Re: The demise of Midrange Computing - Is AS/400 is dead ?

Without speaking for Al, I think he refers to the fact that it has often
been reported in the past that the AS/400 division of IBM is more profitable
than other parts of IBM. If this were a separate business it would have a
higher tax liability. Instead, the margin of the AS/400 division is blended
with the lower margin divisions and IBM's overall margin is more "industry
average."

I do not know how this would compare with the growing services sector. I
also don't know if the AS/400 division gets to report its services income as
its own or whether or not AS/400 and iSeries services are just a part of IBM
Services.

Often, IBM income from one source is not easy to find. The same thing
happened in the OS/2 days. One IBM exec was quoted as saying, "For every $1
spent on OS/2, IBM receives another $3 in additional sales and services." in
response to industry remarks that OS/2 wasn't a money maker for IBM (since
retail sales were only a break even on investment). I copied this quote from
an IBM press release off their web site. A few weeks later, when I wanted to
share the press release with someone, I went back and could not find it. I
emailed the exec and he responded that he couldn't comment and that if I
needed other information I would need to contact xxxxxxx in public
relations. He was nice enough to give me the email address, but she was not
nice enough to respond to my query about this release.

So I guess you can't really tell how much revenue a product generates
because of its own sales. I mean, how much consulting revenue is generated
for every $1 spent on an AS/400? How much in maintenance? The latter would
be particularly important, since that revenue is generated for years to
come.

How many add on sales does IBM get that it would not have seen otherwise? In
other words, does IBM see additional hardware sales in AS/400 shops simply
because those customers keep IBM on their preferred vendor list when they
shop for routers/printers/whatever? How many small shops just call IBM and
say, "I want to do x." rather than bidding alternate solutions?

Chris Rehm
javadisciple@earthlink.net
If you believe that the best technology wins the
marketplace, you haven't been paying attention.


----- Original Message -----
From: "Prowak, Dave" <DProwak@ci.syracuse.ny.us>
To: <MIDRANGE-L@midrange.com>
Sent: Tuesday, July 31, 2001 8:48 AM
Subject: RE: The demise of Midrange Computing - Is AS/400 is dead ?


> > IBM keeps it a secret to minimize their tax liability.
> Huh?  Care to explain?
>


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