RE: More anti-midrange propaganda

["Jon Paris" <Jon.Paris@xxxxxxxxxxxxxx>]

 >> I don't get this argument.  What "lost revenue"?  Show me a simple
hypothetical calculation showing how revenue is lost when more iSeries boxes
are sold.

Interesting that I saw your reaction before I saw my posting!

Don't know what's not to "get" - even IBM admit this simple truth if you get
them off the record.  I will do the math - but you'll only argue with it.

Suppose that IBM sell an iSeries to a new customer for (say) $200,000.  Net
profit from that is (guess) $30,000.  Potential revenue from services is
probably zero (lots of cheap unemployed iSeries folks).  But even if we
assume non-zero then it won't be a huge amount of work 'cos the box it too
darn good.  A pretty high estimate might be 100 hours at $250 an hour - they
net (say)$125 per which means 100 X $125 or $12,500 is the net profit.
Total profit is $30,000 + $12,500 = $42,500

Now suppose instead of the iSeries they sell an RS/6000 for (say) $150,000.
Net profit from that is probably about -$10,000.  revenue from services is
huge (ask Don Rima how much difference there is in workload).
Conservatively to have someone set up security, install and tune DB2, etc.
etc. you are looking at 500 hours plus.  So that would be 500 X $125 or
$62,500.  $62,500 - $10,000 = $52,500.

So to sell the non iSeries box nets them $10,000 more.  The really sad thing
is they probably make more if they _don't_ sell the hardware and just supply
the services.

Agree or disagree it really doesn't matter.  IBM is in the business of
making money - they make most of their money through services.  If a box
doesn't generate much service revenue (e.g. iSeries) they aren't going to
push it.

Same story applies to all the so-called independent consultants who
recommend systems.  They will recommend the systems that drive the most
services revenue.  heck - how else can you explain SAP?  It was designed
from the ground up to be a pig to install and configure.  By doing so they
guaranteed the folks who recommended it massive service revenues.  It is a
sad state of affairs, but I'm afraid it is true whether we like it or not.

Jon Paris
Partner400
www.Partner400.com