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IBM z13: Redefining Enterprise IT For Mobile 13 March 2015

!

© 2015 International Business Machines Corporation 2

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.

Forward-Looking Statement


The digital world is driving the market place

growth of worldwide

mobile payment

volume from 2014-2017

2.3X

Users expect <1 second

app utility

70% lack confidence in data security

80% of marketers send

the same content to all subscribers

Trust Response Time Personalization

Notes 1,2


Customer checks out shopping cart from

retailer on mobile app


The starburst effect

CUSTOMER FULFILLMENT

PAYMENT PRODUCT

Analytics conducted for best shipping method

Request status Info from shipper to customer

Weather and logistics analysis conducted

Retailer sends order status number to customer

Customer info sent to retail customer database

Automatically generated confirmation is sent to customer

30 day follow up

Special offers and coupons codes are made

Ask for review of product

Order confirmation automatically generated

Product info sent to retailers inventory database

Analytics for acquiring insurance

Inventory order is sent to the supplier

Payment confirmation sent to customer

Payment is sent to retailer

A payment request is sent

Customer bank approval conducted

Clearance and settlement carried out

Warehouse “pick and pack” orders are issued

Order info sent to retail fulfillment center

Shipping info is sent to shipper

The pack return label order is issued

Customer checks out shopping cart from

retailer on mobile app.


The starburst effect

Each consumer transaction triggers a “starburst effect” of 4 to 100 transactions across the network.


How industries are evolving In

Bill

ions

Travel Telecommunications Banking

US Mobile and Desktop travel bookings

Mobile data traffic Banking transactions

Tota

l (up

link

+ do

wnl

ink)

m

onth

ly tr

affic

(Pet

aByt

es)

In B

illio

ns $

Notes 3, 4 and 5


The all new

IBM z13 Most powerful IBM system ever built for digital business and mobile economy

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

Our response to these shifts

$1B+ investment with more than 5,000 developers and Co-created with clients


Building on a foundation of innovation

Virtualization Clustering for High availability

Linux

Java Analytics

500+ z13 patents deliver: 2.5B transactions per day to address the scale and speed of mobile Right-time, in-transaction analytics 100% faster and real-time encryption

In-memory database


Save 35% in total cost of ownership over the next three years to deliver next-gen cloud-based passenger services

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


•  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

Why Linux on z13


The economics of the mainframe

Note 6

Accounts for

68% of production workloads, but only

6% of IT spend

© 2015 International Business Machines Corporation


Our growing ecosystem

Independent software vendors

Academia

Clients, user groups and communities

Students

Research and development

Business partners

Competency Centers

Governments

Developer tools

Managed Service Providers


Revenue Gross Profit

z10 (’08-’09) Baseline

100% 100%

z196 (’10-’12)

102% 103%

z12 (’12-’14)

99% 101%

Re-inventing the core: Banking example

Re-invention of Mainframe drives consistent performance

Mainframe capacity deployment continues to grow

Banking transactions growth of ~10% CAGR over ten years

Historical Performance Eight quarters following announcement

IBM Mainframe Banking Transactions

2005 2014

In B

illio

ns

Notes 3 and 7


World’s leading businesses run on z Systems

30 billion business transactions processed on the mainframe per day

55 percent of all enterprise applications need the mainframe to complete transactions

80 percent of the world’s corporate data resides or originates on mainframes

91 percent of surveyed CIOs said new customer-facing applications are accessing the mainframe

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

Note 8


Continuous reinvention and innovation

Delivers stability to IBM's business model Built with innovations for digital business and mobile economy Continues to deliver client investment protection with superior economics

IBM z13


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)

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