IBM share price down, launches the most powerful mainframe ever built

International Business Machines Corp announced on Tuesday the release of its new z13 system aimed at providing superior performance as the company tries to revive its struggling business.

The z13 system is a product of five years of development and a $1 billion investment, IBM said. The companys new mainframe utilizes the innovations covered by more than 500 patents and was created with the collaboration of around 60 of IBMs clients.

With the release of its latest product, IMB is betting on mobile transactions, which the company projected to increase to 40 trillion per day by 2025. The z13 is the first system that is able to processor up to 2.5 billion transaction a day, the company said.

“The z13 is designed to handle billions of transactions for the mobile economy. Only the IBM mainframe can put the power of the worlds most secure datacenters in the palm of your hand,” said Tom Rosamilia, senior vice president of IBM Systems.

The system is the successor of a 51-year-old mainframe, the most famous IBM product. The release comes at a crucial time for the New York-based company as CEO Ginni Rometty tries to put the brakes on the fall in its hardware unit.

IBMs hardware business reported a 16% drop in revenue during the first nine months of 2014 as more and more companies turn to cloud computing services.

However, analysts have calculated that mainframes are still responsible for around 25% to 30% of IBMs overall profit, mainly because of the side services and software that the systems are bundled with. The company scored its first fall in mainframe sales in three years during the third quarter, as companies waited patiently for IBM to release the z13.

Mainframes are being bought by companies who need to process vast amounts of transactions every day, like banks, retailers and telecoms.

“Consumers expect fast, easy and secure mobile transactions. The implication for business is the creation of a secure, high performance infrastructure with sophisticated analytics,” Mr. Rosamilia added.

IBM gained 0.24% on Tuesday and closed at $156.81 in New York, marking a one-year decrease of 14.85%. The company is valued at $155.19 billion. During after-hours trading the stock fell 0.32% to $156.31 at 10:13 GMT.

According to CNN Money, the 24 analysts offering 12-month price forecasts for IBM have a median target of $170.50, with a high estimate of $198.00 and a low estimate of $125.00. The median estimate represents a 8.73% increase from the last close price.