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

<Last time:  I have somehow accumulated 15 items in my Drafts folder.  I
think it's called lack of focus.  Sheesh...  If I've unintentionally
neglected to reply to someone's post, and it's important, please give me a
reminder.>


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.


As I said (or meant to say...;) to Steve, "Rochester <pretty much stated
it's> intended direction by making WebFacing run under interactive."

They have decided they DO want these revenue streams.  So I would presume
they can't see HOW to make up for a low-ball price on the 400, and make up
the difference in volume.  The problem is that the gap is too big...

To price the system anywhere near Windoze, they would need to sell in
comparable volumes.  They also don't have the "monopoly" (legal or economic,
whatever...) that M$ has to subsidize those kinds of prices.  Nor do they
have Bill Gates bankroll...  So they use the "monopoly" they have on the
iSeries to provide these same kinds of revenue streams.


I've been thinking, for about the last hour, how to proceed with this
discussion, because it's very likely to rile a few people up.  Not that it's
necessarily bad to get people riled up, but that they might not be
interested in taking that anger and doing something useful with it.  I'm
just gonna call it like I see it.  You can read further, if you want.  I'm
not responsible for who decides to read this, and what they do with the
info.


IBM, as far as everything I can tell, uses the profits from the iSeries and
zSeries to subsidize prices on the pSeries and xSeries.  I have no numbers
to back that statement up, and they way IBM accounts for OS/400 revenues as
Software Group sales, as opposed to Server Group sales, I don't know that
anyone in IBM has the numbers.  But the signs are pretty obvious to many
people.  I'm not the first person to post this info, that's for sure.

But I'm going to hammer it home in a way that's different than most would.
I don't necessarily see a problem with IBM doing this.  Because the way I
view it, a healthy IBM trickles down to a better 400.  You might ask, why
doesn't IBM let each Division within the Server Group stand on it's own
merits.  Because it don't work that way.. that's why.  There were down years
for the 38, when the other Divisions supported it.  It's payback time.  I
just thank my stars that I don't manage a mainframe shop...  Look at the
prices that group has become accustomed to paying.  Some companies have left
the mainframe and right-sized to a 400, for exactly that reason.

Furthermore, a Server Group without a pSeries and xSeries would be an
extremely weak company.  And make no mistake about it, the Server Group is
one huge company...  I believe it would be one of the biggest, in it's own
right; but it's just a piece of the pie, within IBM.  Mr. Zeitler, who heads
the Server Group, has to contend with the other Groups (there are 5 or 6) to
get his fair share of that pie, and then he has the unenviable task of
dividing that piece amongst the 4 Division that produce the 4 *Series of
computers.  I have no doubt that the Server Group is subsidizing PC sales,
and some of the other Groups as well...


So my question is:  what EXACTLY is fair...?  How does IBM achieve the right
product, at the right price, in the right market...?  (Which is the mantra
of retailing...;-)



Well, just in case there's anybody out there who I haven't offended yet, let
me take another crack.

Contrary to a lot of the things I've seen posted on this list, it's not
quite as easy as it looks...!  I've seen an attitude expressed, sometimes,
that isolates a particular aspect of the problem, and people point to IBM
and say:  this is retarded...!  HOW CAN THIS BE...!  You're shafting the
iSeries Community...!  Yada, yada, yada...  I've seen this attitude on this
list occasionally, but it was really prevalent over on the IGNITe/400 forum,
where one minute IBM was doing a great job, and the next minute they were
described as a bunch of morons.  Now maybe things have changed on IGNITe,
since I was banned from the list about 6 months ago, but I wouldn't be
surprised if it's still the same.

I've seen a lot of disrespect of IBM executives...  Now I'm about as
frustrated as anybody with them.. but I'm disrespectful of disrespect.
Anybody can take a small slice of the problem, and come up with better ways
that IBM could do things.  But the Server Group is 4 Divisions.  These
Divisions have different goals, different aspirations, different personnel,
and probably different cultures.  ICBW..  I may be all hosed up..  But my
guess is that 3 of those Divisions are not backing the idea that the iSeries
is the best computer on the planet, and don't have the same passion for the
design of the machine that some of us might have.

The top execs get to deal with this situation, and it's just a fact of their
daily existence.  And keep in mind that, even within each of these
Divisions, there is probably not unanimous opinion about what would be best
for each of these platforms.  But somebody has to try to marshal these
efforts into some kind of direction that meets the overall goals of the IBM
Corporation and it's shareholders.

Do you suppose there's some politics involved...?  Let me put it this way,
the leadership of IBM is probably not unlike any group of leaders:  the
intrigue probably makes the fighting between and amongst all the warlords
who run Afghanistan look like a cat-fight...  Only difference is that in
Afghanistan, lives are at stake.. as opposed to "just" careers.

Yes, it's a lot easier to make the call, when YOU'RE career isn't on the
line.  But anyone in a position of making a decision at IBM has, by
definition, put YEARS into promoting their careers, and that can sometimes
influence your judgment.  (Sometimes...?!?)  I appreciated, almost from the
first, that I could never insult an IBM executive because they didn't see a
solution to a problem that I thought was clear.  I've tried to maintain the
same respect for the leaders of the iSeries Community, because I haven't
spent years working on "the cause".  I spent years learning things the hard
way, but that's not the same.



Now, it may appear that I'm an IBM apologist and/or completely agreeing with
what Chris has written.  I could hardly be an IBM apologist, especially
since they've "asked" me to never contact any of the executives again, in
any way shape or form.  But I am DEFINITELY agreeing with everything Chris
wrote, as well as with what Don wrote.

I'm sure not going to deny what Don is saying (as I understand it):  you
can't build up many new customers with interactive prices being what they
are.  That's plain and simple.  From what little I've heard, the 400 market
is pretty much in equilibrium:  accounts are lost to Windoze and Eunuchs
(sorry.. xSeries and pSeries...;-) and replaced primarily from Domino
Servers.  Don't know the numbers, but am guessing the profits are a wash.  I
say that because my best guess is that the 400 is still /very/ profitable,
but's it's probably coming primarily for existing green-screen accounts.
(Keep in mind the profits from OS/400, AFAIK, are going to the Software
Group.)  Problem is.. the daggone hardware is so robust that upgrades are a
lot slower from iSeries, than other platforms.

I don't see how anybody can deny that times are not what they were for
green-screen programmers.  Many leave the platform, just as companies do.
I've not personally felt the pinch, so far anyway, but even a hermit like
myself has seen it happen around me.  The prospect of re-training, while it
has many positive aspects, is not very comforting.  I wonder how long it
would take to become proficient in any one of the vast array of new
technologies?  That is, compared to how proficient I am with RPG.  (And I
use the term "proficient" /very/ loosely, because I'm an old green-screen
dog.)  Which of the technologies is still going to be around, in the years
it would take to know it, as well...?

These are not easy questions, to me anyway, but I don't think they're much
harder (if at all) than the decisions IBM execs face, either.


Now this whole post may not say much to some, to others it's all pretty
obvious.  So what's the point of this diatribe...?

===> If you don't consider yourself a leader:

1) You're wrong.
2) You expect too much of your leaders.

I've hammered a few of the leaders of this Community, from time to time, but
now I'm here to set the story straight.  There are no crystal balls into the
future.  People expect the leaders to have one, when they don't exist.

Deciding what /should/ happen in the iSeries future, and deciding what
/will/ happen in the future, and figuring out how to get there...  These are
not easy questions for /anybody/ to answer.  I believe Brad Stone posted a
long, long while back:  "quit being a follower"...

I'd put the same thing this way:  Decide if you want to influence the
changes that will come, or quit complaining about the way things are.  The
changes that come to the iSeries not only CAN be influenced by the
Community, they ARE influenced by the Community whether you do anything
about it or not...


I was going to lay out a few of my theories on Java, OSS, M$, the tough
competition from HP/Compaq, Sun, and some of that.  Writing fatigues me,
sometimes though, and it's time for dinner.

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...?

I repeat, there are no crystal balls.


So I saw a thread on Consult-400, about how the iNation might be able to
help consultants.  I some a few great replies, but only a few.  That's
because people don't know whether the iNation might make any difference, in
the long run, or not.  I have no crystal ball either, but I can pretty
safely conclude that it won't, given that level of participation.

I've been thinking about a reply to that thread, for a couple days now,
although that could loosely be considered "contacting an executive".  I
don't know...  I'm trying to decide if it's worth the time and trouble, same
as others, I'm sure...

Typically, this is where I would state a call to action..  Like: let's see
some posts on Consult-400.  But I've tried that before.  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 2 or 3 months ago, probably on RPG-L.

jt

> -----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