Mainframe Makers Shift to Service Market

IBM Corp.'s only mainframe rivals -- Hitachi Data Systems Ltd. and Amdahl Corp. -- last week announced separate reorganizations meant to make them less dependent on mainframe sales.

The reorganizations come even as mainframe demand continues to be strong. But although sales are up, IBM is getting most of the business, analysts said.

Impact IT, a mainframe consultancy in Mountain View, California, predicts that IBM will ship 343,000 MIPS in the fourth quarter vs. 238,000 in the same quarter last year. The industry as a whole is expected to ship 439,000 MIPS in the first quarter of next year.

As part of its restructuring, Santa Clara, California--based Hitachi is laying off 400 employees and investing more in nonmainframe hardware and service activities.

Meanwhile, Amdahl, in Sunnyvale, California, announced the creation of two groups. The Global Solution Group will focus on delivering a range of highly specialized consulting and information technology integration services; the Technology Group will build the actual systems in collaboration with parent company Fujitsu Ltd. in Japan.

Amdahl's reorganization accelerates its move away from hardware and toward consulting. Last year, nonhardware sales contributed more than 67 percent of Amdahl's revenue.

Hitachi's restructuring indicates that the company is anxious to broaden its product portfolio at a time when rapidly falling mainframe hardware prices are putting tremendous cost pressures on both IBM rivals, said Charlie Burns, an analyst at Giga Information Group in Cambridge, Massachusetts.

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