RE: Price Increases

["Stone, Joel" <StoneJ@xxxxxxxxxxxxxxxx>]

Title: RE: Software Vendors

 Roger Pence> 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. 

I must disagree that this is dumb or mindless on IBM's part.  Unfortunately, it is probably a calculated maneuver.

In the high-tech world, things don't always behave according to supply and demand economics. 

If a technology product price is lowered (or features are added for the same price), this indicates that the manufacturer is fully behind the product, and the market is thriving.  (Example: PC's)

If, on the other hand, the product price remains stagnant, the indication is that the manufacturer would prefer that you look at one of its other product offerings (example: 5494 controllers, old tape drives, etc).  This allows the mfgr to reduce maintenance and support costs on stuff that is no longer accepted in the broader market.

The worst case is when the manufacturer wants to accelerate its customers leaving the product, so the mfgr can stop the bleading of support and maintenance costs.  Especially if they see a declining broader market.  Then the mfgr will raise prices, and force its customers into other products, hopefully within their own lines.

Which case do you think the AS/400 price increases point towards???