Latest Updates on Hurricane Isaac

By MICHAEL SCHWIRTZ

The Lede is following Hurricane Isaac on Tuesday, which is expected to make landfall along the Gulf Coast. Updates will mix breaking news from our correspondents in the region with eyewitness accounts, photos and videos of the storm posted online.

Latest Updates on Hurricane Isaac

By MICHAEL SCHWIRTZ

The Lede is following Hurricane Isaac on Tuesday, which is expected to make landfall along the Gulf Coast. Updates will mix breaking news from our correspondents in the region with eyewitness accounts, photos and videos of the storm posted online.

I.B.M. Mainframe Won\'t Die, But Evolves

is introducing on Tuesday a new line of mainframe computers, adding yet another chapter to a remarkable story of technological longevity and business strategy.

The new model, the zEnterprise EC12, has strengthened the traditional mainframe's skill of reliably and securely handling vast volumes of transactions. That is why the mainframe is still the digital workhorse for banking and telecommunications networks - and why mainframes are selling briskly in the emerging economies of Asia and Africa.

The new models have added capabilities for computing chores that are growing rapidly, like analyzing torrents of data from the Web and corporate databases to predict consumer behavior and business risks. Name a trend in corporate computing - cloud computing, data center consolidation, flash-memory storage, so-called green computing - and I.B.M. executives point to tailored features in its mainframe that deliver the goods.

The death of the mainframe has been predicted many times over the years. But it has prevailed because it has been overhauled time and again. In the early 1990s, the personal computer revolution took off and I.B.M., wedded to its big-iron computers, was in deep trouble. To make the mainframe more competitive, its insides were retooled, using low-cost microprocessors as the computing engine.

Like any threatened species that survives, the mainframe evolved. It has been tweaked to master new programming languages, like Java, and new software operating systems, like Linux.

“The mainframe is the most flexible technology platform in computing,” said Rodney C. Adkins, I.B.M.'s senior vice president for systems and technology.

That flexibility is a byproduct of investment. The new I.B.M. mainframe, according to the company, represents $1 billion in research and development spending over three years.

I.B.M. has also invested beyond its corporate walls. Nearly a decade ago, fearing that its mainframe business would wither if retiring mainframe engineers were not replaced, I.B.M. went out to universities, advocating for mainframe courses and offering support. Today, more than 1,000 schools in 67 countries participate in I.B.M.'s academic initiative for mainframe education.

The sale of mainframe computers accounts for only about 4 percent of I.B.M.'s revenue these days. Yet the mainframe is a vital asset to I.B.M. because of all the business that flows from it. When all the mainframe-related software, services and storage are included, mainframe technology delivers about 25 percent of I.B.M.'s revenue and more than 40 percent of its profits, estimates A. M. Sacconaghi, an analyst at Sanford C. Bernstein.

The I.B.M. mainframe story offers a glimpse of why manufacturing can be crucial to an American company - and to the economy as a whole - even though high-end manufacturing does not employ large numbers of factory workers.

Over the last 15 years, I.B.M. has aggressively globalized its operations and work force, and pulled out of manufacturing businesses including personal computers and disk drives.

But I.B.M. held on to its core mainframe business, whose development is supported by thousands of engineers and scientists. Mainframe parts are produced in I.B.M. facilities in the United States, in Endicott, N.Y., and Fishkill, N.Y., and in Germany and elsewhere. The final assembly work is done in Poughkeepsie, N.Y., where I.B.M. opened a $30 million mainframe plant in 2010.

A mainframe costs more than $1 million, and higher-performance models with peripheral equipment often cost $10 million or more. Yet even young companies and emerging nations, analysts say, find the expense worth it for some tasks.

Comepay, for instance, is a fast-growing company that says it operates more than 10,000 self-service payment kiosks in Russia, where consumers pay for products and services ranging from Internet service and cellphones to electric bills. Comepay handles millions of transactions a day, and the volume is rising. The Russian company bought an I.B.M. mainframe in 2010.

“Mainframes are extremely reliable,” said Ruslan Stepanenko, chief information officer of Comepay. “It keeps working even when the transaction load is very high.”

Last year, the Senegal Ministry of Finance bought two I.B.M. mainframes to help monitor all the imports, exports and customs duties at the African country's 30 border checkpoints.

Performance, security and reliability were the main reasons for selecting the mainframe, said Momar Fall, a manager and mainframe technical specialist in CFAO Technologies, an I.B.M. partner in Senegal. But another advantage in a developing nation, he said, is that the mainframes are constantly communicating over the Internet with a remote I.B.M. support center.

“So seven days a week, 24 hours a day, I.B.M. is looking after them,” Mr. Fall said.

Longtime mainframe customers say the technology has done a good job keeping up with the times. Last year, Primerica, a financial services company, purchased its 19th mainframe in 30 years.

David Wade, chief information officer, has worked for Primerica, based in Duluth, Ga., since its first mainframe arrived. With more than four million life insurance customers and more than two million investment-account clients, he said the company needs the reliable processing technology of the mainframe. “It works like nothing else,” Mr. Wade said.

Amazon Reshapes Business With Cloud Service

SEATTLE - Within a few years, 's creative destruction of both traditional book publishing and retailing may be footnotes to the company's larger and more secretive goal: giving anyone on the planet access to an almost unimaginable amount of computing power.

Every day, a start-up called the Climate Corporation performs over 10,000 simulations of the next two years' weather for more than one million locations in the United States. It then combines that with data on root structure and soil porosity to write crop insurance for thousands of farmers.

Another start-up, called Cue, scans up to 500 million e-mails, Facebook updates and corporate documents to create a service that can outline the biography of a given person you meet, warn you to be home to receive a package or text a lunch guest that you are running late.

Each of these start-ups carries out computing tasks that a decade ago would have been impossible without a major investment in computers. Both of these companies, however, own little besides a few desktop computers. They and thousands of other companies now rent data storage and computer server time from Amazon, through its Amazon Web Services division, for what they say is a fraction of the cost of owning and running their own computers.

“I have 10 engineers, but without A.W.S. I guarantee I'd need 60,” said Daniel Gross, Cue's 20-year-old co-founder. “It just gets cheaper, and cheaper, and cheaper.” He figures Cue spends something under $100,000 a month with Amazon but would spend “probably $2 million to do it ourselves, without the speed and flexibility.”

He conceded that “I don't even know what the ballpark number for a server is - for me, it would be like knowing what the price of a sword is.”

Cloud computing has been around for years, but it is now powering all kinds of new businesses around the globe, quickly and with less capital.

Instagram, a 12-person photo-sharing company that was sold to Facebook for an estimated $1 billion just 19 months after it opened, skipped the expenses and bother of setting up its own computer servers.

EdX, a global online education program from the Massachusetts Institute of Technology and Harvard, had over 120,000 students taking a single class together on A.W.S. Over 185 United States government agencies run some part of their services on A.W.S. Millions of people in Africa shop for cars online, using cheap smartphones connected to A.W.S. servers located in California and Ireland.

“We are on a shift that is as momentous and as fundamental as the shift to the electrical grid,” said Andrew R. Jassy, the head of A.W.S. “It's happening a lot faster than any of us thought.”

He started A.W.S. in 2006 with about three dozen employees. Amazon won't say how many people now work at A.W.S., but the company's Web site currently lists over 600 job openings.

Amazon's efforts are just the start of a global competition among computing giants. In June, Google fully introduced a service similar to A.W.S. Microsoft is also in the business with its offering, Windows Azure.

If only for competitive reasons, Amazon does not say much about A.W.S. However, it is estimated to bring in about $1 billion to Amazon. Its three giant computer regional centers in the United States, in Virginia, Oregon and California, each consist of multiple buildings with thousands of servers.

There are others in Japan, Ireland, Singapore and Brazil. And the pace of its expansion has quickened. It opened four of those regions in 2011 and is believed to be building a similar number now. Jeff Bezos, the chief executive of Amazon, is interested in setting up cloud-computing installations for other governments.

According to an executive with knowledge of Amazon's operation who was not authorized to speak publicly, just one of the 10 data centers in Amazon's Eastern United States region has more servers dedicated to cloud computing than does Rackspace, a public cloud company serving 180,000 businesses with more than 80,000 servers.

Eventually, however, Mr. Jassy said, “we believe at the highest level that A.W.S. can be at least as big as our other businesses.” Amazon recorded nearly $50 billion in revenue last year. Mr. Jassy thinks A.W.S. is probably less than 10 percent of its eventual size.

The lower cost of computing, along with overnight deployment of machines, drives the business. Germany's Spiegel TV paid A.W.S. to make digital copies of 20,000 programs. It cost less than Spiegel would have paid for the electricity powering its own servers.

GoodData, based in San Francisco, analyzes data from 6,000 companies on A.W.S. to find things like sales leads. “Before, each company needed at least five people to do this work,” said Roman Stanek, GoodData's chief executive. “That is 30,000 people. I do it with 180. I don't know what all those other people will do now, but this isn't work they can do anymore. It's a winner-takes-all consolidation.”

All that data running through Amazon's cloud also has value. People leave bits of data about themselves that others then analyze. At any given time on A.W.S., there are about one million uses of a powerful database, called Elastic MapReduce, that is used to make predictions. Some suggest a new movie or video game to play, while others log behavior for advertising, credit history or suggestions about whom to date. (Companies have to permit their data to be analyzed, and Amazon says it applies the same security standards it uses on its retail site.)

The efficiency of this hyper-aware environment is already remaking jobs for many and will most likely dislocate more. “You can now test a product against millions of users for just a few thousand dollars, or start a company with just one or two people,” said Graham Spencer, a partner at Google Ventures, which invests in data-heavy start-ups that rely on such cheap computing. “It's a huge change for Silicon Valley.”

That vision is in line with the way Mr. Bezos sees A.W.S., say executives who have worked with him. “Jeff thinks on a planetary level,” said David Risher, a former Amazon senior executive who now heads a charity called Worldreader, which uses A.W.S. to download books to thousands of computers in Africa. “A.W.S. is an opportunity, as a business. But it is also a philosophy of enabling other people to build big systems. That is how Amazon will make a dent in the universe.”

Morsi\'s Syria Plan Suggests Regional Approach to Foreign Affairs

By DAVID D. KIRKPATRICK

Did President Obama watch Egypt swing from pivotal ally to potential opponent? Versions of that question have hovered around the presidential campaign from the early Republican primary debates through Mitt Romney's comments on his recent trip to Israel about the Islamist electoral victories in the wake of the Arab spring.

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But the debate has taken on new intensity this month as President Mohamed Morsi of the Muslim Brotherhood - Egypt's first elected president and first Islamist leader - has for the first time consolidated his power, pushing into the background his country's Western-friendly military leaders and taking his first steps into foreign affairs.

Mr. Morsi's willingness to visit Iran for a meeting of the so-called Non-Aligned Movement set off alarms from commentators in Washington and Tel Aviv that Mr. Morsi might seek cl oser ties to Iran, an enemy of the United States and Israel that Egypt under Hosni Mubarak helped keep in check.

But his first major initiative in foreign affairs - a bid to include Iran along with Saudi Arabia and Turkey in a four-nation regional contact group to help resolve the Syrian conflict - indicated that Egypt's future course may be more complicated than a simple win or loss for the West. (“Egyptian Leader Adds Rivals of West to Syria Plan,” Monday, Aug. 27)

Unlike Mr. Mubarak, Mr. Morsi displayed an appetite for regional leadership and regional solutions independent of the United States or any other great power. His success in such efforts would surely diminish American influence in the region.

But he also showed a pragmatic willingness to reach out across ideological lines: although some Westerners tend to think of Iran, Saudi Arabia, Egypt and Turkey as four Muslim states, the Sunni Muslim Brotherhood is also a longstanding opponent of the Saudi monarchy and the Iranian Shiite theocracy, which are both inimical to each other. And Mr. Morsi's move, accompanied by explanations from his spokesman, clarified that he sought conversations with Iran to obtain specific strategic objectives, not because he sought closer diplomatic ties with Tehran as a goal in itself. What's more, his aim - a regional solution that could end the Syrian bloodshed - is one that both the United States and Israel might welcome.

With the end of the Mubarak dictatorship, the United States has surely lost a reliable client. A more democratic Egypt will surely be more responsive to Egyptian public opinion, which is cynical at best about America's role in the region. But Mr. Morsi's Syrian gambit suggests that the loss of American influence may not be a gain for any rival, merely an Egypt with its eye on its own region instead of any global power.