Re: Price Increases !!!!!

This whole business with big price increases MIGHT be justified on declining
values of trade in equipment but, frankly, if I were in charge of "goosing"
AS/400 sales I might consider cutting the price instead and sacrificing short
term profit to get some new customers that might buy more full margin equipment
from me in the future. But, oh, I forgot, the "new" IBM is run for short term
quarterly gain not long term maximization of shareholder value via increased
market share! Uncle Lou must want to retire real soon now (maybe by the time
Windows 2000 becomes stable and Chairman Bill is promising its "replacement"
which might even get the in memory database promised for so long in Windows 2000
that I knew would never make it in the final release <g>).

I'll be blunt. I don't give the AS/400 five more years as a distinct product
line!! It is being marketed (if it's being marketed AT ALL!) ever more so as a
"niche" rather than a mainstream product. I got into an argument with a local
AS/400 marketing specialist about this very subject. His view was "IBM is
spending a fortune on R & D, they wouldn't abandon the AS/400". My response was
"Remember how much was spent on OS/2?" (Or all the bucks spent on R & D for all
the networking stuff recently sold to Cisco.)

I think IBM will milk the current installed base for all the money it can get
short term while using a policy of benign neglect when it comes to trying to 
sell
to new customers. Yes, a few technically savvy companies might buy into AS/400
(at least while it appears IBM will spend on R & D giving the illusion the
machine has a future) to run large Domino or even SAP installations (just how
many big companies are there anyway that haven't ALREADY gone to Domino or SAP 
on
another platform?) but most large system sales are going to Unix and the middle
and lower market is moving faster and faster to Windows. Selling more 170's does
very little for the bottom line either at IBM or at its business partners.

The slide is still reversible in my opinion but IBM will have to do two things,
neither of which seems very likely while Lou Gerstner is at the helm 1) come up
with a clever marketing campaign that somehow demonstrates the technical
superiority of the architecture or more accurately the VALUE of that 
architecture
to a company in terms a CEO/CFO type can grasp, and 2) invest fully in the R & D
necessary for the AS/400 to lead in technology adoption instead of being a "wait
and see, me too" also ran.

Part of that R & D should, IMHO, be directed as swiftly as possible to getting
Windows 2000 executables to run on AS/400. Frank Soltis says it's certainly
possible but IBM has been unwilling to spend the money trying to keep up with 
the
constantly moving target of the Win32 API. (He did say that Microsoft may have
finally gotten itself into the position by virtue of its market share of having
to stabilize the API or risk alienating customers as IBM did when it moved to 
the
360). Can you imagine running a performance/throughput and reliability
comparision between Win 2000 and OS/400 running the same executables? I would
wait with eagerness for Gartner Group or IDG to do that!!

The next area I'd concentrate on is porting Novell NDS to OS/400 (maybe right
down in the microcode). Why is OS/400 the ONLY major OS where there has been no
announced plan to support NDS? Yes, it's a proprietary product (so is Java) but
it is far more a standard in the marketplace than the basic LDAP supported in
OS/400 and companies are adopting it right and left for managing far flung
networks of disparate machines. Why is the AS/400 with its incredible 
reliability
not the center of IBM's network management focus? Hey, why not take the best of
Netware and roll it into OS/400 while we're at it?

In my opinion, the only salvation for AS/400 is either the above OR spinning off
or selling the AS/400 division.

Randy Mangham
Pacific Crest Consulting
San Diego, CA

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