IBM still profits from giant mainframes

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BOSTON - Cheap little servers handle so much of the Internet's dirty work that giant computers known as mainframes, which debuted 50 years ago and often cost more than $1 million, are supposed to be passe.

When Hoplon Infotainment, a startup video game company in Brazil, let it be known that it uses a mainframe to operate its signature online game, "People would actually take a step back and say, `What? Did I hear correctly?'" said Tarquinio Teles, Hoplon's CEO.

Yet mainframes are inspiring new ways of doing things at organizations like Hoplon. The trend is driven by and anxiously watched at IBM Corp., which makes the vast majority of the world's remaining mainframes and continues to be hugely reliant on them.

After dropping nearly 8 percent in 2005, IBM's mainframe revenue is up 10 percent this year. That includes a 25 percent gain in the most recent quarter. Mainframes were IBM's fastest-growing hardware segment after the microchip division, which is enjoying a nice ride making microprocessors for the top three video game consoles.

Yahoo