Re: Price Increases

["Roger Pence" <rp@xxxxxxxxxxxxxx>]

Title: RE: Software Vendors

> This should not surprise you. It is one of the ways to maintain revenue.

It is not only surprising, it's dumb. When sales are down, demand is down. You do not increase demand by raising prices. You increase demand by adding value, features and your competitive standing in the marketplace. IBM's recent moves do none of these things.

The only revenue this will drive up is the emergency orders taken between now and 31 Jan. After that, what's IBM to do? What will the next desparate attempt be? And what are we to make of the IBM whining we'll hear in late 2000 when V4Rx upgrades are off pace? IBM will stand there with a straight face and say, "We just don't understand why our customers don't see the value proposition of the 7xx line and V4Rx." Yuk, yuk. Value proposition.

I've got an idea: why doesn't IBM simply raise the price of all 7xx upgrades to 1 million dollars per upgrade, across the board. To generate 500m in revenue, they'd only need to get 500 upgrades. That oughta be easy enough.

The whole AS/400 price increase plan sounds like Steve Martin's plan to get a million dollars and not pay taxes on it (for the puppies amongst you, before Steve Martin was Cary Grant, he was a stand-up comedian!). Martin's plan for getting a million dollars and not paying taxes on it: first you get a million dollars, then you don't pay taxes on it.

Someone at the AS/400 division got their economics degree from The Steve Martin College of Modern Economics.

rp