RE: Free OS/400 -- MIDRANGE-L

R. Bruce,

See inline comments (>>) and comments at end.

-----Original Message-----
From: owner-midrange-l@midrange.com
[mailto:owner-midrange-l@midrange.com]On Behalf Of R. Bruce Hoffman, Jr.
Sent: Saturday, June 30, 2001 8:54 AM
To: MIDRANGE-L@midrange.com
Subject: Re: Free OS/400


-----Original Message-----
From: jt <jt@ee.net>
To: MIDRANGE-L@midrange.com <MIDRANGE-L@midrange.com>
Date: Friday, June 29, 2001 11:44 PM
Subject: RE: Free OS/400


>day-to-day operations, not Mr. Gerstner).  That movement believes that
>hardware will become a commodity, software will be free, and IBM will make
>their shareholders happy by making a killing on services.  Mr. Palimisano


Where do I sign up to get my commodity S/390 with free MVS?!?!?!!?!

<tongue loc="cheek"> MAN I'M THERE!!!  Where is it?  </tongue>

>> That would be your dirt-cheap PC server with Linux on it.  That's how IBM
is positioning the mainframe these days.  They're trying to grow that market
by selling it as a way to consolidate literally thousands of Linux servers
on one box.  I'm assuming they're seeing the MVS market shrink.


Services for what? Services on commodity hardware? Commodity hardware is use
me now, throw me away and replace me, not fix me.

Service their software? How? Fixes? Everyone does that. Free.

Service their software by changing it? Man, everyone I know is staying out
of changes in JDE. They write software around it!

>> That would be IBM Global Services Group.

--------------------------

I didn't feel like researching the numbers, on the Global Services Group,
but off the top of my head, they pull in $20B to $30B a year.  IIRC that
they said they had $87B in outstanding contracts to deliver on.  They're the
ones who putting together and delivering on a deal for 15,000 Linux servers
to a company in Japan.  They put in global networks for the big companies.
There was a write-up on how strong Global Services was, in these areas,
because they deliver end-to-end solutions, and what they promise, they make
sure they deliver on.  Like no other company can.

I couldn't even tell you what all they do, other than they charge high and
pay (relatively speaking) low.  So they make huge profit margins on this
business.  It isn't servicing hardware or software, in the normal sense.
Their clients are more likely to be the multi-nationals, than the
iSeries-type businesses.


Mr. Gerstner and Mr. Palimisano have both said they envision the day when
all computer services are delivered from computer utilities, same way as
long distance telephone is today.  If you're following SOAP, it doesn't seem
so far-fetched.  I'm sure they're looking 3 to 5 years down the road, as
they see the possibility that the PC servers could take over (many on this
list have discussed the same) and therefore the Server Group drops $15B -
$20B in revenues.  They see the possibility that all these servers are
running Linux, Apache, MySQL or Postegre(?) SQL, Tomcat, Meerkat (whatever
that is) and probably by that time they'll be some free software called
Polecat...;-)  Software Group loses another $15B in revenue.  They see
they're making money on the Global Services Group, so that seems to be the
ticket, if all these other things come to pass.  Makes some sense to me.


BTW, I'm not necessarily buying into this strategy, but trying to explain it
as best as I can figure it out.


Now, contrary to many of the things said on this list about Mr. Gerstner
(which are actually being directed right at Mr. Palmisano, who runs the
company) these guys are not stupid, nor fools.  So I feel very comfortable
stating, for a fact, that they know there is no way _anyone_ can honestly
look 3 - 5 years down the road, in this industry.  They know better than
most that there is no crystal ball (that's how they got to be at the top of
IBM).  There's too many variables.  Plus, the biggest technology to come out
in the next 3 - 5 years...  well, it's probably not even on the drawing
board right now.  (It could end up being the OSS development, discussed on
another thread!)  Granted, they're among the top 5 people in the world, who
could make any predictions actually turn into reality.  But even they can't
do it with any large degree of success.

But it's their job to look 3 - 5 years down the road.  They'd be
irresponsible if they didn't try.  So 5 years down the road, they'll either
look like fools or geniuses.  And it's mostly a matter of luck, IMHO.


Finally (applause?!? ;-) this isn't directed at you in particular, Bruce.  I
hope I don't stifle _anyone_ from offering any opinions on any subject.  But
if I see some facts that seem to be overlooked (and if I have the time) I'll
probably point that out.  Opinions will differ, but I think that's how facts
get uncovered.  So I hope I haven't discouraged any of that.  Besides, I
haven't been studying IBM in the news as much lately, as I used to.  Things
change daily.  So it goes without saying that ICBW...

jt

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