RE: New iSeries Purchases ? "Family loyalty"; IBM's big mistake (IMHO)

As I pointed out in an earlier post, I install new-account iSeries on a
regular basis.  I work in an information-intensive niche business plagued by
overcapacity.  The good players are making money and outgrowing their
PC/Unix solutions; because it's a niche business, there isn't a big market
for software.  Without a big market, few outfits want to jump into the
market.  And our application does a combination of things that would be very
difficult to implement in a PC environment.  I have worked hard and been
fortunate.  Business sucks today, but we'll see what happens.

There's a different reason for the lack of new iBoxes: very few firms switch
gears IT-wise.  In 17 years of working with my software, I've lost one to a
mainframe (only because the AS/400's were announced without enough power)
and I don't believe any of my customers has moved "back" to a PC-based
solution.  Once you pick a path, it's pretty unusual for the business to
outgrow the technology.  Yes, it happens, but not often, some companies (and
IT staffs) stay in the rut they're comfortable with.

Mainframes are scalable, midrange is scalable, and only recently have
PC-type operating systems and databases become less cost-ineffective (thus
making them less unattractive).  So, the PC solution is becoming more
flexible, and there are zillions of applications out there, and there are
zillions of propeller-heads out there, and there is still a belief that PC's
are necessary to deal with e-mail and web serving.  Add those factors to the
low cost of entry into a PC solution, the green-screen albatross, and IBM's
confusing/missing-in-action marketing, and you end up with no good reasons
to move to the iSeries.  *We* know there are lots of good reasons to stay.

IMHO, IBM made a big mistake a long time ago when they abandoned marketing
reps and farmed it out to 3rd parties.  IBM needs real, trained sales reps
compensated to sell IBM midrange products and smart enough to deal with the
NT blather; a bunch of disorganized vendors fighting over hardware
commissions and "value add" has turned IBM's marketing on its head.  The
System/3 model 6's sold by IBM marketing reps are now the big iSeries
accounts; IBM got in on the ground floor and kept the business.

IBM completely misunderstood PC's.  As Big Blue designed the System/38 and
AS/400 with lots of tightly-coupled microprocessors, they failed to realize
PC's are loosely-connected microprocessors.  They assumed a monolithic
system was the only answer, gave DOS to Gates, and rolled over on OS/2.  IBM
assumed midrange systems would sell themselves; they did before the advent
of PC's.  Given IBM's technology prowess, one would think they'd have
realized PC's would become commodity items due to Moore's Law, etc.  Maybe
the scientists knew this but the marketing people had their own ideas.

IBM has always reveled in the challenge of "bigger/faster".  But real growth
comes in at the bottom; we need "cheaper" to attract new customers.

If you accept my hypothesis of "family loyalty", the solution is to get in
early, sell iBoxes to the small accounts, and keep the small accounts in the
family while they grow.  Then IBM can count on a revenue stream; by keeping
the customer satisfied, non-IBM solutions have little appeal.

I know many readers are excited about LPAR and Linux.  Yes, they are cool,
but after my initial excitement, I resumed sulking: how many normal users
will use either facility?  What do LPAR and Linux mean to a potential new
account?  They mean something if you're trying to displace a room full of
Compaq servers and sysadmin's with a butt-kickin' iSeries.  Unfortunately, I
suspect most of those people won't give the iSeries a second look.

IBM is harvesting the old growth and they sure as hell are not planting any
trees.  IBM invests in hardware and software: when is IBM going to invest in
customers?

-----Original Message-----
From: midrange-l-admin@midrange.com [mailto:midrange-l-admin@midrange.com]On
Behalf Of Pat Barber
Sent: Tuesday, January 22, 2002 11:24 AM
To: midrange-l@midrange.com
Subject: Re: New iSeries Purchases ?

This has been the case for a number of years dating back to the
S/3's and going forward. Most, if not ALL 400's came from a prior
midrange machine. You see very little "new installs", but they
do occur. The percentage is tiny compared to "upgrades".

If a "survey" was done today, I suspect you would find
very few "new installs"... When was your last "new install" in a
business that did not have some form of IBM midrange prior ???

If IBM midrange didn't have such strong customer loyalty, the
plant is Rochester would be building "widgets"......

The same thing holds true for the "Big Iron" shops that simply
won't move to another platform because of loyalty.

MVS is almost 30 years old and is still being installed around the
world....(Now that's loyal)



Don wrote:
>
> Al,
>
> if I'm reading this right, you're saying no new market share and all
> you're selling to is existing customers either doing upgrades or
> additional boxes....  All, basically due to the fantastic job that IBM
> marketing is doing?
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