RE: MORE V4R2 PRICING: IBM WAIVES V4R1 TO V4R2 UPGRADE CHARGES

So let me see if I have this right:

If I upgraded from V3R7 to V4R1 I wouldn't have paid and upgrade fee for any
of the LPP that stayed V3 (RPG. CBL. etc) at that time since I wasn't
changing versions for those products. Now when I upgrade from V4R1 to V4R2 I
don't have to pay a fee for these products because it's "unfair."

BUT, if I stayed on V3R7 and waited for V4R2 I WILL have to pay version fees
for these products, effectively a penalty for not going to V4R1.

Talk about unfair. Is this correct?

-Walden

-----Original Message-----
From: mcsnet!midrange.com!midrange-l-owner@Mcs.Net
[mailto:mcsnet!midrange.com!midrange-l-owner@Mcs.Net]On Behalf Of Al
Barsa, Jr.
Sent: Wednesday, March 11, 1998 7:40 PM
To: midrange-L@midrange.com
Subject: MORE V4R2 PRICING: IBM WAIVES V4R1 TO V4R2 UPGRADE CHARGES


The following item appeared in NEWSWire/400-03.11.98 today:

MORE V4R2 PRICING: IBM WAIVES V4R1 TO V4R2 UPGRADE CHARGES
In response to complaints from customers hit with unexpected
charges to upgrade from V4R1 to V4R2, IBM next week will announce
a special promotion to waive those charges for all customers who
had V4R1 installed on or before V4R2 shipped February 27. Users
who've already paid the additional V4R1-to-V4R2 charges will get
a refund.

The widespread user complaints on this issue are the latest
development in IBM's continued difficulties transitioning OS/400
pricing from periodic user-based version upgrade fees to a
software subscription model that essentially requires users to
pay a monthly fee in exchange for free future releases. (Previous
stories covering this issue can be accessed at
http://www.news400.com/redir/redirDB.cfm?ID=86 and
http://www.news400.com/redir/redir.cfm?story=/features/
nwn/archives/sep0397/sep0397.htm .)

The unexpected V4R1-to-V4R2 charges, which ran into tens of
thousands of dollars per machine in many cases, arose from
licensed program products that IBM didn't upgrade to Version 4 at
the same time it upgraded the operating system. The list of
program products that didn't get upgraded with V4R1 includes
compilers, Application Development ToolSet (ADTS), and utilities.
Those products all got reversioned with V4R2, so the move from
4.1 to 4.2 meant paying transition charges for those products
that had "skip-shipped," and for which customers had not actually
paid transition charges when they moved to V4R1. (For a complete
list of program products affected, see IBM announcement letters
298-035 and 298-031.)

The release of Version 4 marks the first time that IBM didn't
upgrade all licensed programs along with the operating system.
According to Dave Chorba, AS/400 brand program manager, that only
caused a problem because the AS/400 Software Maintenance and
Support Offering (SMSO) IBM previewed with V4R1 last August
wasn't activated with V4R2 as originally planned. V4R1 users who
signed up for the intended SMSO would have gotten V4R2
automatically. When SMSO floundered in internal logistical
problems, IBM decided to charge transition fees for the products
that weren't upgraded with V4R1 but were with V4R2.

"These skip-ship charges became part of Release 2, which was a
surprise to a lot of people," says Chorba. "The V4R1 people were
expecting some dollar prices when they went Release 2 if they
were planning on taking the Software Maintenance and Support
Offering we previewed in August, but it was unfair to hit them
with these charges and not have something like SMSO available."

The promotion to waive V4R1-to-V4R2 transition charges is welcome
news to many customers who tried to order V4R2 under the old "new
releases are free" concept only to discover they had to pay
significantly more, depending on their processor group and the
number of skip-shipped licensed programs installed.

"We were shocked to hear there was an upgrade charge," says Bob
Romanko, lead computer center engineer at the University of
Virginia's Department of Human Resources, which had just
completed an upgrade in December 1997 from a V3R1 CISC box to a
model 620 RISC machine on V4R1. "To move to V4R2 would have cost
more than we paid for the software in our RISC upgrade, and the
additional money wasn't in our budget. We're relieved that IBM is
making V4R1 to V4R2 a no-charge upgrade. I'm doing a lot with
Java on the 400, and I'm pushing Net.Data to the max. To take all
this to the next level, we really were counting on V4R2."

"We want to reward customers who aggressively got to V4R1 because
they wanted the features they knew were coming in V4R2, like
Java, Domino, e-business and NT on the IPCS," says Chorba. "We're
taking corrective action to make sure those people can get where
they wanted to get as soon as they wanted to get there."

V4R1 customers may be relieved to learn they're off the hook, but
some V3R7 customers still face a higher price to get to Version 4
than they expected because they didn't count on the additional
fees for skip-shipped products.

"Wow, what a shocker," says John Borgne, senior AS/400
development analyst with Chrysler Insurance Company, who recently
learned it will cost him $47,000 more than he expected to upgrade
from V3R7 to Version 4. Chrysler Insurance spent $180,000 in
September 1997 to upgrade from a model 310 at V3R2 to a model 510
at V3R7. Borgne says he considered waiting for V4R1, but his IBM
marketing rep urged him to go ahead with V3R7. The rep gave
Borgne a price of $33,000 to upgrade to V4R1, for which he
budgeted this year.

"Now, to go to V4R2, it's almost $80,000," Borgne says. "To go
back and ask management for $47,000 more is impossible. We want
the new functionality of V4R2 and were planning to upgrade by the
end of the second quarter. Now it looks like we'll have to wait
until next year to see if this amount will be approved by upper
management. I'm very disappointed at the pricing structure to get
to V4R2. There are some really nice enhancements, but IBM has
made them unaffordable."

Budgetary confusion and uncertainty is exactly what IBM was
trying to avoid by moving to a new mandatory software upgrade
protection plan with Version 4. However, the Software Maintenance
and Support Offering previewed with V4R1 last August wouldn't fly
either internally or among Business Partners, and IBM was forced
to revamp its strategy. The company now plans to announce just
the update protection portion of the plan in mid- or late April
and has recently changed the planned name from AS/400 Software
Maintenance to AS/400 Software Subscription. Another offering
combining subscription update protection and support, which is
expected to be called Software Upgrade and Remote Support (SURS),
will be offered late this year.
-- Pam Jones, NEWS/400 Industry Editor

Al Barsa, Jr.
Barsa Consulting, LLC
400 > 390

Phone:  914-251-9400
Fax:    914-251-9406

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