Mainframe Market

Market Overview

The global mainframe market size was valued at USD 3.1 billion in 2023 and is projected to reach USD 6.2 billion by 2032, registering a CAGR of 7.9% during the forecast period (2024-2032). The rising demand for high-performance computing, the expansion of massive data volumes, and the development of the IoT landscape are all driving mainframe market growth.

Mainframes are enormous, powerful, high-performance computing systems built to handle massive amounts of data while supporting vital business applications. They have been a staple of enterprise computing for decades, particularly in industries like banking, finance, healthcare, and government, where dependability, scalability, and security are critical.

The mainframe market will likely expand as enterprises in several industries rely more heavily on these robust computing systems to handle mission-critical workloads. Mainframes are the most excellent solution in sectors such as banking, finance, healthcare, and government due to their unparalleled reliability, scalability, and security. 

Furthermore, mainframes are designed with redundant components and sophisticated fault detection and repair systems to ensure continued operation with minimal downtime. Companies that require uninterrupted processing must rely on systems with minimal downtime. Mainframes can support thousands of users simultaneously and efficiently handle increasing workloads. Moreover, enterprises can improve processing capacity without disrupting operations by adding extra processors, memory, and storage. 

Highlights

• Z Systems accounts for the largest market share by type.
• Healthcare contributes significantly to the market by end-user.

Market Dynamics

Global Mainframe Market Drivers

Modernization Initiatives

Despite their association with legacy technology, mainframes have developed to support modernization programs and connect with emerging technologies like cloud computing, big data analytics, and artificial intelligence. Organizations are investing in mainframe modernization initiatives to enable new capabilities, increase agility, and extend the life of their existing mainframe infrastructure. According to a BMC poll conducted in 2023, 63% of enterprises said that the mainframe was attracting and expanding new workloads, up from 43% in 2016. The poll also discovered that 99% of organizations use a hybrid approach to mainframe modernization, combining legacy mainframe technology with modern cloud alternatives. 

For example, Kyndryl (NYSE: KD), the world's leading provider of IT infrastructure services, announced an expansion of its partnership with Amazon Web Services (AWS) as a Premier Tier Services Partner to assist customers in simplifying and accelerating their mainframe modernization programs. The company also announced new capabilities for easily integrating mainframe apps and data with AWS technology and migrating mainframe workloads to AWS.

Furthermore, mainframe modernization frequently entails employing data virtualization and analytics technology to gain insights from mainframe data and make data-driven decisions. Organizations can acquire a comprehensive perspective of their business processes and increase competitiveness by virtualizing mainframe data and making it available to analytics tools and platforms. Mainframe data power AWS Mainframe Modernization Data Replication is precisely replicated in real time to AWS via durable, high-performance data pipelines to services such as Aurora, RDS, FSx, S3, EMR, AWS MSK, Redshift, Snowflake on AWS, and others. This allows clients to migrate and replicate DB2, IMS, and VSAM data from an on-premises mainframe to the AWS cloud in real-time.

Global Mainframe Market Restraints

Cost Consideration

Mainframes have considerable upfront expenditures, which include hardware, software, licensing, and maintenance. Furthermore, continuous operational expenses, such as energy usage and staffing requirements, can increase the total cost of ownership of mainframe computers (TCO). For certain businesses, the initial investment and long-term costs of mainframes may be too expensive, especially compared to other computing platforms. A mainframe computer can cost up to USD 75,000, higher than the USD 2,000-USD 3,000 price of an x86 server. Each custom-built mainframe can cost between USD 250,000 and USD 4 million. For example, an IBM Z15 system can cost anywhere from USD 250,000 to USD 4 million. IBM also provides an entry-level Linux mainframe machine for USD 135,000. 

In addition to the initial expenditures, mainframe systems have continuous operational expenses such as maintenance, licensing fees, energy consumption, and workforce. The average monthly cost of running a mainframe ranges from USD2,000 to USD10,000 for a mid-sized mainframe and USD50,000 to USD100,000 or more for a large mainframe. According to industry estimates, maintenance expenditures typically account for 15-20% of the entire cost of mainframe ownership each year.

Furthermore, organizations considering shifting from mainframe to alternative platforms or modernizing existing mainframe environments may incur significant expenditures related to migration planning, application redesign, data conversion, and training. For example, a large financial institution planning a mainframe migration project may save millions on consultancy services, software licenses, and project management fees. 

Global Mainframe Market Opportunity

Big Data and Artificial Intelligence

Today's mainframe customers are searching for AI and machine learning methods to improve performance and availability, proactively identify issues, and accelerate support for application releases and DevOps operations. IBM's launch of an IBM Z® integrated on-chip AI accelerator enables clients to analyze real-time, mission-critical transactions at scale, such as credit card, healthcare, and financial transactions. This new AI capability enables fraud prevention and security improvements while speeding up other business operations.

Furthermore, financial institutions use mainframe data, big data analytics, and AI to perform predictive analytics for risk management, fraud detection, and consumer behavior monitoring. Banks, for example, employ transactional data from mainframes and machine learning algorithms to spot anomalies and suspected fraudulent activity in real-time. According to a Deloitte analysis, predictive analytics can help financial organizations cut fraud costs by up to 60% while increasing detection accuracy by up to 90%.

Similarly, transportation and logistics companies leverage mainframe data, big data analytics, and artificial intelligence to improve route planning, fleet management, and supply chain operations. Transportation businesses may optimize logistics processes, minimize fuel consumption, and enhance delivery efficiency by evaluating mainframe data on shipping timetables, delivery routes, vehicle performance, and external factors like traffic patterns, weather conditions, and fuel pricing. According to a DHL study, transportation analytics solutions that use mainframe data can lower transportation costs by up to 20% while increasing delivery accuracy by up to 30%.

Regional Analysis

North America Dominates the Global Market

The global mainframe market analysis is conducted in North America, Europe, Asia-Pacific, the Middle East and Africa, and Latin America.

North America is the most significant global mainframe market shareholder and is estimated to grow at a CAGR of 7.3% over the forecast period. North America is a significant global mainframe market player, serving as a hub for technical innovation and enterprise operations. The region has long been a stronghold for mainframe technology adoption, with many large organizations and important industries relying on mainframe systems for their durability, dependability, and ability to handle vast data workloads. Mainframes have traditionally been used for mission-critical applications in North American industries such as finance, healthcare, government, and telecommunications, including financial transactions, healthcare record-keeping, and data processing. 

In addition, the North American mainframe industry has seen continual modernization initiatives, with organizations merging existing systems with newer technologies like cloud computing, artificial intelligence, and machine learning. As cybersecurity concerns grow, the inherent security of mainframes is a valuable advantage for enterprises in North America, particularly in protecting sensitive data and ensuring compliance with high regulatory regulations.

Moreover, the region's mainframe market strikes a compromise between preserving legacy systems and embracing modern solutions to satisfy the changing demands of the digital era. As North American businesses prioritize efficiency, scalability, and security, the mainframe market continues to play an essential role in the technological landscape, assuring the smooth execution of vital business processes across a wide range of industries.

Asia-Pacific is anticipated to exhibit a CAGR of 8.0% over the forecast period., due to a growing financial industry supported by increased mobile and credit card transactions in China and India, which are important factors driving the growth of the mainframe market. For example, in 2023, Hitachi Vantara, Hitachi Ltd.'s modern infrastructure and data management subsidiary, announced a new partnership with Model9, a leader in cloud data management for mainframe, to provide more access, visibility, and value from critical data for enterprises that rely on mainframes as their primary business platform. The relationship is vital for both organizations that use a hybrid cloud architecture.

The European mainframe market is evolving and expanding across industries, driven by the requirements for reliability, scalability, and security in mission-critical computing environments. Mainframes are essential to Europe's digital economy and business infrastructure, with continued expenditures in modernization initiatives and digital transformation projects.

Additionally, according to an IDC report dated October 2023, the European banking industry will account for a significant share of mainframe spending in 2023. According to the analysis, European ICT spending is estimated to reach about USD 1.1 trillion in 2023, growing at a compound annual rate of 5.3% between 2023 and 2027. Automation, artificial intelligence platforms, security software, and software tools are projected to drive most of this spending.

Latin America, the Middle East and Africa are also projected to be profitable regions in the worldwide mainframe modernization services market. The usage of mainframe modernization services in these regions is expected to increase as government initiatives and industrial digitalization rise.

Segmental Analysis

The global mainframe market is segmented based on type and end-user.

The market is further segmented by type into Z Systems and GS Series.

The Z systems category dominated the mainframe market growth in 2023. It will likely maintain its dominance in the following years because of remarkable features such as lower prices, 99.999% availability, improved security, and higher performance. Z Systems, usually known as IBM Z, are a line of mainframe computers developed and built by IBM. These systems are well-known for their dependability, security, and scalability, making them suitable for managing mission-critical workloads and processing large amounts of data. Z

Similarly, systems' sophisticated features include hardware-based encryption, real-time compression, and virtualization and cloud integration support. They are commonly utilized in sectors such as banking, finance, healthcare, and government, where data protection, regulatory compliance, and continuous availability are critical. The IBM Z mainframes use specialized ASIC on-chip circuitry dedicated to cryptographic procedures, and data is always encrypted while processing. 

The GS series category is predicted to develop the most, thanks to its ability to handle several processors and a considerable amount of memory, allowing it to analyze massive amounts of data and run complicated applications rapidly. The GS Series, or the IBM zEnterprise System, is a range of mainframe computers designed for high-performance computing and enterprise-scale applications. These systems combine classic mainframes' strength and dependability with the current computing environments' adaptability and transparency. The GS Series is distinguished by its flexibility to support a variety of workloads, including transaction processing, data analytics, and cloud-native applications, on a single platform.

The market can be bifurcated based on end-users into BFSI, IT and Telecom, Government and Public Sector, Retail and E-commerce, Healthcare, Travel and Transportation, and Manufacturing.

The convergence of healthcare and the mainframe market is a vital junction in which sturdy, dependable computing systems play an essential role in handling and securing massive amounts of sensitive patient data. Mainframes in healthcare are critical for supporting applications such as Electronic Health Records (EHR), billing systems, and complicated medical research. The inherent security features of mainframes are essential in healthcare, where patient confidentiality and adherence to severe privacy requirements are critical. Mainframes efficiently process enormous amounts of data, which helps healthcare organizations run smoothly and ensures prompt patient information access. As the healthcare industry grows digital, mainframes are essential in enabling applications that require high availability, scalability, and data integrity. 

Furthermore, the integration of mainframes with emerging technologies such as artificial intelligence enables improved analytics for predictive modeling, tailored therapy, and better patient outcomes. Despite the increased emphasis on newer technologies, mainframes remain the foundation of healthcare IT infrastructure, providing the stability and security needed for critical healthcare operations. The mainframe market in healthcare is distinguished by a focus on modernization, which involves adapting existing systems to changing industry needs while retaining the high reliability and security required for healthcare applications.

The BFSI industry is a significant end-user of mainframe systems, relying on their dependability, security, and processing power to perform essential financial transactions, manage customer accounts, and maintain regulatory compliance. Mainframes are crucial to the BFSI business by providing basic banking applications, payment processing, risk management, and fraud detection. With the growing volume and complexity of financial transactions, BFSI companies rely on mainframes to ensure high availability, data integrity, and transaction throughput.

Recent Developments

• April 2024- Atos officially renewed its participation in the robust Amazon Web Services (AWS) Managed Service Provider (MSP) Partner Program. The AWS MSP Partner Program recognizes and evaluates top APN Consulting Partners who excel at providing complete lifecycle solutions to customers. Next-generation AWS MSPs can assist organizations in inventing the future, solving business problems, and supporting projects by focusing on critical results. 
• January 2024- IBM announced that it had entered a definitive deal to acquire Advanced's application modernization capabilities, bringing a combination of talent, tools, and knowledge to IBM Consulting's mainframe application and data modernization services. The announced acquisition will allow us to support better clients' mainframe application modernization journeys, representing another significant step forward in IBM's hybrid cloud and AI strategy.
• April 2024- Fujitsu Limited and Oracle partnered to provide sovereign cloud and AI capabilities that satisfy the digital sovereignty needs of Japanese businesses and the public sector.