IBM z13: Redefining Enterprise IT For Mobile 13 March 2015! www.ibm.com/investor
Forward-Looking Statement Certain comments made during this event and in the presentation materials may be characterized as forward looking under the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on the company s current assumptions regarding future business and financial performance. These statements by their nature address matters that are uncertain to different degrees. Any forward-looking statement made during this event or in these presentation materials speaks only as of the date on which it is made. The company assumes no obligation to update or revise any forward-looking statements. Those statements involve a number of factors that could cause actual results to differ materially, including the following: a downturn in economic environment and client spending budgets; the company s failure to meet growth and productivity objectives, a failure of the company s innovation initiatives; risks from investing in growth opportunities; a failure of the company s intellectual property portfolio to prevent competitive offerings and the failure of the company to obtain necessary licenses; cybersecurity and privacy considerations; fluctuations in financial results, impact of local legal, economic, political and health conditions; adverse effects from environmental matters, tax matters and the company s pension plans; ineffective internal controls; the company s use of accounting estimates; the company s ability to attract and retain skilled personnel and its reliance on critical skills; impacts of relationships with critical suppliers and business with government clients; currency fluctuations and customer financing risks; impact of changes in market liquidity conditions and customer credit risk on receivables; reliance on third party distribution channels; the company s ability to successfully manage acquisitions, alliances and dispositions; risks from legal proceedings; risk factors related to IBM securities; and other risks, uncertainties and factors discussed in the company s Form 10-Qs, Form 10-K and in the company s other filings with the U.S. Securities and Exchange Commission (SEC) or in materials incorporated therein by reference. Additional information concerning these factors is contained in the Company's filings with the SEC. Copies are available from the SEC, from the IBM web site, or from IBM Investor Relations. 2015 International Business Machines Corporation 2
The digital world is driving the market place growth of worldwide 2.3X mobile payment volume from 2014-2017 Personalization 80% of marketers send the same content to all subscribers Trust 70% lack confidence in data security Response Time Users expect <1 second app utility Notes 1,2 2015 International Business Machines Corporation 3
The starburst effect Customer checks out shopping cart from retailer on mobile app 2015 International Business Machines Corporation 4
The starburst effect FULFILLMENT Analytics conducted for best shipping method Weather and logistics analysis conducted Retailer sends order status number to customer CUSTOMER Each consumer transaction triggers a starburst effect of 4 to 100 transactions across the network. The pack return label order is issued Warehouse pick and pack orders are issued Order info sent to retail fulfillment center Customer bank approval conducted Clearance and settlement carried out Shipping info is sent to shipper Request status Info from shipper to customer A payment request is sent Customer checks out shopping cart from retailer on mobile app. Customer info sent to retail customer database Automatically generated confirmation is sent to customer Special offers and coupons codes are made Order confirmation automatically generated Product info sent to retailers inventory database 30 day follow up Ask for review of product Payment is sent to retailer Inventory order is sent to the supplier Payment confirmation sent to customer Analytics for acquiring insurance PAYMENT PRODUCT 2015 International Business Machines Corporation 5
How industries are evolving Banking Telecommunications Travel Banking transactions Mobile data traffic US Mobile and Desktop travel bookings In Billions Total (uplink + downlink) monthly traffic (PetaBytes) In Billions $ Notes 3, 4 and 5 2015 International Business Machines Corporation 6
Our response to these shifts The all new IBM z13 Most powerful IBM system ever built for digital business and mobile economy $1B+ investment with more than 5,000 developers and Co-created with clients Transact at the scale and speed of mobile Deliver insights at the point of engagement with in-line analytics Ensure highest levels of security and trust through cloud 2015 International Business Machines Corporation 7
Building on a foundation of innovation Virtualization Clustering for High availability Linux 500+ z13 patents deliver: 2.5B transactions per day to address the scale and speed of mobile Right-time, in-transaction analytics Java Analytics In-memory database 100% faster and real-time encryption 2015 International Business Machines Corporation 8
How mainframe innovations empower clients Serve 2.5M people while supporting rapid business growth, including 600% mobile growth Increase top line growth by cross-selling / up-selling using real-time analytics Save 35% in total cost of ownership over the next three years to deliver next-gen cloudbased passenger services 2015 International Business Machines Corporation 9
Why Linux on z13 Scale to 8,000 virtual machines Save on software costs due to fewer cores Capabilities to secure workloads on a single frame Manage workloads autonomously 2015 International Business Machines Corporation 10
The economics of the mainframe Accounts for 68% of production workloads, but only 6% of IT spend Note 6 2015 International Business Machines Corporation 11
Our growing ecosystem Academia Governments Business partners Independent software vendors Students Developer tools Research and development Competency Centers Managed Service Providers Clients, user groups and communities 2015 International Business Machines Corporation 12
Re-inventing the core: Banking example Banking transactions growth of ~10% CAGR over ten years Mainframe capacity deployment continues to grow Re-invention of Mainframe drives consistent performance Banking Transactions IBM Mainframe Historical Performance Eight quarters following announcement Revenue Gross Profit In Billions 2005 2014 z10 ( 08-09) Baseline z196 ( 10-12) z12 ( 12-14) 100% 100% 102% 103% 99% 101% Notes 3 and 7 2015 International Business Machines Corporation 13
World s leading businesses run on z Systems 92 of the top 100 worldwide banks 10 out of 10 of the world s largest insurers 6 of the top 10 global retailers 23 out of 25 of the world s largest airlines 30 billion business transactions processed on the mainframe per day 80 percent of the world s corporate data resides or originates on mainframes 55 percent of all enterprise applications need the mainframe to complete transactions 91 percent of surveyed CIOs said new customer-facing applications are accessing the mainframe Note 8 2015 International Business Machines Corporation 14
Continuous reinvention and innovation Delivers stability to IBM's business model IBM z13 Built with innovations for digital business and mobile economy Continues to deliver client investment protection with superior economics 2015 International Business Machines Corporation 15
2015 International Business Machines Corporation 16
Footnotes Note 1 Statista: http://www.statista.com/statistics/226530/mobile-payment-transaction-volume-forecast/ Statistic shows the global mobile payment transaction volume from 2010 to 2013 with a forecast for 2017. The worldwide mobile payment volume in 2012 was 163.1 billion US dollars and is expected to grow to 721.4 billion U.S. dollars in 2017. Note 2 1. The 2012 Digital Marketer: Benchmark and Trend Report: http://go.experian.com/forms/experian-digital-marketer-2012 WT.srch=PR_EMS_DigitalMarketer2012_040412_Download?send=yes 2. ThreatTrack Security Report: Enterprise Executives and Consumers Lack Confidence About Cybersecurity: http://www.threattracksecurity.com/resources/white-papers/ executives-and-consumers-lack-confidence-in-cybersecurity.aspx 3. Announcing the Mobile Experience Benchmark Report 3/27/2014: http://www.crittercism.com/blog/announcing-the-mobile-experience-benchmark Note 3 Adapted from Oppenheimer report The Brick & Mortar Bank Branch, 12/5/2013 Bofl Holding, Tower Group, McKinsey & Co., Novantas Note 4 Adapted from Ericsson Mobility Report June 2014 Note 5 Adapted from Skift 2014 State of Travel Report Source: Business Intelligence / WYSE Travel Confederation 2014 Note 6 SOLITAIRE INTERGLOBAL LTD. query response; 9/6/14 ("IT Workload Deployment Percentages 2014 : http://sil-usa.com/publications.php) Note 7 Performance estimate adjusted for currency Note 8 1. Based on The Banker, System z install base and financial records 2. Based on IBM market development and insights documentation on top 25 ranked by Fortune 500 listing. 3. Based on IBM market development and insights documentation on top 10 insurance companies, ranked by non-banking assets. 4. IBM market development and insights, based on 2011 passenger volumes 5. IBM market development and insights, based on top 10 retailers worldwide, 2013 2:00:38 PM 6. www.share.org/p/bl/et/blogid=2&blogaid=234(30 billion business transactions + 80% corporate data) 7. http://investor.compuware.com/releasedetail.cfm?releaseid=811444 (55% enterprise apps + 91% of CIOs) 2015 International Business Machines Corporation 17