----- Original Message -----
From: <thomas@inorbit.com>
To: <midrange-l@midrange.com>
Sent: Monday, January 28, 2002 8:38 PM
Subject: Re: Linux (see smaller server Iseries)


> Nathan:
>
> On Sat, 26 January 2002, "Nathan M. Andelin" wrote:
>
> > Consider how IBM prices interactive features separately on the
iSeries.  The
> > higher price has little to do with cost.  It's a value
proposition.
>
> I am unaware of any evidence beyond 'educated guesswork' to
support this. Now, understand I'm
> not saying at all that it isn't true; I'm simply saying that IBM
is the sole possible source of any concrete
> evidence for this and they don't comment in any useful way.
There currently seems to be no way
>  for us to determine what it costs IBM to support interactive
capacity.

I thought CFINT was an accepted fact. Do you mean it somehow costs
IBM Corporate for you to use CPU cycles in interactive tasks, not
batch? How? In heartache?

MAybe CFINT is designed to drive people to Linux.

> (I'm personally impressed with how much they've managed to
provide via TCP/IP that was
>  previously available almost solely through SNA. Granted, the
green-screen functionality
> visible to the user might not have changed much; but the
underlying 'plumbing' has
> certainly seen work in OS/400 V3 and V4... and without breaking
much of what has always worked.)

If they didn't provide TCP/IP stuff, they would lose the
opportunity to bid on government computer business. They have been
fighting a delaying action, not charging bravely forward.

> So, while it may be sold as a value proposition, the breakdown
of costs is unknown...
> Unless you have specific sources of info?

It seems that is an untenable argument. I doubt anyone even in IBM
can give you a cost factor for 'interactive'.

What happened is their CPU power outran market demand. They had to
keep pumping CPU to compete on the tests, but since they are
competing with no one but themselves, they had to institute CFINT
or see their delivered price collapse.

If anyone were aggressive about it, they could make a de facto
case for monopoly and unfair trade practices. At some point a
hungry lawyer is going to file a class action and CFINT will go
away. The only thing IBM could say is 'we use it to keep the price
up because we don't have any competition in that segment of the
market.'

That isn't something you want to tell a judge.

I like IBM and I want them to continue to be profitable. The bad
vibes around this could destroy the midrange market, I hope they
come to their senses soon. Can you think how much more money
everyone would be making, and how attractive midrange solutions
would be, if IBM wasn't driving with our brakes on? If you are
losing market share to Linux solutions, call IBM. They are making
money off your distress in the short run, but poisoning the market
in the long run.

Another hypothesis might be that they are protecting their
extremely profitable mainframe market. iSeries has already
overlapped the big iron.

In any case, it cannot continue this way.

Brad Jensen



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