to help solve with the z13. The "z13 is the first system capable of real-time analytics on mobile transactions 17X faster than any other method at a fraction of the cost," IBM said in a release, announcing the product. 

It's a curious move for IBM to continue innovating in hardware, especially as the company sold its PC business to Lenovo nearly a decade ago. In late 2014, the company bought its server unit, as well, as IBM continues to move away from hardware.

However, the money spent on hardware plays into Bank of America Merill Lynch analyst Wamsi Mohan thesis that the company will continue to focus on areas such as security and mobility and data and analytics. "We expect the company to announce (1) significant operational and go to market realignment to drive focus on growth areas such as cloud, data/analytics, security and mobility..." Mohan wrote in a note, where he lowered his earnings estimates and price target to $160.

IBM is still in the process of moving its business towards higher growth segments, which account for nearly a quarter of IBM's more than $100 billion in annual revenue, it will take time, Mohan noted.

The company is expected to say more at its analyst day in February.

As mobile apps continue to grow (Apple (AAPL) recently announced billings for the App Store during the first week of January set a new record, with customers spending nearly $500 million on apps and in-app purchases), customers want transactions to be easy and seamless, something IBM is helping achieve, said Tom Rosamilia, senior vice president of IBM Systems.

 

"Every time a consumer makes a purchase or hits refresh on a smart phone, it can create a cascade of events on the back end of the computing environment. The z13 is designed to handle billions of transactions. Only the IBM mainframe can put the power of the world's most secure data centers in the palm of your hand," Rosamilia said in the release. "Consumers expect fast, easy and secure mobile transactions."

Last year, IBM formed a partnership with Apple to help bring Apple's iDevices to business customers to boost sales, with IBM providing cloud and mobile analytics support. As part of the partnership, nicknamed IBM MobileFirst For iOS, the two companies unveiled in mid-December  the first 10 apps dedicated toward the enterprise.

With the unveiling of the z13, IBM has taken its MobileFirst Platform to deliver even better performance and security than before, as it incorporates the fastest microprocessor in the world, server processors that are twice as fast as existing products, 300% additional memory and 100% more bandwidth analytics speed. The z13 will also include support for Hadoop, which is an open-source software framework that allows companies to store and analyze large quantities of data on hardware that any company can buy off the shelf. It also supports Linux, OpenStack and other software platforms.

--Written by Chris Ciaccia in New York

>Contact by Email.

Follow @Chris_Ciaccia

More from Technology

5 Biggest U.S. Tech Stocks Test $4 Trillion Valuation Amid Bullish Nasdaq Run

5 Biggest U.S. Tech Stocks Test $4 Trillion Valuation Amid Bullish Nasdaq Run

Facebook Takes Aim at YouTube, But It'll Be an Uphill Online Battle

Facebook Takes Aim at YouTube, But It'll Be an Uphill Online Battle

Microsoft Chief Says Its ICE Contract Isn't Part of Child Separation Policy

Microsoft Chief Says Its ICE Contract Isn't Part of Child Separation Policy

Immigration, Instagram and Oil - Here's What You Can't Miss Wednesday

Immigration, Instagram and Oil - Here's What You Can't Miss Wednesday

What Will GM Do With Cruise -- and Is Its Stock Worth $55?

What Will GM Do With Cruise -- and Is Its Stock Worth $55?