Data Sheet—Wednesday, January 14, 2015

Good morning, Data Sheet readers. Does IBM really need a new mainframe? Plus, a Canadian startup just got another $18 million to help marketers make sense of video traffic. Enjoy your Wednesday.

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Bipartisan support for more high-tech green cards? Two new Senate bills would boost the number of visas for qualified workers—one of them raises the annual cap to 195,000 compared with 65,000 today. Another favors technology entrepreneurs. (That’s the category someone like Tesla founder Elon Musk would have used.) Before you get too excited, similar measures died in the anti-immigration House back in 2013. Wall Street Journal

President Obama wants companies to share security secrets. White House ideas for fighting cyberthreats includes encouraging companies to trade information about incoming threats and how to fight them. Several industry groups are emerging to encourage similar countermeasures, including one backed by a quartet of security tech companies: Fortinet, Palo Alto Networks, Symantec and McAfee. Re/code

Just when you thought the patent climate was improving. Now, telecommunications equipment company Ericsson and smartphone giant Apple are suing each other over intellectual property. Plus, the Supreme Court wants an outside opinion as to whether it should consider an intellectual property dispute between Google and Oracle. Reuters, eWeek

POLICY & STRATEGY

Why IBM is still hot and bothered over mainframes

The cloud may be IBM’s future—a reorganization announced internally right after the New Year underscores CEO Ginny Rometty’s desire to accelerate that mission. But it’s still betting big on its mainframe past.

To that end, the company just spent five years and more than $1 billion to develop what it bills as the most sophisticated computer on the planet, the z13. The technology was designed in collaboration with 60 of its most strategic mainframe customers. It can scale up to 8,000 virtual services and is capable processing more than 2.5 billion transactions per day. That’s the equivalent of the online shopping volume generated on 100 Cyber Mondays.

IBM is pitching the system as a platform well-suited for the mobile economy, able to handle billions of interactions faster and more securely—everything from fraud detection for fund transfers via a smartphone banking app to credit-card validation for retail purchases. It will start taking orders this quarter, but a senior executive wasn’t inclined to discuss specific pricing.

“You touch a mainframe every day, but you might not even know it,” said Tom Rosamilia, senior vice president of the IBM Systems division. Industries that are still particularly dependent on the technology: banking/financial services, telecommunications, and retail.

“They are so embedded in the IT organizations of most enterprises that replacing them is extraordinarily risky, expensive and difficult,” said Richard Fichera, vice president and principal analyst with Forrester Research. “Most mobile transactions result in some access to mainframe-resident data being triggered.”

Matt Eastwood, group vice president for research firm IDC, figures mainframes still represent 10% of annual spending on server technology. “They remain very strong platforms for a variety of mission-critical workloads including business applications, transaction processing, and large data warehouses,” he said.

IBM is also talking up another potential use case: cloud data centers. “IBM often expresses the notion that the mainframe is the ‘original’ cloud, in that the virtualization technologies and automated management tools that are key to cloud computing originated decades ago in mainframe systems,” said another analyst, Charles King, with Pund-IT. It isn’t that common, but there are a few IBM customers who run private clouds using the System z platform, King said.

Over the past month, IBM has disclosed several high-profile cloud “wins.” Many of these deals, such as one with Dutch bank ABN AMRO, build on existing outsourcing contracts. Still, what the computing giant counts as cloud revenue grew 50% for the nine months ended Oct. 31; for 2015, it is projecting $7 billion for this line of business.

Although it hasn’t talked much about the move externally, IBM is restructuring to create customer-centric business units that prioritize its cloud business and several other strategic imperatives, such as Watson business analytics services. There are eight divisions being created, according to a report by Technology Business Research (TBR). The main units include Watson, Analytics, Commerce, Security, Cloud, and Systems. The existing services teams remain relatively intact.

TBR notes:

Competitors will face an IBM that can fully enter client discussions with a choice of consumption options in specific areas. As buyers broker decisions between components and cloud, for example, IBM has an advantage over competing firms that can only sell one part of the mix. The challenge for IBM is to continue to train and align its traditional salesforce to sell across this new model, as revenue recognition, value propositions and customer conversations will differ.

STARTUPS & DISRUPTORS

Video marketing entrepreneur snags $18 million

Intuitively, marketers know that video messaging can be very convincing for sales prospects. How convincing? An emerging Canadian software company and Y Combinator graduate, Vidyard, can quantify the impact

“With a white paper, a marketer knows you’ve downloaded something, but they don’t know if you’ve actually read it,” said co-founder and CEO Michael Litt. “Similarly, marketers are creating pools of videos, but they have no way of knowing who is watching them, or for how long.”

The company’s hosting platform tracks viewing behavior, identifying the most likely prospects for certain campaigns. (The videos have to be watched through Vidyard’s player in order for the data to be collected.) Then, that information can be correlated with customer profile information from widely used sales and marketing software applications from Adobe, Marketo, Oracle and Salesforce.

Vidyard’s steady growth (revenue tripled last year) and low churn rate just helped it raise an $18 million Series B round led by Bessemer Venture Partners, along with iNovia Capital, OMERs Ventures, Salesforce Ventures, and SoftTech VC. The money will go toward product development, and its own sales and marketing. Vidyard’s Series A round was $7 million.

“This is a robust platform for management and analytics,” said Bessemer partner Byron Deeter, likening new technologies for more effective corporate video marketing to the rise of emerging social media management software several years ago. “A tipping point is happening among business marketers.”

You’ve heard the metrics: Cisco estimates, for example, that videos will represent 79% of Internet traffic by 2018. Now, it's up to marketers to start proving the value of all that content.

MY FORTUNE.COM BOOKMARKS

Is Amazon risking a backlash over its Woody Allen series deal? By Tom Huddleston, Jr.

Apple, Google reach new deal to end lawsuit over employee poaching By Reuters

How women can break into tech: don’t be a brogrammer and 6 other tips By Michael Choi

Apple’s new video camera patent sends GoPro’s shares into a tailspin By Verne Kopytoff

Ex-KKR tech chief launches new private equity firm By Dan Primack

FOR YOUR INNER TECHNOPHILE

Print your ride. 3-D printing company Local Motors doesn’t need some fancy plant to manufacture cars. Well, at least not for the chassis. Can I get that two-seater in candy apple red? Fortune

ONE MORE THING

Move afoot to unionize high-tech shuttle drivers. After success with Facebook late last year, the Teamsters union in Silicon Valley wants Apple, eBay, Genentech, Yahoo, Zynga to support similar efforts. WSJ