1. Power Systems: Open Innovation to Put Data to Work Presented by David Spurway IBM Power Systems Product Manager STG, UK and Ireland

2. Agenda Market 3 rd Platform POWER8 Proof Points Platform Selection Conclusion Questions 2

3. Quarterly Unix server revenue and units rose in 4Q13 as per annual norms. Revenue declined 20% YtY Power Systems Share 4Q13: UNIX Linux - IDC Server Tracker I IBM Proprietary

4. 4 POWER4 P690 (2002) List Price $7.8M 32 Processors rPerf – 60.6 15,400 watts max Weight 1000kg POWER 710+ (2013) List Price $6.7K 6 Processors rPerf 90.6 750 watts max Weight 28kg = Power Systems Scalability and Value Growth

5. Unix segment R4Q revenue declined 25% YtY, Power gained 8.5pts in Entry, 5.5pts in high end. Oracle gains in high end, HP takes share in midrange. Power Systems Share 4Q13: UNIX Linux - IDC Server Tracker I IBM Proprietary Legend: Entry: <$25K Midrange: $25K<$250K High End: $250K+

6. December 2012 Mind the Gap

7. This new era is reshaping the IT landscape and creating new market dynamics 7 Mobile Internet of Things Cloud 40% of people socialize more online than they do face-to-face 300x growth of digital content between 2005-2020 57% of companies using cloud to drive competitive and cost advantages 80% of all data is unstructured and growing 15x the rate of structured data 63% of people expect to be doing more shopping on their mobile devices over the next couple of years © 2014 IBM Corporation

8. Analysts and vendors are interpreting the next Era of IT IDC calls it the “3 rd Platform” Cisco refers to it as the “Internet of Everything” GE sees the “Industrial Internet”Gartner interprets it as the “Nexus of Forces” January 2014

9. IBM calls it the Era of Smart, CAMS*-based transformative solutions Mobile $315B 10.6% CAGR Big Data & Analytics $205B 6.3% CAGR Social $198B 13.9% CAGR Cloud $327B 28.2% ‘12-’15 CAGR Smarter Enterprise Transformative Solutions *CAMS = Cloud, big data Analytics, Mobility, Social January 2014

10. Buying is also shifting - towards pursuit of greater business value Technology is increasingly being seen as a strategic asset for leaders The CIO’s role is being elevated and reshaped to focus increasingly on business value LOB influence over IT spending is continuing to grow Source: IBM Global CEO Study 2012 Survey Q1 “What are the most important external forces that will impact your organization over the next 3 to 5 years?” Over 75% of Smarter Analytics, Commerce and Workforce software purchases involve a C-Level LOB exec in at least one stage of the decision process By 2016, 80% of new IT investments will involve direct participation by LOB executives with LOBs taking the lead decision-maker role in half or more of those investments By 2015, 35% of enterprise IT will be managed outside the IT department’s budgets 35% Budgets to be outside IT 40% LOB will lead 75% Involve LOB Source: MDI, Gartner, IDC respectively More than one-third of CEOs see their CIOs taking on a business leadership role outside of IT By 2017, CIO’s spending directed to initiatives that grow or transform the business (as opposed to cost reduction) will grow from 30% to 50% Source: IDC, Worldwide CIO Agenda Top 10 Predictions, 2013; Gartner Nexus of Forces Changes Everything, January 2013 January 2014

11. The Power Systems Strategy Next Gen Apps Big Data & Analytics Power Charter Open Platform for Choice Leadership and innovation to support today’s core business applications and next-generation solutions with strong financial benefits, industry leading support and a highly skilled and vibrant ecosystem OpenPOWER Consortium Innovation that Matters Client Value Community Engagement

12. Delivering an open server ecosystem revolutionizing the way IT is developed & delivered Superior cloud price/performance advantages and security to move data- centric applications to the cloud First server processor generation optimized for big data and analytics with POWER8 innovative design Power Systems: Open innovation to put data to work Designed for Big Data Superior Cloud Economics Open Innovation Platform © 2014 IBM Corporation 12

13. IDC on POWER8 and 3 rd Platform http://www-03.ibm.com/systems/power/announcement.html https://www.ibm.com/services/forms/signup.do?source=stg-web&S_PKG=ov22278&S_CMP=web-ibm-po-_-ws-20140428annc “This IDC paper explores the transformational challenges created by Big Data, cloud, and mobile and offers insight on how POWER is designed to address these new business as it integrates core business applications and new, 3rd platform applications.” 13

14. IDC’s Conclusion “…organizations that have traditionally used enterprise servers leveraging RAS features for mission-critical applications such as OLTP must now figure out how to marry those requirements with cloud deployments, especially as 3rd Platform technologies become mission critical and increasingly require the same RAS features — along with the scale- out and virtualization features required for the 3rd Platform. IDC expects that with the upcoming POWER8 release, IBM will address many of these challenges. While building on its enterprise legacy of providing RAS features for mission- critical OLTP and ERP applications, POWER8 also contains innovations to better support virtualization, multitenancy, and cloud necessary for the 3rd Platform. IDC expects POWER8 to continue to be a viable choice for transaction-oriented, mission-critical deployments as well as Big Data, cloud, and other 3rd Platform technologies. “ 14

15. High Value Workloads “IDC notes that a significant part of infrastructure spending for high-value workloads like those in Figure 1 also covers 3rd Platform needs such as security, privacy, compliance, RAS, and virtualization. “ 15

16. Supporting Cloud and Virtualization “Another major pillar of the 3rd Platform is cloud technologies. “ “Power Systems include a commitment to a number of important areas of open source innovation including KVM and OpenStack as well as expanding support for additional Linux distributions around the globe. These technologies help enterprises achieve the disaggregation of software from hardware necessary to pursue private, public, and hybrid cloud computing initiatives. “ 16

17. 3rd Platform Workloads Combine Reliability, Availability, and Serviceability Requirements with High Degrees of Scalability “With the 3rd Platform, an increasing number of 3rd Platform workloads are crossing into the "mission critical" category. As a result, more of these technologies now require the same level of RAS, security, and performance that was previously reserved only for transaction-oriented workloads. More organizations are looking to deploy Big Data and cloud workloads on enterprise-class systems with robust RAS features but that still offer the features to scale out and support large VM environments such as multithreaded processors and high workload density. IBM Power Systems continue to improve these capabilities with features such as Enterprise Pools and the Power Integrated Facility for Linux (Power IFL). “ DOX (Design & Operational eXcellence) Methodology –Each generation of IBM Systems are designed to deliver higher levels of RAS than the generation before Enterprise System Pools –Move processing power and memory between physical servers, including transferring from POWER7+ to POWER8 IFLs and new PVU rating for IBM SWG products when running on Linux on Power 17

18. Industry Best Practice Industry Best Practice Industry Leading POWER8 – Continued Leadership (what you expected)

19. Industry Innovation Industry Innovation Extended Innovation Extended Innovation On Power Innovation On Power Innovation On Power Innovation On Power POWER8 – Innovating for Tomorrow

20. April 28 New Power Systems Naming Transition Power S814 Power S824 Power S822 Power S812L Power S822L Scale-out Systems (1 & 2 sockets) Power 750 Power 730 Power 710 Power 720 PowerLinux TM 7R2 PowerLinux TM 7R1 Power 760 Power 770 Power 780 Power 795 Power 740 PowerLinux TM 7R4 2013 Power Systems 2014 IBM Power Systems Announce: April 28, 2014 Enterprise Systems (4+ sockets) Future announcements

21. Power 740+ / S824 rPerf Comparisons Performance per KW Performance per Core Performance per Socket 27% Better

22. System Simple Query Intermediate Query Complex Query Reports per Hour POWER POWER8 439457758212 X86 Ivy Bridge 22671850.27 Speed up1942784 Larger and more complex queries have more speedup POWER8 thrives on the complex Running Cognos BI reports and analytics on POWER8 with DB2 with BLU Acceleration versus Ivy Bridge with a traditional database Dynamic Query Compatible Query Dynamic Cubes Based on IBM internal tests comparing IBM DB2 with BLU Acceleration system with a comparably tuned competitor configuration executing a materially identical 2.6TB operational analytics workload in a controlled laboratory environment. Test measured 60 concurrent user report throughput executing identical Cognos report workloads. Report per hour (RPH) metric calculated for each category of reports as total completed reports/hours to completion of all reports in the category. Competitor configuration: HP DL380p, 24 cores, 256GB RAM, Traditional Database, SuSE Linux 11SP3 (Database) and HP DL380p, 16 cores, 384GB RAM, Cognos 10.2.1.1, SuSE Linux 11SP3 (Cognos). IBM configuration: IBM S824, 24 cores, 256GB RAM, DB2 10.5, AIX 7.1 TL2 (Database) and IBM S824, 16 cores, 384GB RAM, Cognos 10.2.1.1, SuSE Linux 11SP3 (Cognos). Results may not be typical and will vary based on actual workload, configuration, applications, queries and other variables in a production environment.

23.  POWER8 S824 will deliver 2x the performance of the best published x86 system  POWER8 exploits additional cores, more threads, larger caches, memory bandwidth, I/O bandwidth  Terasort is a popular benchmark to measure the performance of a Hadoop solution  Sorts a large dataset (10 TB) in parallel  Exercises the Map-reduced framework and Hadoop Distributed File System (HDFS) IBM Analytics Stack: IBM Power System S824; 24 cores / 192 threads, POWER8; 3.5GHz, 512 GB memory, RHEL 6.5, InfoSphere BigInsights 2.1.2 http://www.cisco.com/en/US/solutions/collateral/ns340/ns517/ns224/ns944/le_tera.pdf POWER8 delivers 2x performance on Big Data / Hadoop Terasort benchmark on a POWER8 doubles the system capacity of the best x86 published result 2x

24. This is an IBM internal study designed to replicate a typical IBM customer workload usage in the marketplace. The results were obtained under laboratory conditions, and not in an actual customer environment. IBM's internal workload studies are not benchmark applications, nor are they based on any benchmark standard. As such, customer applications, differences in the stack deployed, and other systems variations or testing conditions may produce different results and may vary based on actual configuration, applications, specific queries and other variables in a production environment. Prices, where applicable, are based on published US list prices for both IBM and competitor, and the cost calculation compares the cost per request for the 3yr life of the machine. 3 year total cost of acquisition comparisons are based on similar expected hardware, software, service & support offerings 183,800 User Interactions per second WebSphere on platform Database off platform $3.09 per UI per sec DB2 Power S824 AIX WAS 2S/24 Core POWER8 (3.525 GHz) PowerVM HP - ProLiant DL380p Gen8 6 VMs DB2 2S/24 Core Ivy Bridge-EP (2.7 GHz) 85,939 WebSphere on platform Database off platform $5.84 VMware ESXi User Interactions per second per UI per sec 8 VMs RHEL WAS AIX WAS AIX WAS AIX WAS RHEL WAS RHEL WAS RHEL WAS AIX ….. 2.1x Faster 47% Lower cost per UI per sec Web Application Online Banking Workload v3.6 Both Servers configured to achieve maximum throughput NO trade-offs: 2x Throughput at Half the Cost of x86 POWER8 Delivers Over TWICE the Throughput Relative to Ivy Bridge-EP at 47% Lower Cost for an Online Banking Workload

25. 1 Performance based on published SPECjEnterprise2010 results www.spec.org/jEnterprise2010/;www.spec.org/jEnterprise2010/ 2 IBM Power Systems S824 (24 cores) 3 2 Intel E5-2697 v2 (24 cores) 4 1 Oracle T5-2 (32 cores)  POWER8 processing cores 2 are the fastest in the industry for Enterprise Java workloads 2x more performance per core than Intel E5-2697 v2 offerings 3 1.77x more performance per core than Oracle T5-2 offerings 4 POWER8 has 2x per core performance of x86 Ivy Bridge systems in Enterprise Java-based environments 1

26. Platform Selection 26

27. The competition only have Intel Abraham H. Maslow (1962),Toward a Psychology of Being: I suppose it is tempting, if the only tool you have is a hammer, to treat everything as if it were a nail.

28. The need for Platform Selection/Fit for Purpose

29. Also: Beware hidden cost of sub optimization. Large reliable servers are best for virtualization Don’t trust benchmark results that scale “nearly linearly” IBM has a “Fit for Purpose” point of view System x Power Will this platform run my solution? How well will it run? What will it cost me? What is the impact on my enterprise? Can I operate and manage it well enough? Will my organization accept it? Is this platform effective for the application scope? How does this platform fit into my current infrastructure? Is this solution shared or dedicated to a single business process? Do I know all the inherited requirements? System z Local Factors Matter

30. Conclusions Market –The larger IBM Power Systems offerings continue to gain share, as they are the ideal solutions for server consolidation and other “2 nd Platform” workloads 3 rd Platform –IDC agree that the new, Scale-Out offerings based on POWER8 address many of the requirements for the new workloads. The new offerings have been designed to address the requirements of Big Data and other 3 rd Platform solutions POWER8 –New innovations and continued leadership Proof Points –Significant performance improvements above Intel for a range of workloads, including DB2 BLU, Hadoop, Java and more Platform Selection –One size does not fit all, and Infrastructure Matters Conclusion –IBM Power Systems remains the leader in Scale-Up. The new Scale-Out offerings are designed for the new workloads and the new challenges before us 30

31. Questions? David Spurway – IBM Power Systems Product Manager Email: david.spurway@uk.ibm.comdavid.spurway@uk.ibm.com Phone: 07717 892 896 Thank you!