Yeah IBM really created a false dichotomy. Production users want the mainframe architecture and reliability. Developers are fine with emulation and create demand.
I've got to imagine they are barely breaking even on a minimal config baby class system. The yield on an MCM has to be minimal. You can find videos of how labor intensive the build of a frame is, let alone the engineering. I wouldn't even be surprised if they were loss leaders.
And that begs the question, why not grow the user base with aggressive placement, training, and development. Another $1 billion investment in Linux has no appreciable affect to most mainframe users, and no way there is an ROI. Imagine that injection on this small, loyal platform of users.
I settled for hercules at home, hell of a lot easier to manage, and is pretty fast given that its a fairly naive emulator (aka no JIT/tracing/etc). I think if the turbo hercules guys (or someone else) added a decent JIT, and solved the licensing problem IBM would be in a world of hurt. Although, maybe not, the few remaining customers aren't the kind to run their bank/airline/etc on a 10k piece of hardware and an open source emulator. Of course, I've been wondering for a few years what percentage of machines are being sold to development shops to support the limited number of real customers. That is why we purchased ours, to support real customers, not to run any actual work on it. Of course I've also heard that most of the business class machines are sold with tiny capacities, because they are simply hot fail-over targets. The assumption is that if something goes wrong at the primary site, someone calls up IBM and gets them to boost the capacity on the idle machine as the workload is shifting over.