Mainframes Make Money

The title of this post has three meanings. IBM Z mainframes in their current form have an architecture that was defined back in the mid-1960s, and yet software written back then, most likely punched to punch cards, can still run today on their newest mainframe models, at full speed, with no emulation. IBM even supports virtualized punch card readers for booting VMs, with the text encoded as EBCDIC, of course. It’s a very different world, and yet they quietly make finance and transportation possible, among other industries.

Mainframes are critically important because they’ve been used by the largest institutions for the longest time, including the IRS and the world’s airlines. And yet there are only about 10,000 IBM mainframes operating in the world today. How can so few machines be so proprietary and so rare and yet so essential to modern living in every industrialized country on Earth, through banking if nothing else?

It’s because mainframes make money. They make the most money in fact, for the companies that continue to use them. Why? Those companies don’t have to spend time and money on porting their decades-old code to another platform, which also involves a significant risk. The IRS still uses the same 1960s-era software, continuously updated with new tax rules, that powered the ancient computers in the 1966-67 promotional video I linked to earlier. The country’s tax records are still stored today in a database called the Individual Master File (IMF), using the same proprietary VSAM data set format, most likely modified over the years, but never converted into anything resembling SQL.

What’s worse is that the IRS software is written in IBM Z assembly language, not even COBOL, so 100% backwards compatibility without emulating the 1960s CPU architecture is very important. Mainframes make the most money for IBM’s legacy customers.

Why would a new client buy a mainframe? Probably to replace an older one. Maybe they’re starting a new bank. Maybe they want to run several thousand Linux VMs and not z/OS at all. In future posts, I want to go a little deeper into the unique features they offer, like RAIM and channel I/O.

Because they have such a demanding customer base, and so few customers, mainframes are also a high-margin business for IBM, so they’re able to charge as much of a profit margin as they dare, especially for z/OS customers, because it’s difficult for them to migrate their software and data to PC-based solutions. Mainframes make so much money for IBM that they’ve jettisoned most of their other divisions over the years, as they became commoditized.

In fact, because of this demand differential, IBM sells special LinuxONE mainframes that can only run Linux (as well as z/VM to multitask Linux VMs inside an LPAR, if you don’t want to use KVM), or you can license CPU cores on a mainframe running z/OS that can only be used to run Linux and not z/OS workloads.

There’s a lot more I want to write, but I think this post is getting long enough. The last meaning of “Mainframes Make Money” that I wanted to hint at here is: because they’re used by most banks and exchanges, and because the cryptocurrency enthusiasts are so busy now trying to role-play how they imagine that financial institutions operate, I thought it was only fitting to close on the note that IBM mainframes are where most money is “printed” today, digitally, based on business logic. They literally make money.

Not only that, but they’ve been doing it this way for decades and it keeps working. The easiest way to make money under capitalism is by not spending it unnecessarily on “fixes” that don’t fix anything.

IBM sells an emulation package for mainframe developers called ZD&T, which normally costs $5,540 per user per year (that’s for the cheapest edition, and the price goes up by about $100 each year), but they just released a few months ago a new Learners Edition for personal educational use only that costs just $120/year. The catch is that you have to take a bunch of free courses in order to teach yourself enough z/OS skills to earn the badges required to qualify to buy it. I’m still waiting to hear back from the IBM sales rep about when I can order it. The last I heard, I’ve been approved, so now I’m waiting to order. I can’t wait to run my own emulated mainframe at home with the full z/OS software stack (and also to use it to run mainframe Linux at home).

One last link: if you’d like to try out mainframe Linux for free, there’s a LinuxONE Community Cloud that lets you make a single 2 core, 50 GB disk, 4GB RAM VM with your choice of Linux distro. It’s a lot of fun to play around with, and Linux on Z is about 1000 times easier to understand than z/OS on Z.





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