RE: Fast400 Value to iSeries community is less than zero -- MIDRANGE-L

<SMALL CHIT-CHAT:  Don, you do not need to read this, if you don't want...>


You both have clearly identified the problem IBM execs face, today.  What
both of you have said is definitely "for-sure".  There can be no doubt about
it, IMV.


I've been thinking about this, off and on, most of the afternoon.  Wore me
out, so I took a nap...;-)  I wrote 3+ pages, and haven't even begun to
scratch the surface.  Here's the skinny, IMV:


Everything Chris said is exactly true.  All of it.  I'd summarize it as
"While the iSeries TCO is still lower than the TCO of other platforms, then
it appears to still be worth it. If that changes, IBM has to decide if they
want to lower the price or drop the product."

If it changes, and it is changing, then IBM will decide.

I disagree with absolutely none of what Don wrote.  I don't really see any
contradiction.  Don wrote a lot more than the quote below, but he summarized
his post well: "Justifying to people that they're paying PREMIUM pricing for
a machine that they'll not be able to use all that they're paying for is
getting to be alot harder in the real world..."

Like Jim Damato said "Some of IBM's own statements suggest that legacy
customers are carrying iSeries server customers."  I believe that's the
case.  No way of knowing, for sure, and I doubt if you'll ever see the
numbers.  Besides that, I've read several places that OS/400 profits get
credited to the Software Group, which is basically an independent
sister-company of the Server Group, who's responsible for the iSeries.


My 3 page analysis basically says:  That's life... That's just the way it is
and, in fact, could hardly be otherwise.  Other Divisions carried the 38
during it's dog days.  In a sense, other Groups are carrying the Server
Group, margin wise.  But IBM supports the Server Group because it provides
the basis of a huge chunk of the 4 or 5 Groups within IBM.  There are two
things that motivate IBM to do what it does:  stock prices and profit
potential.

A snip from the long version of this essay:  "I will say this:  I was
extremely surprised to find that IBM operates their business using 90-day
financial plans.  Sure.. they have build-plans for way out, but the business
itself runs off 90-day plans.  Who woulda thunk it.  But thinking about it
some more, it only makes sense...  The market changes THAT FAST...!  Plus,
the stock market doesn't care a thing about long-term growth anymore, so how
can companies...?  Not much companies can do about the thinking of the stock
market, now, is there...?"

But, IMV, there are DEFINITELY things the market can do to influence the
direction of IBM, and that market can change in as little as 90-days.

For the iSeries Community to influence the market, it just needs to get
organized.  I floated that idea, over on IGNITe/400, when the new list was
first set up; the one set up just to discuss the iNation.  Was banned from
both IGNITe lists within minutes.  Go figure...


I'm sure there are more than a few folks who are tired of hearing this,
because I sound like a broken record.  But then again, this may be a novel
idea to others.  I wrote in the long piece:  "I forgot, twice now, that I
meant to tell James that I'm 99% sure I posted the stuff about SPECIAL files
and the SEPT, oh.. 2 or 3 months ago, probably on RPG-L."


The way to organize is through the iNation.  That way IBM can have input
into HOW the market organizes.  IBM can, and should, have input about WHAT
this organized market can do to help IBM.  IBM can, and should, help the
iSeries Community through the vehicle of the iNation.  This can, and would,
change the situation described above.

Will it happen...?  "There are no crystal balls."


Now some will say I don't know bin.  (No TLA, short for bin Laden...;-)  I
admit, there are a lot of things where I don't know bin.  But I'm fairly
certain that the iNation is never going to fulfil it's potential until it
becomes a grassroots organization.  I figure there are about a thousand
people up in Rochester, somewhere around 40,000 man-hours.  That's a
wild-hair guess.  I've heard there are 29,000 members in the iNation, but
there are probably more.  Each of these could probably recruit 1 new member,
and double the size over-night.  So if 10% of 60,000 people put in 5 hours a
week towards some goal, that would be HUGE.  Any project, it would hardly
matter...  No offense, but these 10% would be as dedicated, if not more so,
than the truest Blue up in Rochester.  So you can't just measure the thing
by man-hours.

Would that ever happen...?  I believe JFK said "Some ask why, others ask why
not"...


What could change that would be worth the effort?  A lot of things...  But
in a nutshell:

The iNation can demonstrate, by way of example, that TCO is still the only
measure that counts.  The market is ready to hear that message, but they
won't pay much attention if IBM says it.  The iNation can also work to
improve the TCO value-proposition of the iSeries.

Many ways to do these...  Pick one...!


I may work on finishing the long version tomorrow, or maybe not...



> -----Original Message-----
> From: midrange-l-admin@midrange.com
> [mailto:midrange-l-admin@midrange.com]On Behalf Of Chris Rehm
> Sent: Thursday, November 08, 2001 1:32 PM
> To: midrange-l@midrange.com
> Subject: Re: Fast400 Value to iSeries community is less than zero
>
>
> On Thursday 08 November 2001 09:33 am, Don wrote:
>
> > Justifying to people that they're paying PREMIUM pricing for a machine
> > that they'll not be able to use all that they're paying for is
> getting to
> > be alot harder in the real world...
>
> Well, Don, I think you are comparing apples and oranges to make your case.
>
> But the bottom line of it is that IBM has costs associated with providing
> the iSeries platform. If there is no market justification for them, then
> why have the system at all? If your customer sees no benefit from having
> the iSeries features, why would you want them to buy it?
>
> If, on the other hand, the facilities and reliability of the iSeries
> platform provide function above the level of the Wintel platform (or *nix
> platforms) then what is the crime in IBM charging for that? It's not like
> they get it free out of the ether, they actually do employ people to
> develop the platform.
>
> Now, there might be justification in being upset that IBM charges too much
> for the iSeries. I haven't seen the figures of late, but I sure know they
> used to have a very high margin in the AS/400 arena. I'd like to see lower
> prices myself. But the pricing of models with a CFINT governor is just a
> method IBM uses to maintain a revenue stream for a product that they are
> selling.
>
> What is the difference to your customer between IBM controlling CFINT with
> a governor or IBM actually manufacturing boxes with different levels of
> processor performance and physical limitation? If you went out
> and bought a
> 50 CPW machine then, you wouldn't be upset that it only handled 50 CPW,
> right? Would it be possible then to get down to the real issue of whether
> or not the features are worth the money they are being charged for?
>
> So, ignore the fact that the method used by IBM to sell CPW includes a
> governor to manage the level. That is really irrelevant. Your
> customer buys
> a level of CPW. The question is, "Is it worth it?"
>
> While the iSeries TCO is still lower than the TCO of other platforms, then
> it appears to still be worth it. If that changes, IBM has to
> decide if they
> want to lower the price or drop the product.
>
> I do not personally see how IBM would be able to maintain the level of R&D
> the iSeries needs if they were to just sell it on the same commodity level
> of the Wintel boxes. I'd love to buy iSeries at the same cost as a Dell,
> but I just don't know how that would work.
>
> > Don in DC
>
> --
> Chris Rehm
> javadisciple@earthlink.net
>
> And thou shalt love the Lord thy God with all thy heart...
> ...Thou shalt love thy neighbor as thyself. There is none other
> commandment greater than these. Mark 12:30-31
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