Re: Price Increases -- MIDRANGE-L

Hey Roger:

To paraphrase that old gospel song...."Go tell it on your mountain".

While the price increase "justification" of lower residual values may be 
true, my opinion is that this is a thinly veiled effort to drive as much 
revenue into a miserable 4th quarter as is possible, but then again, IBM 
can't exactly come right out and say that, can they?  Most customers will 
not take kindly to having their intelligence insulted and their 
pocketbooks impacted at the same time.

I have a copy of the full IBM announcement regarding the increases.  If 
anyone is interested, please email me privately and I will forward it to 
you.

Lane Leach
AS/400 Systems Engineer
The Kalos Group





"Roger Pence" <rp@rogerpence.com>
Sent by: owner-midrange-l@midrange.com
12/07/99 01:26 PM
Please respond to MIDRANGE-L

 
        To:     <MIDRANGE-L@midrange.com>
        cc: 
        Subject:        Re: Price Increases

> 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
 
 
 
 


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